In this solo commentary, David Oualaalou explains the Iraqi Central Bank’s recent decision to allow Chinese‑origin trade to be settled in the Chinese yuan rather than the U.S. dollar. He outlines the financial mechanics—building yuan reserves, converting existing dollar holdings, and navigating SWIFT restrictions—and situates the move within a broader geopolitical shift away from dollar dominance, citing Iran‑Russia currency swaps, sanctions‑driven de‑dollarisation, and Iraq’s heavy reliance on oil revenues. Oualaalou argues that the policy reflects Iraq’s attempt to hedge against U.S. financial pressure and align with a growing coalition of countries seeking alternative payment systems, while also hinting at possible U.S. military responses. The video concludes that the world is polarising into pro‑dollar and anti‑dollar camps, and Iraq is positioning itself on the latter side.
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Hello everybody and welcome to Geopolitical Trends. My name is David Oualaalou. So good to be with you as always. Just imagine this for a second: the United States is sending its troops back to Iraq, and the immediate question becomes, why? So the answer might shock you. Here is why: the United States and the West Did not see this coming. Iraq dumps the US dollar and start trading in the Chinese yuan. In this video, I am going to provide you insights about this topic given the ongoing changes on the global economic and geopolitical landscape. But before I'll do all this, I'd like to extend my thanks as always to the channel supporters and members And for you, if this is your first time landing on this channel, please make sure to subscribe and smash that notification button so you will be notified every time I upload a new video. And to all of you, I say thank you so much. Let's dive in into this. So the Iraqi Central Bank just announced recently that for the first time, it plans to allow trade from China to be settled directly in the Chinese currency yuan instead of the US dollar. Yeah, whoever thought this, right? No. And the reason for that is they said, according to their statements, is that to improve access to foreign currency. You all see what's coming. Like, I'm not surprised. You know, most countries are moving into that direction. So the Iraqi government economic advisor, his name is Mathir Saleh. Said, and I quote— let me get the quote here, you know— he said, and I quote, it is the first time imports will be financed from China in yuan, as Iraqi imports from China have been financed in US dollar only, end of quote. Well, looking at this, if you take a step back, there are two angles to this, and I'm going to provide you my insights You know, the two angles are one is financial and the other one is geopolitical, just because of this decision. But I'm gonna focus in this video on just the financial aspects of it. So, so here's the thing. According to the statements released by the Iraqi Central Bank, carrying out these transactions in the Chinese currency will boost the balances of the Iraqi banks with accounts that are tied to Chinese banks. However, I do see a challenge on this. This option depends on the size of the Iraqi Central Bank's yuan reserves. So basically, they have to build the reserves to ensure that all the bilateral transactions will be conducted in the Chinese currency. So my take on this is as follows, the way I see it, and again, this is my personal perspective and just thinking of the big picture. Iraq wants to move forward with the establishment of this bilateral trade with Chinese, the reason with the Chinese in their Chinese currency, because the global economy is shifting away from the US dollar. You know, that's one. Second aspect to this is that Iraq sees also what its neighbor Iran just did with Russia. What am I referring to here? I'm referring to when Russia and Iran have begun to take small but potentially significant steps towards sort of moving or removing the US dollar from their bilateral trade with the launch of a settlement system using their own currencies. Yeah, this is what Iran— Iraq is watching its neighbor Iran is doing with Russia. So you think about it in the case of Iran and Russia. So Iran currency exchange has listed the ruble and rial— ruble, the currency for Russia, rial, the currency for Iran— trading pair As a matter of fact, this started back the conversation in July '22, and this came following the visit by none other than Ali Saleh Abadi. He is the Iranian Central Bank governor who went to Moscow and set this in motion. Yeah, that is the reason why Iraq made the quick decision within just few days. They're going to dump the US dollar and embark on using the Chinese— pardon me— the Chinese yuan currency. So if you like this video so far, please make sure to hit the like button and don't forget to subscribe if you have not done so. And thank you for your support. So here's the thing for Iraq's second option is to boost its local banks, not with the Iraqi currency, but rather yuan. Because they want to increase the reserves, and this will involve converting US dollars held in central bank accounts, for example, with JP Morgan and the Development Bank of Singapore. All the reserves held there in the US dollar, the Iraqi central government wants it to be converted to the yuan before paying for the financial, financial beneficiary in China. In the bilateral trade. And now you see why I said, will the United States be sending troops back to Iraq? So, uh, here's the— it's not a laughing matter, but I just— I can just see how Washington would be thinking. So the Iraqi Central Bank has been on a mad dash to compensate for a dollar shortage. Yes, it was a shortage in a local market, and this crisis basically prompted the cabinet to approve currency reevaluation earlier this month. This just happened. That's how fascinating it is. And this is why I like to come on the air right away and share this with you, because you are not going to hear this anywhere else. So like I said last time, my objective is to get the content to you. I care less for other, you know, whether the production is done right and all that. No, no, no, no. I want you to get the information ASAP so you can think and see what lies ahead. So here's the thing. Last year, the United States Treasury Secretary and the Federal Reserve Bank of New York, they began enforcing a harsher control on international transactions by the Iraqi commercial banks, you know, forcing them to comply with specific SWIFT global transfer system criteria to access their foreign reserves. Now you see why Iraq made the decision and dumped the dollar altogether. And this also comes on the heels of another issue. Well, since the war in Ukraine started, you know, several nations around in the Global South mainly have begun to move away from the US dollar in their bilateral trade with China. So many others have chosen to boost their Chinese yuan reserves at a time when the hegemony of the United States continues to weaken. Yeah, it's, it's a fact, it's reality. We all see it on the ground. So, so, but to keep this within the context of what's going on in Iraq, you need to remember one thing. Iraq is one of the top oil producers also and a member of the OPEC organization, of course. So oil or energy plays a major role because for Iraq, oil production accounts for some 90% of Baghdad— of Iraq's income, basically. And the country is the second largest producer within the Organization of the Petroleum Exporting Countries, known as OPEC. Yeah, it's no small matter. So you can just see where things are headed. So the Iraqi oil minister, his name is Hayyan Abdel Ghani, said in a statement, and I quote, the total, the total reserve from the exports of crude oil for the year of 2022 amounts to more than $115 billion, end of quote. So you can just see the problem for the US dollar once the transaction in energy will be conducted in some other currency beside the US dollar. Once again, this is why I started with that scenario at the beginning. Just imagine the US sending troops back to Iraq, because I do see the possibility of that. So here's the thing. My brief analysis for you: Iraq is seeing where the world is headed and does not want to be left behind. Look no further at countries that are moving away from the US dollar: China, India, Turkey, Iran, Russia, Saudi Arabia, and now Iraq. It's very interesting, isn't it? So here's my conclusion for you, because I always like to keep this concise. Short to the point, the past year 2022 was full of events that inevitably split the world or the global geopolitical space into two camps mainly. You know, those who still support the, uh, the US currency or the US dollar as universal, as universal financial tool, and those who are turning their back on the US dollar. Yeah, that's basically what it is as of today. That's why Iraq did this. So the global tension caused by the economic sanctions and trade conflicts triggered by Washington, you know, have forced now targeted countries to take a fresh look at alternatives alternative payment systems currently dominated by the US dollar. And Iraq is saying to itself, we better get on, on this train before it's too late. I hope you find this informative, and as always, remember, geopolitics impact your daily life in more ways than one. Till next time, guys, bye-bye.
