Iraq is considering the creation of a free trade zone in which imported goods will be sold in the local currency, the Iraqi dinar.
This one initiative aims to benefit consumers with competitive prices and increase the value of the dinar in the foreign exchange market. The move is in line with the BRICS strategy to reduce dependence on the US dollar, intending to enable Iraqi consumers to offer imported goods at lower prices when purchased in dinars.
The government is seeking to streamline import procedures while mandating the use of dinars for transactions, reducing the dollar’s role in the sale of imported products. The proposed free trade zone will serve as a hub for various imported goods and materials, facilitating bulk sales to the private sector in local currency. This strategic shift aims to strengthen Iraq’s domestic economy and reduce dollar transactions within the zone.
Iraq is actively challenging the dominance of the US dollar. It recently banned cash withdrawals in US dollars, effective January 1, 2024.
In addition, Iraq has formally applied to join BRICS, signaling its interest in diversifying away from the US dollar. This is in line with Iraq’s broader strategy to minimize dependence on the dollar and encourage the use of the local currency, the dinar, in all transactions. Notably, the potential implications for various sectors in the US if BRICS were to reduce their use of the dollar are discussed.