Jordanian expert: Iraqi banking sector faces opportunities and challenges ahead

BAGHDAD — Jordanian banking expert Maher Sha’sha’a expressed optimism about the prospects for Iraq’s banking sector with Donald Trump’s potential return to the Oval Office. Sha’sha’a stated that Iraqi banks have “learned their lesson the hard way” and criticized the U.S. Federal Reserve’s policy of ‘collective punishment’ against Iraqi banks.

However, he clarified that these measures were “not explicit sanctions against Iraq but rather reservations that are being addressed.”

Sha’sha’a also predicted that “no Iraqi party will pursue policies opposing the United States, given Iraq’s experience with Trump.” He emphasized the need for Iraqi banks to take advantage of the United States’ multi-trillion-dollar economy by creating a “business-friendly environment” to attract investments that could reach $200 billion.

Excerpts from Sha’sha’a’s interview with HD 24 Iraq TV:

Given Iraq’s experience with Trump, I don’t believe any party in Iraq will pursue policies opposing those of the United States in the coming period, especially as the newly elected U.S. president will be more familiar with the Iraqi situation compared to his first term.

Iraqi banks learned their lesson the hard way after meeting all the requirements of the U.S. Federal Reserve, even though the latter acted unfairly toward some Iraqi banks and employed collective punishment.

The situation might improve for the Iraqi banking sector, and the issues facing Iraqi banks could even be resolved before Trump takes office. The banks were not subjected to explicit sanctions but rather reservations that are being gradually addressed.

Trump’s previous policies toward Iraq must be understood. During his first term, he did not impose sanctions on Iraq’s banking sector but threatened to restrict Iraq’s access to its own funds. This is a serious matter, as the U.S. president tends to target the inputs of Iraq’s economy, not just its outputs.

The U.S. economy is worth tens of trillions of dollars, and it could easily make investments in Iraq exceeding $100 or $200 billion. However, this requires creating a business-friendly environment for American companies in Iraq.

Iraq will not be able to break free from U.S. financial dominance unless it can sell its oil outside the U.S.-aligned system.

There is ambiguity about the identity and orientation of Iraq’s economy—whether it is capitalist or directed socialism. State-owned banks dominate the banking sector, while private banks have largely benefited from currency exchange margins without offering any other banking services. This contrasts with places like Dubai, which does not rely on an oil-based economy but, due to the efficiency of its banking sector, sustains an economy worth hundreds of billions. Iraq should follow this example.