Middle East
How oil-rich Iraq ran out of dollars?
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.
Middle East
UNDP estimates $1.38 billion in building damage across southern Lebanon
The United Nations Development Programme (UNDP) and Lebanon’s National Council for Scientific Research have released a rapid assessment report on building damage in southern Lebanon.
According to Lebanon’s Al-Akhbar newspaper, the study relied on satellite imagery and geospatial artificial intelligence (GeoAI) technologies to assess externally visible damage to buildings along the southern border between October 23, 2025, and April 29, 2026.
The report found that a total of 11,095 buildings had been completely destroyed in the areas surveyed. Based on an assumed average apartment size of 150 square metres, these destroyed structures are estimated to correspond theoretically to 17,891 housing units.
The volume of debris generated in the region is estimated at 3,107,756 cubic metres.
In addition to the buildings that were completely destroyed, the assessment identified partial damage to 2,242 buildings and minor damage to 9,311 others.
At the housing-unit level, the report estimates that alongside the approximately 17,891 units that were completely destroyed, around 5,219 homes sustained partial damage and 18,282 suffered minor damage.
The report stressed that these housing figures are not based on direct field surveys but on mathematical modelling using average floor-space assumptions and therefore constitute theoretical estimates.
Preliminary cost of building damage estimated at $1.38 billion
The report calculated reconstruction costs using a standard benchmark value of $450 per square metre. On that basis, the total preliminary cost of building damage was estimated at $1.384 billion.
Geographically, Nabatieh Governorate accounted for the largest share of the damage, estimated at $1.053 billion, while losses in South Governorate were assessed at $331 million.
At the district level, preliminary costs were estimated at $688 million in Bint Jbeil, $333 million in Marjayoun, $315 million in Tyre, $32 million in Nabatieh district and $16 million in Sidon.
The report emphasised that these figures cover only external physical damage to buildings and do not represent the final cost of reconstruction or the total economic losses caused by the war.
In Bint Jbeil district, the highest levels of destruction were recorded in Aitaroun, where 1,658 buildings were destroyed, followed by Bint Jbeil city with 1,076, Ayta al-Shaab with 539, Beit Lif with 371, Yaroun with 242 and Ainata with 227.
In Marjayoun district, 969 destroyed buildings were recorded in Mais al-Jabal, 824 in Taybeh, 285 in Houla, 199 in Markaba, 184 in Blida and 174 in Deir Siryan.
In Nabatieh district, 71 buildings were destroyed in Yahmar al-Shaqif, 69 in Zoutar al-Sharqiya and 37 in Kfar Sir. In Tyre district, 370 buildings were completely destroyed in Burj al-Shamali, 216 in Naqoura, 162 in Abbassiyeh, 80 in Tyre city and 65 in al-Mansouri. In Sidon district, destruction was concentrated mainly in Zirariyeh, where 65 buildings were destroyed, and Arzi, where 62 buildings were levelled.
The report also outlined significant limitations that prevent the findings from being treated as a definitive final assessment.
The study did not cover entire administrative districts but was limited to areas where clear satellite imagery was available.
As a result, the area south of the Litani River constituted the main focus, while only limited data from areas north of the river were included. Some municipalities were fully surveyed, while only selected sections of others could be examined.
For example, all cadastral zones in Bint Jbeil district were surveyed. In Tyre district, 74 of 75 cadastral areas were fully covered, while one was only partially included.
In Marjayoun, 17 of 33 areas were fully surveyed and 21 partially covered. In Nabatieh, only four of 52 areas were fully analysed, while 15 were partially examined. In Sidon, none of the 77 areas underwent a complete survey, with only five areas partially included in the assessment.
The report listed several additional limitations:
Critical infrastructure damage, including roads, bridges, electricity networks, water systems and telecommunications facilities, was not assessed.
Damage to underground shelters, basements and non-visible interior sections of buildings could not be detected.
No clear distinction could be made between residential, commercial and industrial structures.
Buildings with minor damage were excluded from debris-volume and cost calculations.
Structural density, shadows and narrow streets introduced potential margins of error in satellite analysis.
No field visits or on-site inspections were conducted to verify the findings. The assessment was carried out entirely through desk-based analysis of satellite imagery.
Given the scale of destruction and confidence in the methodology employed, no on-site verification procedures were undertaken in cooperation with the Lebanese Armed Forces or the United Nations Department of Safety and Security (UNDSS).
UNDP said the findings should be regarded as preliminary planning data and that the scope of the assessment would be expanded as additional satellite imagery and field information become available.
Officials noted that once excluded categories and infrastructure losses are taken into account, the true cost of the destruction in southern Lebanon is likely to be significantly higher than the estimates contained in the report.
Middle East
Iran makes Lebanon ceasefire prerequisite for final agreement with US
Assessments that efforts to restrain Israel in Lebanon are being shaped less in Beirut or Tel Aviv than in closed-door talks between Iranian and American negotiators resurfaced ahead of negotiations in the Swiss town of Bürgenstock.
Unlike the current approach adopted by the Lebanese government, Iran continues to pursue a strategy of leveraging its influence on the ground to secure diplomatic gains.
The Lebanese government, meanwhile, remains committed to a separate negotiating track that critics say facilitates concessions to Israel at the negotiating table in Washington that could not be achieved on the battlefield.
US Vice President JD Vance, who arrived in Switzerland to participate in the latest round of talks, confirmed that efforts to make the ceasefire in Lebanon permanent would be among the negotiations’ top priorities.
According to CNN, citing a diplomatic source familiar with the matter, the US and Iranian delegations agreed to convene an emergency session on the situation in Lebanon as the first item of discussion, placing the issue at the top of the agenda.
US says it faces difficulties over Israeli withdrawal
According to diplomatic sources cited by Al-Akhbar newspaper, US officials informed the Iranian side that Washington had made intensive efforts to persuade the Israeli government to complete a full withdrawal from Lebanon but had encountered significant difficulties in the process.
US officials requested Iranian support in facilitating Hezbollah’s withdrawal from southern Lebanon as part of efforts to enable an Israeli pullout.
The Iranian delegation responded that Hezbollah was an internal Lebanese matter. While indicating that Tehran did not oppose an agreement by the Lebanese authorities on a timetable providing for a rapid Israeli withdrawal, the delegation outlined what it viewed as its own area of responsibility.
Iranian representatives said both Tehran and Washington had committed to implementing measures aimed at ending the war across the region, including in Lebanon, and argued that the United States should exert pressure on Israel not only to uphold a ceasefire but also to withdraw quickly.
Iran reiterates Lebanon condition for final agreement
An Iranian official also told CNN that ending the conflict in Lebanon was the most important item on the Iranian delegation’s agenda.
During the talks, Vice President Vance said Washington would continue working toward peace between Lebanon and Israel and expressed hope that the temporary ceasefire could be transformed into a permanent agreement capable of delivering long-term stability.
Speaking before the session, Iranian Foreign Ministry spokesman Esmail Baghaei said Tehran would not begin negotiations on a final agreement with Washington unless the war in Lebanon was halted, as stipulated in the US-Iran memorandum of understanding.
In a post on X, Baghaei wrote: “It is not possible to move to the negotiation stage for a final agreement unless these provisions are implemented, foremost among them the first clause, which calls for ending the war on all fronts, including Lebanon.”
Military and diplomatic developments ahead of the Bürgenstock talks threatened to undermine the understanding reached between the parties. Following Israeli attacks in Lebanon and what Iran described as an escalation of military tensions in violation of the US-Iran agreement, Tehran announced that it had closed the Strait of Hormuz to traffic.
In a statement, Iran’s Khatam al-Anbiya Headquarters said the closure of the strait was only the first step in a series of measures planned by Tehran. Iran’s Foreign Ministry subsequently announced the suspension of the Geneva negotiations with the United States.
Following those developments, reports indicated that Washington intervened and increased pressure on Israel, leading Israeli military commanders to issue definitive orders for a complete halt to military operations in southern Lebanon for the second time within 24 hours.
Israeli media reports said the decision was not taken solely on Tel Aviv’s own initiative and that military operations were curtailed as a result of intense US pressure following Iran’s move in the Strait of Hormuz.
Middle East
US lifts naval blockade of Iran after ceasefire memorandum signed
The United States has lifted its naval blockade of Iran on the orders of President Donald Trump, ending restrictions on vessels entering and leaving Iranian ports.
Announcing the development, the US Central Command (CENTCOM) said the US military was no longer blocking maritime traffic to Iranian ports and had halted all operations related to enforcing the naval blockade.
The statement added that US warships would remain in the region to monitor compliance with the terms of the agreement.
The decision to lift the blockade follows the memorandum of understanding signed by the United States and Iran on June 18, aimed at ending the war and reopening the Strait of Hormuz to maritime traffic.
After signing the document in France, where he was attending the G7 summit, Trump sent the agreement to Iranian President Masoud Pezeshkian for approval.
In a statement, Iran’s Foreign Ministry said a formal signing ceremony between the two delegations, previously scheduled to take place in Geneva on June 19, would no longer be held.
Negotiations to continue in Switzerland
According to Axios, citing sources familiar with the matter, the signing process for the memorandum of understanding was accelerated in order to reopen the Strait of Hormuz to shipping as quickly as possible.
A planned meeting between US and Iranian representatives in Switzerland has not been cancelled. The talks are expected to focus on launching negotiations over Iran’s nuclear programme, with US Vice President James David Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf set to take part.
According to CNN, the 14-point memorandum calls for an immediate ceasefire on all fronts, the lifting of the naval blockade, the resumption of maritime traffic through the Strait of Hormuz, the removal of oil sanctions on Iran and the withdrawal of US troops from areas surrounding Iran.
The agreement also includes the allocation of $300 billion for Iran’s economic reconstruction, the release of $24 billion in frozen Iranian assets and a 60-day negotiation process aimed at reaching a final agreement on the nuclear programme.
In return, the authorities in Tehran pledged not to develop nuclear weapons.
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