Iraq’s oil revenues are closely linked to a financial system based in the United States, giving Washington significant influence over how the country’s oil income in dollars is managed.

The arrangement dates back to the aftermath of the 2003 Iraq invasion, when the Development Fund for Iraq was established to receive oil revenues and support reconstruction and development. The fund was held through the Federal Reserve Bank of New York. It later evolved into accounts belonging to the Central Bank of Iraq that remain at the New York Federal Reserve.

The system does not mean that the United States owns Iraq’s oil revenues. The funds belong to Iraq, while the financial structure provides a channel through which Iraqi oil income is held and accessed. Iraqi officials have also cited the arrangement as a way to protect the country’s revenues from legal claims and financial risks.

However, because Iraq depends heavily on oil income, control over access to dollar based financial channels gives the United States considerable economic leverage. Oil accounts for around 90 percent of Iraq’s state budget, making uninterrupted access to its oil revenues particularly important for government finances.

The arrangement has remained in place for more than two decades, even as the broader US military presence in Iraq has changed. Its continued existence means that the financial relationship between Washington and Baghdad remains significant for Iraq’s economy and access to international dollar markets.