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
Recall that Trump Blackmails Germany With Sanction Threats Over Nord Stream 2
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
Iraq didn’t see this one coming?
Attacking a country under false pretexts and keeping the loot, that’s what it is all about, just like ancient times, nothing ever changes ….
This is a good example of the neocon way of forcing business weather the President is Trump or not. That is unfair to blame Trump for that. (they could impeach him by the way) The growing black holes in US budget and exports are not his fault.
What looks very immoral in this business case is that the US neocons first destroyed the country and their internal peace guarantor (Saddam) for fallacious reasons. And now they want ,even trough blackmail if necessary ,recover some of their war expenses.
Look at China leader smiling face. With their underpriced agreement to rebuild Irak they are waiting at the door.
The Iraqis have the option of moving their forces to where they do not protect our bases or assist against ISIS. Shutting down their roads so those bases are only supplied by air comes to mind.
Anyone still wondering who is a Rogue state and who is a terrorist state?
Well, that’s been obvious since ‘Nam (many would say earlier…)
It’s normal to describe everything in terms of The Leader did this, the leader (Trump) did that. But clearly he’s following a standard neocon polity, so he’s the fourth or fifth one in a row with the possible exception of Obama, albeit I think they used him to see if he could make some sort of rapprochement given his Muslim upbringing, but in the end he made things more messy. In any case, Trump ain’t doing anything new.
Personally I never assumed when he was elected that he would get to call the shots on Foreign Policy. Presidents don’t have enough authority for that, as his being hounded since before Inauguration and all the Court injunctions amply demonstrate. I find it strange that people keep projecting him as some sort of Dictator operating independently, and thus also projecting little more than personal motivations, usually shallow and emotional, onto what he’s doing, when it’s clear that he’s not in charge.
But anyway.
Am surprised, Mish, that you didn’t bring the gradual decline of the Petrodollar into your comments. Team Trump is trying to prevent the exodus of the US from the current world order which depends on the Petrodollar, no? Or am I wrong?
Part of the recent kerfuffle seems to have been about the Iraqi PM making a deal with China involving their doing the infrastructure developments that the US promised but failed to deliver in return for more oil access. So that’s why US is freezing the oil: to make that deal fail. They don’t want China-Eurasia getting too much of a toe-hold in the Middle East.
Personally, I don’t care about the morals. This is international financial war in many ways. But I do think the US is doomed with all this and should bow out gracefully. But that said, I think the America First notion is good in principle (also China First for Chinese, Polish First for Poles etc.), i.e. using the Nation State model versus Federated Constipated and Corrupt Conglomerate Globalist model. But first they have to bring down that Petrodollar.
Re the decline of the Petro Dollar: Is this really what INSTEX is all about.
This is from an article in Zero Hedge today:
“And addressing the European initiative to set up a “SWIFT alternative” special payment vehicle for Iran, Putin expressed optimism that INSTEX would soon be “be up and running” and the European nations “would deliver on their promise to create an independent mechanism free of the dollar influence.” “
They are asking us to leave. Trump wants to leave(supposedly). This is a perfect opportunity to GTF out of there. Mission accomplished.
To me this fits the pattern of never thinking beyond a single, current problem and not considering the consequenses of the “solution” as proposed.
Putin is still dictating Trump policy. Russia needs more customers for their oil but only at $75/bbl
4D chess, played by a very stable genius….
Remember how Trump tried to prod Germany into a deal with the US to import LNG instead of allowing Norstream II pipeline into Europe. Then a few days ago, Putin worked out a deal with President Zelensky (Ukraine) to resume delivery through the country to Europe. Now the Turkstream Pipeline seems to be coming back as a possibility. Meanwhile, we have a huge oversupply of natural gas in North America and wellheads are shutting down in droves because the price is now cheaper than the mining costs which were only possible through cheapened money. 4D chess?
I guess I don’t why countries have not hedged their bets by using the euro as a reserve currency. It is not as if the euro is going to collapse overnight.
Or maybe the pound sterling or the yen. Or all of the above.
The man-boy cannot even play go fish, let alone chess.
“Reserve currencies” don’t have negative interest rates. That is why the Euro is completely unsuitable. And the others you mention are equally as bad. There is only one true “reserve currency” worthy of the name. And all Central banks own some of it. For that good reason.
I guess that’s one of the reasons Central Banks have been buying more Gold than usual.
https://www.zerohedge.com/commodities/central-banks-continue-remarkable-gold-buying-spree
Hopefully our refusal to leave Iraq will wake up more of the 4D chess believers. Then again, if they’re still in thrall to Trump at this late date, they may keep dreaming forever.
War with Iran is still very much on the table and will be for the foreseeable future. MIG… er, MAGA!
Trump is playing 4 D Chess. Obviously, he’s only capable of 2D Chess.
Do you mean 1-D chess?
We’ll be leaving Iraq at the exact same time we leave Germany, Korea, Okinawa and all the other places we have bases overseas.
When the “money” runs out.
Nope. Germany, Korea and the Japanese islands have no oil. They’ll be first to be cleared out, Iraq will be last. Troops will merely relocate to Venezuela to stabalise the forthcoming occupation.
I wonder whether other countries might start to remove their dollars from the NY Fed. I would, if you can’t access them their not worth the paper they’re printed on, debasement or no debasement.
Study Confirms Climate Models Are Getting Future Warming Projections Right (nasa.gov) https://climate.nasa.gov/news/2943/study-confirms-climate-models-are-getting-future-warming-projections-right/
I’ve studied the climate models for many years. They are terrible, overestimating warming by a huge amount. They are more political than scientific.
Haha, this reminds me of the old joke ‘Thieves broke into the Kremlin and stole the results of the next election’! So they know the future and are getting it right, huh! The correct title should be ‘models have now been tweaked to perfectly back-fit data’.
They need to make public forecasts of the FUTURE and see how many of those come true. Until now that record has been abysmal.