Report details how a New York Fed account gives US leverage over Iraq's oil funds
A two-decade-old financial arrangement rooted in the 2003 invasion still routes Iraq's oil revenues through the US, letting Washington pressure Baghdad over Iran-aligned groups.
What to know
- Iraq's oil revenues have been routed through a Federal Reserve account in New York since the 2003 US-led invasion, originally to shield the money from creditor claims.
- When UN oversight of the arrangement ended in 2011, Iraq's dependence on the US financial system persisted, now governed by annual US executive orders granting immunity to Iraqi sovereign funds.
- In April 2026 the US blocked a $500m cash shipment to Iraq to pressure Baghdad over Iran-aligned armed groups, then restored it — showing the leverage the system gives Washington.
- About $40bn in unsettled Iraqi external debt creates risk that moving funds outside the US system could expose them to creditor claims, complicating any push for greater Iraqi financial independence.
“I believe that the most important advantages of keeping the Central Bank of Iraq's account in New York are protecting Iraqi oil revenues f…”
Ahmed Saddam, Associate professor of economics, University of Basra · Middle East Eye ↗ · Sep 20
Muayen al-Kadhimi Former Iraqi parliamentary Finance Committee memberAhmed Saddam Associate professor of economics, University of BasraUnited States Treasury/Washington Controls the New York Fed account holding Iraq's oil revenuesCentral Bank of Iraq Nominal holder of the oil-revenue account at the New York Fed
How it unfolded 1 development · click the chart to see its coverage articlesposts
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Article is republished and syndicated across outlets
The explainer was republished by Middle East Eye's live blog, aggregated by europesays.com/Mastodon, and picked up by ZeroHedge, extending the reach of the analysis about US financial leverage over Iraq.
“The US decision to freeze or delay sending Iraq's foreign currency entitlements represents a serious violation of the financial and political sovereignty of the Iraqi state…”
— Muayen al-Kadhimi, Former parliamentary Finance Committee member · source -
first by Middle East Eye, 20h ago · also ZeroHedge
1 more headline
- The Hidden Mechanism Behind Washington's Control Of Iraq's Oil Money ZeroHedge · 4h ago
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background
Middle East Eye explains the mechanism behind US control of Iraqi oil funds — Azhar Al-Rubaie's investigative piece lays out the history of the arrangement from the 2003 invasion through the IRAQ2 account, including Iraq's roughly $40bn in unsettled external debts that create risk if funds move outside the US system.
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US restores the blocked shipment — The frozen shipment was later restored to Iraq, though the episode had already demonstrated how Iraq's dependence on the US financial system can be used as a political tool.
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Washington blocks a $500m cash shipment to Iraq — The US halted a shipment of about $500m in cash to Iraq as part of pressure on Baghdad over the activities of Iran-aligned armed groups, exposing the practical leverage the financial arrangement gives Washington.
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UN-backed oversight of Iraq's oil fund ends, US role persists — At Iraq's request, the UN-backed monitoring system ended, but oil revenues remained tied to the Federal Reserve through a new account known as IRAQ2, leaving Iraq dependent on annual US executive orders granting immunity to its sovereign funds.
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background
Coalition Provisional Authority creates the Development Fund for Iraq — Under UN Security Council Resolution 1483, Iraqi oil and gas revenues began being transferred to a special account held in the name of the Central Bank of Iraq at the US Federal Reserve, with 5% deducted for Kuwait compensation claims.