SWIFT AND THE US FEDERAL RESERVE PUT IRAQ AT THE MERCY OF THE GLOBAL ECONOMY

SWIFT AND THE US FEDERAL RESERVE PUT IRAQ AT THE MERCY OF THE GLOBAL ECONOMY

Economic expert Hassan Al-Sheikh warned on Tuesday that Iraq has become more vulnerable to global economic shocks due to its increasing connection to the international financial system, especially after joining the global SWIFT system and its direct dealings with the US Federal Reserve.

Al-Sheikh told Al-Maalouma News Agency that “Iraq, over the past two years, has strongly entered the global economy by activating international bank transfers, subjecting banks to strict oversight, and opening channels with international banks, which has made it vulnerable to any external economic change, whether in oil prices or financial and monetary policies.”

He pointed out that Iraq, which before 2020 was almost isolated from the global financial system, is now severely restricted, which negatively impacts its general budget, which is already suffering from a worsening financial deficit.

Al-Sheikh added that this connection not only threatens the stability of oil prices, but also makes any global economic or customs decision directly impact state finances, warning of the exacerbation of crises if steps are not taken to strengthen the independence of the Iraqi economy.

He pointed out that any breakthrough in the US-Iranian negotiations could open the door for Iraq to overcome some obstacles, especially those related to the sanctions imposed on the Central Bank. This could allow Baghdad to withdraw its funds freely, provide better access to dollars, and perhaps even restore the exchange rate to 120,000 dinars for $100.   

He indicated that this would allow Iraq to import Iranian gas more smoothly, which would contribute to improving the performance of the electricity sector.