When President Barack Obama announced last month that he was barring a Baghdad bank from any dealings with the US banking system, it was a rare acknowledgment of a delicate problem facing the administration in a country that US troops just left: For months, Iraq has been helping Iran skirt the economic sanctions imposed on Tehran because of its nuclear program.The little-known bank singled out by the United States, the Elaf Islamic Bank, is only part of a network of financial institutions and oil-smuggling operations that, according to current and former US and Iraqi government officials and experts on the Iraqi banking sector, has provided Iran with a crucial flow of dollars at a time when sanctions are squeezing its economy.
The Obama administration is not eager for a showdown with the government of PM Nouri al-Maliki over Iran just eight months after the last US troops withdrew from Baghdad.
Still, the administration has held private talks with Iraqi officials to complain about specific instances of financial and logistical ties between the countries, officials say. In one recent instance, when US officials learned that the Iraqi government was aiding the Iranians by allowing them to use Iraqi airspace to ferry supplies to Syria, Obama called al-Maliki to complain. The Iranian planes flew another route.
In response to questions from The New York Times, David S. Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, provided a written statement saying Iran "may seek to escape the force of our financial sanctions through Iraqi financial institutions." But he added that efforts are on to prevent Iran from evading US or international financial sanctions, in Iraq or anywhere else. NYT