A report in Sunday’s New York Times says Iraq has been using a network of financial institutions and oil smuggling operations to help Iran skirt economic sanctions imposed because of its nuclear programme.
Last month, U.S. President Barack Obama barred a Baghdad bank, the Elaf Islamic Bank, from any dealings with the American banking system. In a statement, Obama said the bank had “facilitated transactions worth millions of dollars on behalf of Iranian banks that are subject to sanctions for their links to Iran’s illicit proliferation activities.”
The newspaper says that despite Obama’s order, Elaf continues to participate in the Iraq Central Bank’s daily auction where commercial banks can sell Iraqi dinars and buy U.S. dollars.
According to current and former American and Iraqi government officials and experts on the Iraqi banking system, Elaf is just one of a number of institutions helping to funnel cash into Iran as sanctions choke its economy. The New York Times described the auctions as “a crucial pathway for Iranian access to the international financial system.”
Several U.S. and Iraqi banking and government officials say Iranian organizations have gained “effective control” of at least four Iraqi commercial banks through Iraqi intermediaries, according to the newspaper report. That control gives Iran direct access to the international financial system, a system Iran should not have access to because of the economic sanctions.
David Cohen, the U.S. Treasury Department’s under secretary for terrorism and financial intelligence, told the Times the U.S. is “actively pursuing efforts to prevent Iran from evading U.S. or international financial sanctions, in Iraq or anywhere else.”
According to the New York Times, some current and former American and Iraqi officials, along with banking and oil experts, say Iraqi government officials have largely ignored the massive financial flows, smuggling and other trade with Iran. The paper says some Iraqi government officials who have close ties to Prime Minister Nuri Kamal Al Maliki are directly profiting from the activities.