For decades, Washington has used Iraq’s oil wealth as a lever, a strategy that remains unchanged as the last U.S. bases close this week.
The Development Fund for Iraq, created by the Coalition Provisional Authority in 2003 and housed at the Federal Reserve Bank of New York, has been the custodian of 90% of the state budget since then.
In 2020, when Baghdad asked for troops to leave, the U.S. threatened to cut access to the fund, forcing the Iraqi government to back down, a reminder of the money’s power.
Iran and its allies have celebrated the withdrawal as a strategic win, while U.S. officials say the financial arrangement is essential for stability and to guard against sanctions violations.
The next move will see Washington continuing to monitor the fund, with Iraq expected to rely on a new auction system for foreign currency, a shift that could reshape its economic landscape.