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TNT
Tishwash:
The file of Iraqi funds in the US Federal Reserve: From occupation to temporary immunity
The issue of Iraqi funds deposited in accounts at the US Federal Reserve is one of the most complex financial files in Iraq’s modern financial history.
These funds are linked to a series of UN resolutions and international sanctions that have shaped the Iraqi economy since the former regime’s invasion of Kuwait on August 2, 1990, to the present day.
Resolution (1483) Legal and Economic Framework
UN Security Council Resolution 1483, adopted unanimously on May 22, 2003, established the legal and economic framework for managing Iraqi oil revenues following the US-led invasion of Iraq on April 9, 2003. The resolution was adopted under Chapter VII of the UN Charter, giving it international legal force. Its key features include:
– Recognition of the occupying power: The resolution explicitly recognized the United States and its allies as occupying powers under a unified command called the “Coalition Provisional Authority,” and obliged them to act in accordance with the United Nations Charter and international law, particularly the 1949 Geneva Conventions, to guarantee the rights of the Iraqi people.
– Lifting the sanctions: The resolution ended the international isolation imposed on Iraq since 1990 under Resolution 661 and subsequent resolutions, as the Security Council lifted all financial and trade sanctions except for the ban on the sale of weapons and military equipment.
New financial resource management mechanisms
For managing financial resources, the decision stipulated the following:
1. Establishment of the Development Fund for Iraq (DFI): The fund was established and placed under the custody of the Central Bank of Iraq. It was allocated to collect oil export revenues, frozen assets of the former regime that the resolution mandated member states to transfer to it, and the surplus from the Oil-for-Food Program. The stated objective was to use these funds to meet humanitarian needs and for reconstruction. The disbursement mechanism was directed by the Coalition Provisional Authority in consultation with the Iraqi Interim Administration. To ensure transparency, the International Advisory and Monitoring Board (IAMB) was established, comprising representatives of the UN Secretary-General, the International Monetary Fund, the World Bank, and the Arab Fund for Economic and Social Development. This board approved independent auditors to ensure that oil sales and disbursements were conducted in accordance with international best practices.
2. Management of oil revenues: The resolution mandated that all oil sales revenues be deposited into this fund, with 5% of them being deducted for the benefit of the compensation fund established under Resolution 687 to compensate those affected by the invasion of Kuwait.
3. Spending of funds: The resolution specified the need to use the Fund’s money transparently to meet humanitarian needs, rebuild the economy, repair infrastructure, cover the costs of civil administration, and disarmament.
4. Termination of the “Oil-for-Food” program: The decision stipulated the gradual termination of the program within six months, and the immediate transfer of $1 billion of unrelated funds to the Development Fund for Iraq.
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Resolution 1483 provided the legal cover under which the Coalition Provisional Authority exercised its influence and charted a course for channeling financial assets and oil revenues into reconstruction efforts. While it lifted sanctions, it placed Iraqi financial resources under international oversight and granted the Coalition Provisional Authority broad powers.
Executive Order 13303 and American protection
In conjunction with Resolution 1483, US President George Bush issued Executive Order 13303 on May 22, 2003, to provide broad legal protection for the Fund’s money and oil revenues from any international prosecution or seizure, to ensure the continuation of reconstruction.
Practical implementation: Regulation No. 2 of 2003
The practical implementation of the requirements of Resolution 1483 was carried out by the regulations issued by the Coalition Provisional Authority, in particular Regulation No. 2 of 2003. Part Three of it stipulated that the funds of the Development Fund for Iraq be kept in an account opened with the Federal Reserve Bank of the United States in New York in the name of “Central Bank of Iraq / Development Fund for Iraq Account”.
Although the regulations granted the Coalition Provisional Authority (CPA) administrator, Paul Bremer, the authority to direct the opening of accounts at other financial institutions, the primary and sole account was opened at the U.S. Federal Reserve Bank. The bank, acting on CPA directives, transferred 95% of oil revenues to the fund’s account and 5% to a compensation account.
End of the Development Fund for Iraq (DFI)
Pursuant to Security Council Resolution 1956 of December 15, 2010, adopted at the request of the Iraqi government, the arrangement for depositing oil export revenues into the Development Fund for Iraq was terminated effective June 30, 2011. This ended the mandate of the International Advisory and Monitoring Board (IAMB). Consequently, the management of the funds was transferred entirely to the Iraqi government, but without comprehensive international protection. Iraq became dependent on an annual executive order issued by the US president (such as Executive Order 13303) to provide legal immunity for its funds held abroad against creditor claims.
Current money management: IRAQ2 account
With the original Development Fund for Iraq (IRAQ1) coming to an end in 2010, the management of oil funds moved to a new mechanism:
1. Existing Bank Accounts (IRAQ2): The Iraqi government has opened an alternative account at the Federal Reserve Bank of New York known as (IRAQ2). All revenues from Iraqi oil sales are deposited into this account and then transferred within 24 hours to the Central Bank of Iraq’s account (IRAQ1) to avoid international claims or seizures, as the funds deposited therein are classified as sovereign funds belonging to a central bank.
2. Mandatory Deposit: Since Iraq prices its oil in dollars, it is obligated to deposit its revenues in the Federal Reserve Bank of New York. Furthermore, the outstanding external debt (approximately $40 billion) prevents Iraq from easily closing these accounts or transferring the funds, as they would be subject to immediate seizure by creditors once removed from the US protection umbrella.
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3. Memorandum of Understanding: To ensure the continued flow and protection of oil funds, a memorandum of understanding was signed on June 2, 2014, between the Federal Reserve Bank and the Iraqi Ministry of Finance to regulate the operation of the IRAQ2 account, an agreement that still represents the legal basis for depositing Iraqi funds in the United States.
Temporary sovereign immunity
With the expiration of the international protection provided by the United Nations under Chapter VII, Iraq now relies on sovereign immunity, renewed annually by the US president, for funds deposited in the Federal Reserve, provided these are sovereign funds and not derived from commercial activities. This annual immunity aims to protect Iraq’s funds from previous creditors, as there are still outstanding debts estimated at around $40 billion owed to countries both within and outside the Paris Club. There are also concerns that unknown creditors may file lawsuits once the sovereign immunity expires.
The position of the Central Bank of Iraq
The Central Bank of Iraq, represented by its Investment and Foreign Transfers Department, issued an official document addressed to the General Secretariat of the Council of Representatives, explaining the legal and logistical mechanisms adopted for managing Iraqi funds abroad. This document was a response to parliamentary inquiries submitted by MP Adnan al-Jabri.
The bank explained in its letter No. (5/3/1464) dated March 14, 2024, that the legal basis for depositing crude oil revenues into account (IRAQ2) dates back to after the expiration of the extension of the executive order issued by the US President in 2003, as well as after the end of the protection that the United Nations provided to Iraqi funds in 2010.
The central bank also warned that closing accounts at the Federal Reserve would have serious consequences, including:
A) Exposing Iraq to the risks of international and judicial claims.
B) Loss of the ability to conduct financial settlements in US dollars due to the lack of sufficient alternative channels.
The path towards permanent sovereign immunity
To secure Iraqi funds, a transition from temporary protection to permanent sovereign immunity is required. This can be achieved by completing the settlement of the remaining Paris Club debt and strengthening relations with major powers (the United States, China, the European Union, Japan, and Russia) to secure their support in protecting Iraqi funds. (LINK)
Source: Dinar Recaps
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Tishwash:
I’m pretty sure EID ending today so we are now on to the option in this article
Al-Fayez sets a date for completing the cabinet
The head of the “Design” coalition, Amer Al-Fayez, confirmed on Saturday that the completion of the ministerial cabinet of Prime Minister Ali Al-Zidi’s government will take place after the Eid Al-Adha holiday, noting that the decision will be made through an emergency session or immediately after the end of the parliamentary legislative holiday.
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Al-Fayez told Al-Maalomah News Agency that “political forces and blocs are currently holding intensive internal meetings to discuss the names nominated to fill the remaining ministerial portfolios and to ensure the entitlement of the components and blocs.”
He added that “the vote on the candidates may be held in an emergency session called by the House of Representatives during its current legislative recess,” noting that “official meetings of the Coordination Framework forces are currently suspended, but will resume immediately after the Eid al-Adha holiday to finalize the matter.” (LINK)
A member of parliament demands that al-Zaydi close two loopholes that are plundering the Iraqi budget
MP Faleh Al-Khazali called on Prime Minister Ali Al-Zaidi on Sunday (May 31, 2026) to take practical and tangible measures to combat c********n in the files of implementing government contracts and the general budget, stressing the need to put an end to what he described as “the chaos of circumventing the law” through pretexts of adding components or changing spare parts in government contracts, warning of its serious repercussions on the general budget.
The MP also called for the instructions for implementing government contracts to be turned into legally binding legislation, considering that this would contribute to curbing the phenomenon of overpricing projects.
The following is the text of what Al-Khazali published in a post on the “X” platform, which was followed by the 964 Network , addressed to “Mr. Ali Al-Zaidi, the respected: Combating c********n requires practical steps, the most important of which are:
1- Stop the chaos of circumventing the law under the guise of adding a component or changing a spare part. This file contains destruction to the budget.
2- Converting the instructions for implementing government contracts into law, and this will stop the chaos of exorbitant project price hikes.”
Earlier, on Saturday (May 30, 2026), Prime Minister Ali Faleh al-Zaidi directed the establishment of the Supreme Sovereign Council for Integrity, Oversight and Recovery of Public Funds , during a special meeting on procedures for auditing government contracts, in the presence of the head of the Federal Financial Oversight Bureau, the head of the Federal Integrity Commission, the head of the Public Prosecution, and the judge of the Karkh Investigation Court specializing in integrity cases.
On Thursday (May 28, 2026), Al-Zaydi directed that an investigation be opened into a number of government contracts concluded during the government of Mohammed Shia Al-Sudani, within the framework of “combating c********n and protecting public funds.” He then met with Al-Sudani and discussed with him the completion of the formation of the government and support for development plans, without addressing the recent directives regarding the review of contracts. (LINK)
Source: Dinar Recaps
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