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Iraq's Central Bank is helping Iran to evade US sanctions and fund the Quds Force

Iraqi Central Bank [Wikipedia]
Iraqi Central Bank, 9 August 2017 [Wikipedia]

Saudi Arabia's Al-Arabiya news agency reported in February that Iraq — more specifically the Iraqi Central Bank — has played a major part in helping Iran to get around US sanctions, thus providing it with the means to continue funding the Quds Force, which is labelled as a terrorist group by Washington. The Quds Force is part of Iran's Islamic Revolutionary Guard Corps and carries out its missions beyond Iran's borders.

One of the most notable members of the Quds Force was General Qasem Soleimani, who was killed by a US air strike ordered by former President Donald Trump. News of Soleimani's killing reverberated around the world; Iran condemned the attack and the US and its allies hailed it as a step towards reducing and even eliminating Iran's negative regional influence.

However, it's clear that merely cutting off what many may have perceived to be the head of the snake did little to deter Iran's ambitions in Iraq and beyond. According to Al-Arabiya, shortly after Soleimani's death, Iraq became concerned about ongoing sanctions that the US had placed on Iran.

As Iran enters new nuclear agreement talks with the US under President Joe Biden, such claims come into clearer focus. Two years ago, Al-Arabiya revealed that the Central Bank was putting pressure on private banks within Iraq to open credit accounts in order for Iran to export oil, gas and other commodities to Iraq. Many of the owners of these smaller banks were of Iranian descent.

The entire process is a complicated mix of deceit and skirting around sanctions, but it has allowed Iran to continue providing funding for the Quds Force as well as other interests it has within Iraq and beyond. Once the local middlemen — the private banks — convert Iraqi dinars to dollars, the funds can be transferred outside the country using other banks and exchange offices.

READ: US denies deal to unfreeze $7bn in Iranian funds for prisoner release

By continuing to be able to receive funding, it has become clear that the Quds Force has neither been dismantled nor even severely hampered in its ongoing efforts to create instability within the Middle East and Iraq.

It is noteworthy that Iran's Ambassador to Iraq since 2017 has been Iraj Masjedi, a former Revolutionary Guard commander. While there may have been some hope that a change at this level would benefit the Iraqi people, especially in light of President's Trump's determination to eliminate Soleimani, little has changed during the past two years since his assassination.

Iran now appears to be showing its resolve to continue pressing its interests across the region by naming Masjedi's replacement as Mohammad Kazem Al-Sadeq. He has been an advisor to the outgoing ambassador and is also a former commander in the Revolutionary Guard Corps.

Although Al-Sadeq was born in Iraq and his dialect is natural and native to the region, it is believed that he was very close to Soleimani and remains on the US terror list. He has been under sanctions since October, when the US government labelled the Revolutionary Guards as a foreign terrorist entity because, it alleged, it was responsible for the deaths of more than 600 American military personnel.

Al-Sadeq's appointment is coming at a time when negotiations between the US and Iran may well be tense. They are taking place in Vienna, and Iraq has long been considered a bargaining chip for both governments. Saudi Arabia and Iran are also talking, in Baghdad.

Since 2003, Iran has been known to appoint ambassadors in Iraq who have military experience and connections, rather than political links. This has clearly been a strategic move, since Iran's diplomatic interests, especially relating to Iraq, have been minimal. Their constant focus has been to create disruption and chaos in order to carry out Tehran's own agenda, even if it means that Iraqis suffer.

The Iraqi file, therefore, will remain firmly in the grip of the Quds Force, as other staff members at the Iranian Embassy in Iraq are also affiliated with it. In fact, according to political analyst Qusay Mahbouba of Al-Monitor, this will be the case for at least the next five years. "There are intersections between Iran's Ministry of Intelligence and the IRGC over areas of influence in Iraq," he pointed out.

When we see the manner in which Iraq's Central Bank has manipulated the banking systems to fund Iran's Quds Force, and with the determination to appoint men closely affiliated with this particular military unit, it becomes evident that Iran will continue to press its agenda onto Iraq, Syria and beyond. Depending on how the talks between Iran and the US and Saudi Arabia go, it's clear that Tehran will continue to move ahead in this vein regardless of the cost because, when all is said and done, it will continue to find ways around the obstacles that others place in its path.

READ: Iran Guards commander says death of all US leaders would not avenge Soleimani killing

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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