Iraq’s financial sector faces growing uncertainty after a new round of US sanctions targeted key Iraqi companies and individuals. Experts warn these measures could destabilize the economy, reduce investor confidence, and slow business activity across the country.
The US Department of the Treasury imposed sanctions on Al-Muhandis General Company, the economic arm of the Popular Mobilization Forces (PMF). In addition, several prominent Iraqi bankers and firms faced restrictions. Authorities accused these entities of facilitating financial transactions for Iran’s Islamic Revolutionary Guard Corps (IRGC) and its Iraqi ally, Kataib Hezbollah. Washington has issued similar sanctions over the past two years to limit the influence of armed groups in Iraq.
Mahmoud Dagher, former director at the Central Bank of Iraq (CBI), explained that the sanctions could alarm investors, even if the direct economic impact appears limited. He noted that including a state-linked company on the list undermines trust in the banking sector. “Without confidence in banks, the economy becomes unstable,” Dagher said. He also warned that further sanctions could intensify uncertainty and disrupt financial stability.
Analysts emphasize that these sanctions carry not only financial but also political and security implications. They argue that the US aims to pressure Iraq to control groups connected to Iran and increase transparency in financial operations.
Iraqi banks report cautious client behavior. Many companies delay investment projects, reduce foreign transactions, and scale back new contracts to avoid compliance risks.
Observers stress that prolonged sanctions may slow economic growth, reduce both domestic and foreign investment, and destabilize banking and commercial markets. The Iraqi government may need to negotiate with Washington or adopt new policies to reassure investors, maintain liquidity, and preserve confidence in the financial sector.