The Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials. 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. In response to the nonbinding resolution, which was backed by the prime minister, President Trump threatened to impose sanctions against Iraq if the U.S. was forced to withdraw its troops.