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How oil-rich Iraq ran out of dollars?

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Three years ago, Iraq was on the brink of expelling US troops, but now, Prime Minister al-Sudani asserts that his nation needs US and NATO forces. Although he gives ISIS as the reason, the dollar crisis in the country seems to be a more plausible explanation. The political actors backing al-Sudani blame the United States for the crisis but having to handle this crisis shortly, al-Sudani sees the exit in reconciliation with Washington.

The political turmoil in Iraq after the elections in October 2021 resulted in al-Sudani taking the seat of Prime Minister as a candidate of the so-called Iran-backed Shiite alliance in October 2022. in his first US interview since taking office, al-Sudani said, “we need the foreign forces to eliminate ISIS.” “Iraq would like similar relations with Washington to what Saudi Arabia and other Persian Gulf oil-and-gas producers enjoy,” al-Sudani told WSJ, “we strive to “see Iraq have a good relationship with Iran and the US.” Stating, “President Biden is different from other presidents in that he knows the situation in Iraq completely,” al-Sudani thinks it might be the foundation to build an excellent relationship between Baghdad and Washington. al-Sudani’s views regarding keeping the US and NATO forces in Iraq are deemed significant since he has been publicly silent about this issue until now. After the killing of Iranian commander Qassem Soleimani in a US drone strike on Baghdad, the Iraqi parliament voted a resolution to withdraw American troops from the country. Currently, 2,000 American troops in Iraq under the umbrella of NATO are training the Iraqi armed forces.

According to Foreign Policy, al-Sudani’s public support for the presence of US troops originates from the threat of ISIS. al-Sudani’s words, however, are not an unexpected turn; instead, they reflect a steady movement toward the United States in recent years. The article’s title is also noteworthy: “The New Iraqi Leader tilts the scales toward the USA.” Former US officials told Foreign Policy that even amid the tension escalating after the assassination of Soleimani, Iraqi officials had expressed support for the US military mission behind closed doors to ensure to defeat of ISIS and counter Iranian influence. “US presence that was hanging by a thread in pre-pandemic Iraq, at the tenuous invite of the Baghdad government, now appears to be there to stay—indefinitely,” interprets the journal the situation that became concrete upon al-Sudani’s statement. Although al-Sudani created uproar in Iraq, the more significant problem is that Centcom has no planning or vision about the future of the US-Iraq relationship.

“The presence of foreign military forces in this country is a very dangerous issue,” remarked Nouri al-Maliki, the leader of the Shiite alliance that brought al-Sudani to the office and kept him in power. It is remarkable that Maliki’s statement followed al-Sudani’s controversial comment.

Then, why did al-Sudani express his public support for the presence of the US troops in the country “independently” of the coalition behind his power and despite growing anti-American sentiments in Iraqi society over the last several years?

The reason for the crisis: US sanctions

Sudani employs the existence of ISIS to justify his statement, but it seems that the underlying issue is the currency crisis that shook the Iraqi markets. Unlike other oil-rich countries, the second largest oil producer of OPEC after Saudi Arabia, Iraq stands out for its economic problems and the massive social protests these sparked. The current crisis, however, is not the same as the usual mechanism of bribery and corruption that plagues Iraq. It has everything to do with US sanctions. The restrictions put into practice by the US to prevent the illegal allocation of dollars for the interests of other US-sanctioned countries, especially Iran, have triggered a severe dollar crisis in the country.

The USA has implemented a “regulation” to the system that allows the daily foreign exchange auctions of the Iraqi Central Bank, which has been in effect for 20 years since the invasion and permitted banks to sell dollars without any restrictions. In November 2022, the US Federal Reserve (FED) started enforcing strict screening on the operations of Iraqi commercial banks, such as requiring all clients to disclose their identities before a transfer of funds could be made. In fact, these measures were implemented after almost two-year planning by the Central Bank of Iraq, the US Department of the Treasury, and the FED. However, in spite of all the planning, since the strict regulations have been in effect, more than 80% of daily dollar transactions have been blocked. As a result of the slowdown in dollar transactions, the markets have rushed into the dinar, ultimately creating a double-sided “currency crisis.”

Protests in rise

Due to the crisis, the value of the Iraqi dinar has weakened vis-à-vis the dollar, leading to a sharp rise in food prices. Over the currency drop, on January 23, al-Sudani dismissed Central Bank Governor Mustafa Ghaleb Mukheef on his request, and Muhsen al-Allaq replaced him. After a slight decrease in the exchange rate following the replacement of the office at the Central Bank, it has begun to increase again quickly. The official rate for Iraqi citizens set by the Central Bank stands at 1,470 dinars to the dollar. Established by the Central Bank of Iraq is 1470 Iraqi dinars per dollar, while on the black market and free market, it ranges from 1590 to 1620 dinars.

Iraqis slowly started to protest against the devaluation of the dinar. The protesters gathering outside the Central Bank called on the government to halt the depreciation of the dinar. Those demonstrating in Iraq called on al-Sudani’s government to do everything they could to bring down inflation. Mainly, they demanded that staples like eggs be made more affordable. Protesters from south Iraq also participated in the demonstration in Baghdad.

The ruling coalition blames the US

Hadi al-Amiri, the leader of the Fatah Coalition and a partner of the Iraqi government, accused the US of using the dollar as a weapon to starve the people in Iraq. “Since the reserves of this country’s central bank are at the Federal Reserve’s disposal, Iraq lacks economic independence. Everyone now knows how the Americans use the dollar as a weapon to starve people. The Americans are currently putting the most pressure on Iraq to prevent its relations with Europe and other countries of the world,” said al-Amiri.

Maliki, the head of the same coalition, claims that the United States uses the dollar as a global weapon: “They try to destabilize it by using dollar paper.” Maliki, however, sees the United States as the key to solving the issue: “There is no solution to the dollar crisis except by controlling the dollar and understanding with the American side.”

Here, the reason behind al-Sudani’s controversial statement that US soldiers are required in Iraq is nothing but Maliki’s proposed solution. al-Sudani is trying to find a way to ease the effects of the dollar crisis. In this regard, he plans to send the Foreign Minister to Washington at the start of February, followed by his own visit. The Iraqi premier may try to negotiate looser US screening on the movement of dollars or at least a postponement of such controls. As the Prime Minister of a coalition accused of being “pro-Iran” and even a “puppet of Iran,” al-Sudani may have hoped that sending sound signals to the United States would facilitate reconciliation. Against this backdrop, Foreign Affairs’s inference that the “The New Iraqi Leader tilts the scales toward the USA” seems an unrealistic expectation.

The dollar is indeed a powerful winning tool in the hands of the USA. The United States may offer the Iraqi government a short-term solution to the pressing crisis. The country is still nothing but one of the major oil producers, although the post-invasion system in Iraq is plagued by bribery, corruption, and smuggling. The greater challenge is that Iraq lacks the political will to combat the issue and blow the cobwebs away.

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France explores Syrian transit routes as alternative oil corridor to bypass Strait of Hormuz

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10/07/2026

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France is evaluating the creation of alternative energy routes through Syria to mitigate potential disruptions in the Strait of Hormuz following the resumption of hostilities between the United States and Iran. French Foreign Minister Jean-Noël Barrot stated that Paris is working on new transit routes for the transport of Persian Gulf oil, with Syria emerging as a prominent option in this context.

“Among the initiatives we have pursued since the beginning of this crisis is the concept of preparing alternative routes, in order to avoid remaining dependent on blockages that could occur here or there,” Barrot said.

Barrot indicated that Syria, which has entered a process of reunification following the collapse of the Bashar al-Assad administration, could become a “new regional hub.” The French minister characterized the country as a strategic corridor that could transport Persian Gulf oil to the Mediterranean, thereby reducing the impact of potential shipping disruptions in the Strait of Hormuz.

Stating that France wishes to expand commercial and economic cooperation with the Damascus administration, Barrot expressed that they aim to establish a secure transit route for Gulf producing nations through this cooperation.

According to Barrot, implementing this plan requires a comprehensive assessment of existing infrastructure and the provision of necessary security guarantees. The French minister noted that these efforts are of critical importance for securing global energy markets.

Barrot’s remarks followed French President Emmanuel Macron’s visit to Damascus on Tuesday. During the visit, Macron met with Ahmed Shara, the former al-Qaeda leader who has declared himself President of Syria.

Patrick Pouyanné, the Chief Executive Officer (CEO) of TotalEnergies, was among the delegation accompanying Macron. Characterizing Syria as a country situated “at the crossroads of the Middle East,” Pouyanné said it could establish a vital energy link between Iraq and the Mediterranean.

In response to the potential closure of the Strait of Hormuz, Iraq has been shipping its oil via tankers through Syria for export since April.

More than 600,000 tons of fuel were exported through this route between April and June. Last month, Iraqi and Syrian officials discussed the reactivation of the Kirkuk-Baniyas oil pipeline and the establishment of energy transit mechanisms.

TotalEnergies has also signed a memorandum of understanding for an offshore exploration block in the Mediterranean. However, Pouyanné stated that beyond this, the company currently has no concrete projects under development.

Stating that security conditions in the country have not yet stabilized, Pouyanné said, “It is clear today that the security situation does not yet permit us to operate here. However, I believe coming here, to Damascus, is a positive initiative.”

Shortly after Pouyanné’s statements, two bombs reportedly exploded near the Four Seasons Hotel, where the French delegation was staying.

Stating that the Syrian administration must be given time to establish control over the country, Pouyanné said, “We must not demand too much,” adding, “We need to be a little patient.”

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Senior US military officers ignored system alerts on obsolete targets, leading to strike on Iranian school

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08/07/2026

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Senior US military commanders approved strike lists despite automated system warnings indicating that intelligence on certain targets in Iran was years out of date and required revalidation, according to a CNN report citing three sources familiar with the decision-making process.

The warnings were bypassed to “speed things up” under intense pressure to rapidly designate targets during the opening days of the conflict. One of the targets approved by commanders under these conditions resulted in a strike on a school in Minab.

This military decision is directly linked to the February 28 strike on the Shajara Tayyiba School in Minab, which killed at least 168 children and 14 teachers. The heavy loss of life makes the strike one of the mass casualty events involving the highest number of civilian deaths in the recent history of the US military.

According to the sources, automated system warning messages indicating that the intelligence was obsolete were already integrated into the database used during the target development process. Within this system, a target could only be added to a strike list with the approval of a senior officer. Two sources stated that the decision by senior commanders to ignore these warnings directly contributed to the school being targeted “by mistake.”

Military officials reportedly realized within days of the strike on the school that the error stemmed from outdated information. Despite the passage of months, the Pentagon has not released its investigation report on the incident.

A White House official stated that the investigation remains ongoing, asserting, “As we have said before, the US does not target civilians.”

The Pentagon referred inquiries on the matter to US Central Command (CENTCOM), which declined to comment, citing the active investigation.

School and military facility were located within the same compound

The strike reportedly occurred while the US military was targeting an Islamic Revolutionary Guard Corps (IRGC) facility located near the Shajara Tayyiba School. Initial military investigative findings also pointed to this conclusion.

Satellite imagery reveals negligence in the target analysis process. Imagery from 2013 shows the school and the IRGC base located within the same compound, whereas imagery from 2016 clearly indicates that the school had been separated from the base by a fence and provided with a separate entrance.

In satellite imagery dated December 2025, dozens of children can be seen playing in the schoolyard.

The strike took place on the first day of operations following Donald Trump’s decision to launch military action, a period during which military officials and intelligence analysts worked under intense pressure to update thousands of targets.

Analysts were unable to update all records in the Pentagon database prior to the operation. As a result, records for multiple targets—including the IRGC facility adjacent to the elementary school—consisted of information that was more than 10 years old.

Due to the accelerated timeline, analysts prioritized updating “high-priority” records, which included moving targets with a high probability of being struck first and locations posing an immediate threat to US forces. Because fixed facilities were deemed a lower priority, the information for the facility near the school was not updated.

Disconnected databases and staffing shortages compounded the error

At the center of the investigation are two separate targeting databases used by the Pentagon. These are known as the Modernized Integrated Database (MIDB), which was built in the 1980s and relies on manual data entry, and the Mitigation and Analysis Reporting System (MARS), a new artificial intelligence-backed digital platform.

Both systems indicated that information needed to be updated before use. However, efforts to fully transition to the MARS system were reportedly years behind schedule, leaving official targeting data still dependent on the legacy MIDB system.

An intelligence analyst had previously noted changes on the ground in a separate digital tool, but because this tool was not connected to the official targeting database, the information did not reach commanders. How this disconnect influenced the targeting of the school is also being examined as part of the investigation.

Following the strike, Donald Trump suggested that Iran might be responsible for the incident, later asserting that responsibility might never be determined. Defense Secretary Pete Hegseth stated that the strike would be thoroughly investigated, claiming that the US takes every possible measure to prevent civilian casualties.

However, due to cuts implemented early in Hegseth’s tenure, Civilian Harm Mitigation and Response (CHMR) teams within CENTCOM were reportedly facing severe staffing shortages.

Under the cuts made by Hegseth prior to the conflict with Iran, the 10-person civilian casualty specialist staff at CENTCOM was reduced to a single full-time employee.

Sources added that while the remaining staff did everything they could, they lacked adequate resources due to the budget and personnel cuts implemented by Hegseth.

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US revokes Iran oil license and launches airstrikes following Strait of Hormuz tanker attacks

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08/07/2026

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The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has revoked a general license that permitted commercial transactions involving Iranian oil.

According to a statement issued by the agency, the “General License X” regulation, which had been in effect since June 21, 2026, was fully rescinded as of July 7, 2026, and replaced by the newly introduced “General License X1” regulation.

The statement noted that a wind-down period lasting until July 17 has been granted to allow for the completion of transactions initiated prior to the revocation.

The Iranian Ministry of Foreign Affairs reacted strongly to the OFAC decision, declaring that Tehran will take all necessary measures to protect its national security and interests.

In a statement shared on the ministry’s official Telegram channel, Iran stated: “The Ministry of Foreign Affairs of Iran decisively condemns the US Department of the Treasury’s decision to revoke the temporary suspension of sanctions on the sale of Iranian oil. This step is a flagrant violation of Article 10 of the memorandum of understanding concerning the cessation of military conflict.”

Following the decision, the US Armed Forces conducted a series of airstrikes targeting Iranian territory during the night of July 8. US officials maintained that the military operation was a response to Tehran’s actions in the region. Washington characterized Iran’s conduct as a violation of the ceasefire regime and a threat to the security of navigation in the region.

The Iranian state broadcaster, IRIB, reported that explosions occurred at various locations across the country. News sources noted that seven explosions were heard near the village of Taherui in the Sirik district, and six explosions were heard near the city of Qeshm.

Previously, US media outlets including The Wall Street Journal and Axios, citing US officials, had reported that despite the active ceasefire, forces of the Islamic Revolutionary Guard Corps had attacked oil tankers near the Strait of Hormuz.

According to data shared by the United Kingdom Maritime Trade Operations (UKMTO), a tanker off the coast of Oman was struck by an unidentified munition, causing a fire on board. It was reported that the incident resulted in no casualties, injuries, or environmental pollution.

The Wall Street Journal reported that one of the targeted vessels may have been the “Al Rekayyat,” a tanker owned by the Qatar-based shipping company Nakilat.

The vessel sustained damage to its engine room, though the crew was reported to be safe. Axios reported that while the attacked vessels sustained damage, no major destruction had occurred.

On June 18, 2026, the US and Iran had signed a memorandum of understanding that established a two-month ceasefire and envisioned the initiation of negotiations for a more comprehensive agreement.

Following the start of the ceasefire period, the US had also struck targets in Iran on June 27 and June 28, citing Iranian actions against commercial vessels in the Strait of Hormuz.

Following those strikes, the Islamic Revolutionary Guard Corps had announced that operations would be launched against US facilities located in Arab countries.

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