Iraq Shows How U.S. Could Pressure Iran's Trade Partners
Washington's Iraq playbook may be the template for squeezing countries that keep doing business with Tehran.
If you want to understand how the U.S. plans to choke off Iran's economic lifelines, look at what's already happening in Iraq. Washington has used financial pressure, sanctions threats, and dollar-system leverage to push Baghdad toward cutting ties with Tehran — and that same strategy could be deployed against any country still trading with Iran.
Iraq is a uniquely complicated case. It shares a long border with Iran, relies on Iranian natural gas to keep its lights on, and has deep political ties to Tehran-aligned factions. Yet the U.S. has repeatedly used Iraq's dependence on the dollar-clearing system as a choke point, restricting Baghdad's access to its own oil revenues held in New York whenever it moves too close to Iran.
Read more New US Sanctions on Iran: What Traders Need to Know →
That's the leverage play. Any country that settles trade in U.S. dollars — which is most of them — is ultimately vulnerable to the same pressure. Cut off their dollar access, threaten secondary sanctions on their banks, and suddenly doing business with Iran looks a lot more expensive. It's not subtle, but the Iraq case suggests it works, at least partially.
For traders, this matters right now. Renewed U.S. maximum-pressure campaigning against Iran ripples into oil markets, regional risk premiums, and the currencies of countries caught in the middle. Watch which governments start quietly distancing themselves from Iranian trade deals — that's your signal the squeeze is working.
The Iraq model isn't perfect, and blowback is real — countries may accelerate de-dollarization efforts in response. But as a near-term policy weapon, the U.S. has already proven it's willing to use it. Continue reading at Reuters.
