Tag: Iraq Post-ISIS

Trump Tries Extorting Iraq

The Daily Escape:

Kaskawulsh Glacier, Kluame NP, Yukon, CN – 2019 aerial photo by Picture Party

Last Saturday, the WSJ reported that the Trump administration had warned Iraq that it might shut down Iraq’s access to its account at the Federal Reserve Bank of New York (FRBNY), if Baghdad carries through on its threat to kick out American forces.

Iraq, like most other countries, maintains accounts at the New York Fed as an important part of managing the country’s finances. This account receives revenue earned from foreign trade, including in Iraq’s case, sales of oil. Loss of access to their accounts would restrict Iraq’s ability to use their funds to settle foreign transactions, or to repatriate funds needed in their domestic economy. AFP, citing an unnamed Iraqi official, reported that the balance stands at about $35 billion.

From the WSJ:

“The New York Fed provides banking and other financial services for around 250 central banks, governments and other foreign official institutions, such as the account owned by Bangladesh from which North Korean agents were able to steal $81 million in 2016, U.S. officials have said.”

The FRBNY has the authority to freeze accounts under US sanctions law, or if it has reasonable suspicion that use of the funds could violate US law.

This financial threat isn’t simply theoretical: Iraq’s financial system was squeezed in 2015 when the US suspended access to the central bank’s account at the FRBNY for several weeks over concerns the cash was filtering from Iraqi sources through loosely regulated Iranian banks and on to ISIS.

We’ve occasionally frozen foreign countries’ assets, in both the Federal Reserve Bank and in US commercial banks, typically when a country has engaged in illegal activity, or when a revolution has occurred. We did this after the overthrow of the Shah of Iran in 1979. Those funds were released by the Obama administration in 2017, when the US unfroze some $150 billion in Iranian blocked assets as part of the Iran nuclear deal.

Iraq is a weak nation with a fragile economy, so it has to take the US threat to freeze its central bank’s assets at the Fed very seriously. Freezing their account would also end any semblance of a friendly relationship between it and the US. It could also become a challenge for the US if Russia and China stepped in to rescue Iraq by weakening the role of the US dollar as the global reserve currency, that is, a currency used to settle foreign trade obligations.

America has become enamored with stopping the global free flow of funds for regimes it doesn’t like. Our sanctions regime is used so frequently that it is difficult to get an overall list of individuals and organizations that are under sanction. The US government maintains a sanctions search engine here.

Interrupting the flow of international settlements by the US has caused competitor countries to try to establish settlements in currencies other than the dollar. To date, there hasn’t been much success. Wolf Richter reports that the US dollar’s share of global reserve currencies has fallen from 65% in 2014 to 61.8% today, with the Euro in 2nd place and the Yen in 3rd.

Will the downward trend of the dollar as a reserve currency continue? Possibly, but if the US continues to act to restrict money flows, it will occur faster and more sharply than it might otherwise.

There is a kind of desperation in Trump’s threat. We’ve spent 18 years in Iraq and it comes to this? Critics of the threat say that it amounts to blackmail, or extortion. Wrongo believes he’s recently heard this about Trump and another country, too.

Is this desperation President Trump’s, or is it a reflection of a deeper desperation on the part of the US ruling elite? Are we seeing the beginning of the end of US omnipotence through the dollar’s role as the dominant global trading currency?

Is it wrong to bring up how Republicans attacked Obama for “abandoning” Iraq even though Iraq wanted us out in 2010? The GOP saw the US leaving Iraq as a mistake. They were glad when we were invited back to help defeat ISIS. Now, the question is: Will we leave under a Republican president?

How would Trump react if a local armed resistance against a US occupying force in Iraq used force of its own to try and get their money back?

Are we really going to punish Iraq because they have asked us to leave?

Isn’t it their country?

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Can Anybody Play This Game?

The Daily Escape:

Fall in the Grand Tetons – photo by Jack Bell

The NYT just devoted more space to the auction of a Trump ink drawing of the Empire State Building than it did to news that the Syrian Kurds made a deal with the Russians to give Syria access to gas fields the Kurds had just captured. Why it wasn’t covered in the NYT is worth pondering, but the real question is, who is in charge of the asylum that houses our US Syrian policy?

It’s supposed to be some combo of Brett McGurk, who has the jawbreaker title of: Special Presidential Envoy for the Global Coalition to Counter ISIS, Secretary of State Rex Tillerson and Secretary of Defense Mattis. But the Syrian fighters we back just went rogue. From Oil Price:

In a move that surprised many observers of the ongoing war for Deir Ezzor province, the US-backed Syrian Democratic Forces (SDF) handed over one of Syria’s largest gas fields to Russian forces on Thursday, possibly as the result of unprecedented direct talks between high ranking Russian officials and Kurdish leaders in Qamishli in northeastern Syria.

Oil Price quotes Beirut-based al-Masdar News:

The information, disseminated by Syrian military reports, claims that an agreement has been brokered between Russia and the US-backed Syrian Democratic Forces whereby the Syrian government will be allowed to assume control over the gas field.

It’s pretty clear that the Russians continue to run rings around the US in Syria. Does anybody in DC know what the US strategy is in Syria? If so, can they tell the rest of us?

The Kurds may have decided that their best bet is to make bi-lateral deals with Russia, Iran and Syria to hedge against their possible fight with Iraq and Turkey over independence, particularly if the US plans to watch from the sidelines. The Kurds now know that their hopes that the US would support their drive for independence was in vain, since we sided with Iraq when forced to choose between them.

Maybe the Russian/Syrian deal offers some protection to the Kurd’s desire for self-rule.

The remaining question is: was this deal part of some backdoor agreement between Moscow and Washington?” If not, how could this happen without the US knowing about it?

Oil Price says that on Wednesday, Russia’s Deputy Foreign Minister was spotted in the Kurdish autonomous zone of Rojava meeting with Kurdish and Syrian leaders in the northern city of Qamishli. No one has said what was discussed, but it was probably big, and our man McGurk wasn’t on the guest list.

This follows last month’s secret US-Russia military to military meeting about Syria. The AP reported:

The meeting, however, also suggests an expanded US and Russian effort to coordinate their efforts, raising questions about how the Pentagon is adhering to an American prohibition against military-to-military cooperation with Moscow. Congress enacted that law in the wake of Russia’s annexation of the Crimea region of Ukraine in 2014.

And the unexpected transfer of the gas field by the SDF to the Syrian government raises the question if additional cooperation between the Syrian Arab Army and Kurdish-led militias to seize control of the much larger Al-Omar Oil Field from ISIS further south will occur. Last week, control of that oil field was thought to be a competition between the two forces.

The US endgame in Syria is the million dollar question. Before, it looked as if the goal was permanent US bases in a Syrian Kurdish federated zone. But if the Kurds are cutting separate deals with Russia and Syria, a US exit from Syria could be happening sooner rather than later.

We know that there are great complexities in these relationships in the Middle East, and that the Administration is hamstrung by its anti-Russia, anti-Iran ideologues.

Unless that goes away, we can just call the Trump administration “Incapable of Agreements,” while the Kurds, the Syrians, the Russians and Iran are all very capable of making them.

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Monday Wake Up Call – July 10, 2017

The Daily Escape:

Mosul – Old City, July 3, 2017 – photo by Felipe Dana

Mosul is now back in Iraqi control. The strategy for Mosul was “clear, hold, and build”. America used a similar tactic in Vietnam; “clear and hold”, without lasting success.

The “clear, hold and build” approach involves clearing contested territory through military operations and then holding that territory, isolating and defending it from insurgent influence. The build phase involves economic, developmental or governance-related activity intended to increase the legitimacy of the counterinsurgents and the government they represent. It has not been successful in Afghanistan, where clear and hold have been difficult or impossible, to achieve.

So far in Iraq, clear, hold and build has more or less worked in Ramadi and Tikrit, but the corrosive Sunni-Shia rivalry may have negative impacts going forward. The defeat of ISIS will offer Baghdad a fresh state-building opportunity to correct the mistakes made following the ouster of the Saddam Hussein in 2003. And there is some reason for optimism, as the Cairo Review states:

Post-Saddam Iraq has managed to write a new constitution, and has witnessed four national electoral cycles, four peaceful transfers of power, and three constitutional governments in which Sunnis, Shiites, and Kurds have been consistently represented. Iraq today can claim a flourishing civil society, a thriving media, and expanded civil and political liberties. By the standards of the Middle East, these are no small achievements.

So, what’s next? Widespread corruption persists, as does the continuing struggle for power among Iraq’s Sunni, Shiite, and Kurdish communities. This has been a feature of Iraqi politics since Iraq’s independence from Ottoman rule in 1920. The post-Saddam era has allowed Sunnis, Shiites, and Kurds to pursue their own interests. In part, the Shia effort to strip Sunnis of power after Saddam brought about the ISIS ascendancy. The Kurds have used the ISIS insurgency to consolidate all territory in northern Iraq that is Kurdish-speaking, including oil-rich Kirkuk. The Iraqi Kurds are planning a referendum on independence in September, and Turkey, Iraq and Iran have all announced their opposition.

The majority Shiites are divided. Elites run the government, and hold economic power. But, the vast majority of Shiites have not done well since the start of the Iraq war. The prominence and successes of Shiite militias gives Shiites great influence in their struggle for power in post-ISIS Iraq. Some of the militia leaders have become so popular they may win positions in the 2018 national elections.

Shiites and Kurds must recognize that it is in their interest to see that Sunnis are stable and thriving. Sunnis, humbled by the disaster they helped bring to the country by the ISIS insurgency, should now be eager to secure their place in a new political reality.

Post-ISIS, will the country break into a federation of three distinct areas? The Kurds are hoping for that outcome. US policy has been to encourage a united Iraq. Iran favors that as well, but the situation on the ground is volatile. Let’s give Cairo Monitor the last word:

Perhaps the best hope is that Prime Minister Al-Abadi and his eventual successor will push for incremental measures toward securing Sunni communities and settling Shiite disputes with the Kurds.

Time for the Iraqi groups contesting for power to wake up and support something bigger than themselves. Violence over the past 14 years has taken the lives of some 268,000 Iraqis, including nearly 200,000 civilians, with perhaps, many more to come.

To help them wake up, here is Big Country with their 1983 tune “In a Big Country”. The song is anthemic, a rallying cry to get up off the floor and grab for the things you want. Here is a live video from 1983 recorded in London at the Hammersmith Odeon:

Those who read the Wrongologist in email can view the video here.

Takeaway Lyric:

Cry out for everything you ever might have wanted
I thought that pain and truth were things that really mattered
But you can’t stay here with every single hope you had shattered, see ya

 

I’m not expecting to grow flowers in a desert
But I can live and breathe
And see the sun in wintertime

In a big country dreams stay with you
Like a lover’s voice fires the mountainside
Stay alive

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