In his latest act of international belligerency, Trump Warns Iraq It Risks Losing Access to Key Bank Account if Troops Told to Leave.
The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said.
Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical lubricant for the economy.
The prospect of U.S. sanctions against Iraq arose after the Jan. 3 U.S. airstrike that killed Iranian Maj. Gen. Qassem Soleimani at Baghdad International Airport. The Iraqi parliament voted Sunday to urge Prime Minister Adel Abdul-Mahdi to work toward the expulsion of the approximately 5,300 U.S. troops.
The New York Fed doesn’t publicly disclose how much money it currently holds for Iraq’s central bank. But according to the Central Bank of Iraq’s most recent financial statement, at the end of 2018, the Fed held nearly $3 billion in overnight deposits.
Restricting Iraqi access to dollars could cause the dinar’s value to fall, as it did in 2015, which could again trigger a dash for dollars in Iraq as people, companies and banks try to secure hard cash. Such a devaluation could cause broader economic woes as it cuts spending power for workers, companies and the government.
How to Make Enemies Everywhere
Trump sure knows how to do one thing: make enemies everywhere.
If he follows through on the threat, Iraq will lose access to its New York Fed account where international oil sale revenue is kept.
This would cause a devastating cash crunch in Iraq.
Message of the Day
In case you missed it, here's Trump's message for Iraq.
It may be your oil, but you can't have it unless we say so.
Non-Dollar Mechanism Desperately Needed
Trump's repeated sanctions and illegal occupations prove once again why Europe desperately needs euro-based accounts to avoid Trump's illegal sanctions.
Trump's Attempt to Blackmail Germany Failed
With thanks to Russia, that pipeline will be soon completed.
On December 27 2019, I commented Trump's Russian Gas Sanction Strategy Blows Up Two Ways
Trump wanted the EU to buy more US liquid Natural Gas (LNG). It would have been far more expensive for the EU so they resisted US sanctions. But thanks to now bipartisan US sanctions, Russian contractors will get the money for completing the pipleline.
And the sanctions that Trump wanted, just might drive the EU to come up with a workable way around US sanctions.
Trump Sets Sanction Policy for the World
On June 26, 2018, I commented Economic War on Iran: Trump Sets Sanction Policy for Entire World
Trump will grant no waivers on purchases of Iranian oil. Effectively, this is an economic declaration of war on Iran.
Effectively, Trump sets sanction policy for the whole world, by proclamation.
EU Rebukes Trump
Since then, the EU has been working on a mechanism to avoid these sanctions, to no avail.
On September 25, 2018, I noted EU Rebukes Trump, Will Create "Special Vehicle" to Bypass US Sanctions on Iran
And Bloomberg writer Leonid Bershidsky says Europe Finally Has an Excuse to Challenge the Dollar
The EU did create a mechanism to avoid SWIFT and dollar-based transactions, but it was flawed and remains unused.
Trump Should Sanction Himself
Until the EU gets its act together, the US will get to set sanction policy for the world.
Earlier this week Trump imposed new sanctions on Iran, targeting 8 officials involved in 'destabilizing activities'.
If Trump wanted to sanction the person most responsible for 'destabilizing activities', he would sanction himself.
I will cheer the day when the world is finally tired enough of Trump to act.
Five Key Ideas
- Trump sure knows how to do one thing: make enemies everywhere.
- It may be your oil, but you can't have it unless we say so.
- Europe desperately needs euro-based accounts to avoid Trump's illegal sanctions.
- If Trump wanted to sanction the person most responsible for 'destabilizing activities', he would sanction himself.
- Number One Person Afflicted with TDS is Trump
Mike "Mish" Shedlock