The New York Fed’s Financial Stranglehold on Iraq

Ann Garrison, BAR Contributing Editor

22 Jan 2020

The US is threatening to seize Iraq’s oil revenues if Baghdad expels American troops.

“If they want to cut you off from the global economy, they can do so at the flick of a switch.”

After the US assassination of Iranian general Qaseem Soleimani on Iraqi soil, the Iraqi government demanded that the US remove all its troops. Great idea, long overdue. Black Agenda Report readers no doubt agree, and many of us will no doubt join the national and international day of antiwar marches coming up on Saturday, January 25. Up rising Today reports that tens of thousands of Iraqis took to the streets in Baghdad and other cities in the south and center of the country on January 18 to demand the US troops leave. They also demanded a new government.

However, more than US military might stands in the way of any Iraqi government attempt to expel the US. It’s a righteous but unrealistic demand given the New York Federal Reserve’s financial stranglehold on Iraq. As Peter Koenig writes in Global Research, “The stakes are too immense for the US. It has all to do with their move towards world hegemony by territory and by finance – meaning by the US dollar.”

On RT’s January 18 Keiser Report, “Not your settlements layer, not your money,” Robert Keiser and his cohost Stacy Herbert, explained how the hegemony of the US dollar works:

Stacey Herbert: US officials warned Iraq that it risks losing access to its account at the New York Federal Reserve, where international oil sale revenue is kept, if it moves to expel US troops. So Iraq is theoretically an independent sovereign nation and they should be able to invite other militaries in to help them fight somebody or whatever and they should be able to expel foreign military troops if they wish them not to be there, [in accord with the UN Charter]. But the US is saying, “Should you choose to expel our military base, we will seize your assets at the New York Fed.”

Max Keiser: Yeah, I mean this is what is fascinating and people are starting to see how the world really works and how this American empire works and how the empire of debt, as some have called it, works. It [oil and other commodity sales] all clear through the New York Fed, so these countries in the Middle East can throw a hissy fit and throw themselves onto the ground and cry and scream and they can do all kinds of stuff, but it doesn't really matter because everything goes through the New York Fed. And remember that the 2008 crisis was resolved through the New York Fed when Timothy Geithner was in charge. And every time there's an economic crisis anywhere in the world, pretty much it's all resolved through the New York Fed. If they want to cut you off from the global economy, they can do so at the flick of a switch because since the 1940s, commodities sales have been settled in dollars.

Ever since the 1970s and the emergence of the petrodollar, everything, all oil, all energy is settled in US dollars. All commodities are priced in dollars and settled in dollars and that all happens at the New York Fed and everyone around New York gets a lot of money because they are in proximity to the New York Fed and that's the way the world works.

Stacey Herbert: Back in May—remember Representative Brad Sherman of California? He said that we must stop Bitcoin now because what they're trying to do is replace the New York Fed. He was forecasting that Bitcoin would undermine US control of the settlements layer by undermining the US dollar as a settlements layer.

When people say, “Oh, you know, oil is priced in Euros and that's a threat to the dollar, they’re wrong. That's not the threat. The threat is the settlements layer. So all trade for oil has to settle [in dollars] through the New York Fed, which is basically able to say, “You can't exist, you have no sovereign rights unless you cut the New York Fed in as the middleman that approves everything.”

Max Keiser: Iraq has three billion in cash parked at the New York Fed now. So if Trump tells the Iraqi president, “You owe us $30 billion for our military base, he means he's going to cut them off, seize that three billion dollars and then slap Iraq with an invoice for 30 billion [if they kick our troops out. [To be paid, presumably, by seizure of more Iraqi oil revenue cleared in dollars through the New York Fed.]

It’s as if he’s developing a casino in Atlantic City and he gets all the contractors to build it and then says, “I'm not going to pay you.” And then he gets Roy Cohn, his legal advisor at the time, to hire a leg breaker like Ray Donovan to go straighten things out. [All of which Trump did.] That's the way the world works at the moment.

“Everything goes through the New York Fed.”

It’s grim, as are all the US military bases surrounding Iran. Are we as helpless as these Middle East nations who, as Keiser says, “canthrow a hissy fit and throw themselves onto the ground and cry and scream” that they want the US out but to no avail? Is the New York Fed the financial version of General Alexander Haig’s “Let them march all they want as long as they continue to pay their taxes”? Didn’t 36 million of us march against the Iraq War, in 3000 protests around the world, without stopping it? So why should we be any better able to stop a larger regional conflagration that could draw in Iranian allies Russia and China?

It’s conceivable that a critical mass of people in the streets might finally stop a war, but 36 million of us weren’t enough in 2003, and we’ve not seen anything like that since. F ragging, with the support of global protest, did finally end the US War in Vietnam, but drone warfare leaves few commanders in the field to be taken out by foot soldiers who don’t want to keep fighting a pointless war. Afghani troops trained to fight the US War in Afghanistan have shot US commanders, but not enough to end the war.

Most BAR readers can probably imagine a world without 800 US bases and eleven command centers spanning the globe. It’s still conceivable, however improbable.

But what would the world look like without the tyranny of the US dollar, and what could bring that world into being? Russia and China are no doubt asking the same question as a new multipolar world emerges.

Ann Garrison is an independent journalist based in the San Francisco Bay Area. In 2014, she received the Victoire Ingabire Umuhoza Democracy and Peace Prize for her reporting on conflict in the African Great Lakes region. She can be reached at [email protected].

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