Iraq

Baghdad, Iraq – Sitting anxiously in his small office in Jameela market, one of Baghdad’s main wholesale markets, food trader Hamza al-Rudayni is waiting to see what the coming days will bring.

A decision by the Iraqi government to devalue the country’s currency, the dinar, against the US dollar has left traders like him facing sudden losses and uncertainty over the prices they should charge for their goods.

“I don’t know what to do,” al-Rudayni told Al Jazeera after the devaluation reduced the dollar value of his dinar holdings, leaving him with less money to purchase imported goods.

“All I know is I woke up a few days ago to discover that I had lost 25 million Iraqi dinars (roughly $16,500 at the new exchange rate) because of this decision, while larger merchants lost billions,” he said.

Al-Rudayni entered the wholesale trade market last year after losing his previous job at a private Iraqi bank that he says was sanctioned by the United States Treasury. He sold his car and used his savings to start trading with a larger merchant before recently launching his own business.

With exchange-rate fluctuations making prices unpredictable, al-Rudayni said he and many other traders have chosen to suspend buying and selling until the situation stabilises.

“Market activity has ground to a halt,” al-Rudayni said. “Traders buy goods in dollars but sell them in dinars, as regulations prohibit them from selling in dollars.”

That is the root of the problem for traders: A weaker dinar means they have to pay more in local currency for goods imported in dollars, while making it harder to determine the right price they should charge customers for goods they already have in stock.

Why devalue?

On October 7, the Iraqi government introduced a new official exchange rate against the US dollar, in an attempt to ease a financial crisis triggered by the US-Israeli war on Iran and the  disruption of oil exports through the Strait of Hormuz.

Before the war, Iraq exported around 3.5 million barrels of oil per day through the Strait of Hormuz, accounting for 90 percent of Iraq’s government revenue.

The Central Bank of Iraq decision set the rate at 1,520 dinars per US dollar for cash sales to the public. It was previously set at 1,320 dinars per dollar.

Devaluing the Iraqi dinar by almost 15 percent against the dollar allows the government to receive more local currency for every dollar of oil revenue it converts, helping it cover public spending, including government employee salaries.

“It is my decision and I am responsible for it,” Iraqi Prime Minister Ali al-Zaidi said during a meeting with parliamentary leaders on Thursday.

“I was facing three challenging options to cover salaries and other mandatory expenditures,” al-Zaidi added. “The first is to cut salaries by 35 percent … the second is to pay the salaries every 45 days … while the third is to resort to foreign loans.”

Al-Zaidi, a former banker, also said that his government had inherited public debt exceeding 208 trillion Iraqi dinars ($139bn at the new rate) when it took office in May. He said the government needed approximately 10 trillion dinars ($6.7bn) each month to cover salaries and other essential expenditure.

A shortage of liquidity

The crisis in the Strait of Hormuz had caused a severe financial squeeze for the Iraqi government.

Although the situation has eased somewhat in recent weeks after Iraq’s oil exports partially recovered, they have yet to return to their pre-war levels.

Mudher Mohammed Salih, the Iraqi prime minister’s financial adviser, said in August that the Central Bank of Iraq’s foreign currency reserves had declined from $106bn to approximately $80bn.

To make up for the loss of revenue, the Iraqi government has also turned to borrowing from domestic banks to cover salaries and other expenses.

A Finance Ministry official told Al Jazeera that ensuring salaries were paid on time remained the government’s main priority, describing this issue as a matter of domestic economic stability.

“Our hands are tied regarding the revenue and how to maintain enough money to ensure that we can pay the salaries,” the official, who asked to remain anonymous because he was not authorised to speak publicly, said.

Economists have warned that while adjusting the exchange rate could ease some immediate fiscal pressures, it would not address the deeper weaknesses in Iraq’s economy.

“Nothing in economics is sacred, including the exchange rate,” said Nabil al-Marsoumi, professor of economics at Al Maaqal University in Basra. “It can be adjusted, but only after all other options have been exhausted.”

“In any case, the exchange rate shouldn’t be used as a cover-up for failures in the state’s economic and fiscal policies,” he added.

WASHINGTON — Late September in the Oval Office, President Trump declared, “Iran will never have a nuclear weapon. We’re gonna win that war very soon.”

It wasn’t the first time he’s described the hostilities as “war.”

On Feb. 28, the day U.S. and Israeli began bombarding Iran, he warned that “the lives of courageous American heroes may be lost, and we may have casualties. That often happens in war, but we’re doing this not for now. We’re doing this for the future, and it is a noble mission.”

But throughout seven months of back-and-forth strikes with Iran, Trump administration officials, and sometimes Trump himself, have performed verbal acrobatics to avoid the “W” word.

President Trump, addressing the United Nations General Assembly on Sept. 22, used the word “war” one time when referring to hostilities with Iran.

(Pool / Getty Images)

Senior administration officials loosely tossed around “war” during the first stages of conflict, but with polls showing the war in unpopular and congressional support waning, “war” and even “Operation Epic Fury” have become taboo among members of the Trump administration.

Trump has called attacks on Iran a “military operation,” “military decimation,” “excursion” and “skirmish.”

At a White House press briefing last month, Vice President JD Vance attempted to clear the air when a reporter asked about a potential end to what she called a “war in Iran.”

“I wouldn’t call it a war right now,” Vance said. “Major combat operations lasted for about six weeks.”

Vice President JD Vance, addressing reporters at the White House on Sept. 3, said, “I wouldn’t call it a war right now” when asked about the conflict with Iran.

(Chip Somodevilla / Getty Images)

Defense Secretary Pete Hegseth tread carefully in front of the Senate Appropriations Committee in July, repeatedly referring to a “conflict” in Iran that needed additional funding to continue.

On May 5, during the first of two delicate ceasefires with Iran, Secretary of State Marco Rubio announced an end to the objectives laid out in Operation Epic Fury and the beginning of “Project Freedom” — an effort to escort merchant ships through the Strait of Hormuz.

In April, Trump announced the blockade of Iranian ports. When asked about whether the blockade constituted an act of war, Rubio replied, “That’s not an act of war, that’s a defensive measure. It’s a counter to what they have decided to do.”

Senior Trump officials have maintained that the conflict can no longer be viewed as war because the intensity of strikes between the two countries has been reduced.

The “end” of Operation Epic Fury, the name Trump used when he announced hostilities on Feb. 28, was declared on May 5 — 60 days after the fighting began.

The timing was no coincidence. Under the War Powers Resolution of 1973, a president must cease all hostilities abroad after 60 days if there is no congressional declaration of war.

Legal and political considerations

Under the Constitution, only Congress declares war, but past presidents have routinely circumvented this rule by exercising their authority to direct the military and initiate strikes on targeted nations.

Nearly every modern president, from Dwight D. Eisenhower to Trump, has used this justification to undertake military action without the declaratory approval of Congress.

Congress can also choose to approve an Authorization for Use of Military Force, which grants the president legal authority to conduct military operations overseas.

Unless Congress sets a time limit on the authorization, authority to use the legal justification to launch military strikes can theoretically span multiple administrations.

Rep. Jamie Raskin (D-Md.), a former constitutional law professor at American University, said that presidents of both parties have avoided the term “war” when attempting to evade congressional approval of hostile action abroad.

“Trump has followed some of his predecessors in playing word games with the war power,” Raskin said. “What makes his case so extreme is that he proudly described it as a war and depicted it in glorified military terms.”

In March, seven days into the fighting, Trump said, “The war itself is going unbelievably. It’s as good as it can be.”

Congress has not officially declared war since World War II. The Vietnam War, the invasion of Afghanistan and both wars in Iraq were all approved by Congress under the umbrella of an Authorization for the Use of Military Force.

This year Congress has not approved such an authorization for the action with Iran. Fourteen Senate votes for a War Powers Resolution to curb Trump’s war efforts have failed in the chamber so far.

According to a CNN/SSRS poll last month, only 26% of Americans approve of the Trump administration’s handling of the Iran war.

Raskin said that he believes Trump’s terminology has shifted with the public mood, adding that he hasn’t heard any of his Republican colleagues “play along with the semantic games.”

“When things have turned south in the fortunes of this war, he has tried to pretend it’s something else,” Raskin said. “I think that has just further enraged the population.”

Past handling of congressional war power

The administration’s declaration that Operation Epic Fury had concluded echoed May 2003, when then-President George W. Bush stood in front of a banner reading “Mission Accomplished” aboard the USS Abraham Lincoln, approximately six weeks after Operation Iraqi Freedom began.

“Major combat operations in Iraq have ended,” Bush said. “And now our coalition is engaged in securing and reconstructing that country.”

President George W. Bush speaks aboard the aircraft carrier USS Abraham Lincoln off the California coast on May 1, 2003.

(J. Scott Applewhite/AP)

Despite the victory lap, combat operations in Iraq and across the Middle East continued through the aughts. The Iraq war wouldn’t officially end until 2011, with President Obama’s signature.

Obama himself relied heavily on the 2001 Authorization for the Use of Military Force — passed by Congress under Bush — in his military campaign against Islamic State during his presidency.

According to Council on Foreign Relations data, Obama launched 542 drone strikes and killed 3,797 people in Yemen, Pakistan and Somalia without renewed approval from Congress.

A case more analogous to Trump’s comes in former President Truman’s unilateral decision to deploy U.S. troops to Korea in 1950. The Truman administration forwent congressional approval altogether and used United Nations Security Council resolutions to justify the intervention against Communist forces in the north, according to a White House news release from the time.

There were many critics of this exercise of executive war powers, most notably, Ohio Republican Sen. Robert A. Taft, who argued that Truman had usurped congressional war powers.

However, that Congress still provided monetary support, granting Truman military funds and extensions to the draft to raise additional troops for the Korean War effort. According to historical Gallup polls, 78% of Americans in 1950 approved of U.S. intervention in Korea.

Trump sticking with ‘war’

While Vance and other administration officials continue to avoid “war,” it does slip out now and then. Trump has been, perhaps, the most discordant messenger of the administration when discussing Iran.

After referring to the “war” on social media and public interviews more than a dozen times, Trump backed Vance’s comments about the Iran war no longer being active as he spoke to reporters in the Oval Office in September. He refuses to call the conflict a “war,” Trump said, because “you are supposed to get approval.”

“I call it a military conflict, because it’s small potatoes for us,” Trump said.

Mahan Air is excluded from the agreement as Baghdad says Washington granted its request for a waiver.

Iraq has agreed to let Iranian airlines, except Mahan Air, operate up to 40 flights a day to and from Najaf International Airport, saying the United States granted an exemption from its sanctions.

Prime Minister Ali al-Zaidi’s office announced the agreement on Friday, a day after Tehran urged Baghdad to lift restrictions that it said hurt pilgrims, patients, students and business.

The deal eases the links between the two Shia-majority neighbours since Washington sanctioned Iran’s aviation sector last month.

Al-Zaidi welcomed the “positive response shown by the US government to Iraq’s efforts and its cooperation in granting the necessary exemption”, the statement from his office said.

“Air travel does not merely represent transportation between two airports, but rather a bridge of communication between peoples,” it added.

Separately, Iraq’s Foreign Minister Fuad Hussein said the return of flights supports an Iraqi-US partnership premised on mutual respect.

Hussein also welcomed what he described as US understanding of the importance of respecting religious freedom and facilitating access for visitors to holy sites.

Flights suspended

The US Treasury announced sanctions on September 8 against 36 entities linked to Iran’s aviation sector.

Foreign ground-handling companies then refused to service Iranian aircraft for fear of falling foul of US sanctions, and flights stopped at four Iraqi airports.

Soon after, Iraq’s government held direct talks with Washington, seeking an exemption.

Iraq’s ambassador to Tehran, Yasser al-Hajjaj, told Iran’s IRNA news agency that Baghdad had not ordered the halt in flights. The suspension also led to demonstrations outside Najaf airport and in Nasiriya, Karbala and Amarah, according to Iran’s Press TV.

Najaf is the main destination for Iranian flights in Iraq. Flights to and from the city carry Iraqi Shia Muslim pilgrims to Iran’s holy cities or Iranians visiting sacred sites in Iraq.

Iran’s ambassador to Baghdad, Mohammad Kazem al-Sadegh, told the Iranian news agency ISNA that there were “roughly 25 daily flights from Iran to Najaf and about 15 flights to Baghdad” before the ban.

“Around 12,000 to 13,000 people travel between Iran and Iraq and vice versa on Iranian airlines, which is not a small number,” he added.

In a statement shared on Thursday, Iran’s Foreign Ministry said that Washington’s “illegal and inhumane” extraterritorial enforcement of sanctions was disrupting Iran’s trade and air transport.

Restrictions remain

Flights between Najaf and Iran restarted late on Monday, according to the Iraqi News Agency.

However, flights with Iran are still suspended at Baghdad, Erbil and Sulaimaniyah airports, forcing passengers into land journeys of at least 12 hours and disrupting pilgrim traffic.

Al Jazeera has not verified the exemption with representatives in Washington.

The last remaining US troops have left Iraq. The US military was first deployed to Iraq back in 2003 to depose its leader, Saddam Hussein.

It later faced a series of crises that ensued after the ousting of Hussein. Iraq became embroiled in a cycle of violence that considerably weakened the country.

While the US may have prevented the collapse of the state, it’s also accused of contributing to the subsequent chaos that engulfed it.

The Iraqi government will now be dealing with a new reality.

Is it up to the job? And who stands to gain from the US finally leaving Iraq?

Presenter: Dareen Abughaida

Guests:

Ahmed Rushdi – President of the House of Iraqi Expertise Foundation.

Kenneth Katzman – Senior fellow at The Soufan Center specialising in Middle East geopolitics and US foreign policy.

Abdullah Alshayji – Professor of political science at Kuwait University specialising in US politics and Gulf security.

Baghdad, Najaf, Erbil, and Sulaimaniyah airports suspend flights as US ramps up pressure on Iran’s aviation sector.

Four Iraqi airports have suspended all flights to and from Iran days after the United States announced new aviation sanctions on any global companies doing business with Iranian airlines.

It is the latest ramping up of sanctions since the US launched Operation Economic Outcast in August in an effort to isolate Iran from the global economy.

Iraqi state media said flights will no longer be operating from Baghdad, Najaf, Erbil and Sulaimaniyah airports.

Iraq was one of the top destinations for Iranian airlines, especially after Iraqi airlines stopped flying to Iran at the start of the US-Israel war on Iran in February.

Passengers travelling between Iran and Iraq will now be forced to make a land journey of at least 12 hours, depending on the destination.

Najaf airport

Iraq’s state news agency reported the suspension at Najaf international airport earlier on Friday.

Airport director Hussein Muhanna told the AFP news agency that “all flights were halted between Iran and Najaf airport following a directive from the prime minister’s office to the governor” of Najaf.

Iraq and neighbouring Iran are both Shia-majority countries, and flights to and from Najaf carry Iraqi Shia Muslim pilgrims to Iran’s holy cities or Iranians visiting sacred sites in Iraq.

In a post on X, the Iranian Consulate in Najaf responded to the suspension of flights to and from Iran, saying “Najaf international airport, the shrine of the first Imam of the Shia, and the capital of their last Imam, is closed to the largest Shia country in the world?!”

An Iraqi employee of an Iranian airline at Najaf airport told AFP Iranian carriers usually operate at least 20 daily flights, but after the suspension, only four flights to other destinations remained scheduled on Friday.

Several other regional countries, including the United Arab Emirates and Qatar, have either cancelled or restricted flights to Iran to enforce US aviation sanctions.

That is despite the secretary of Iran’s Supreme National Security Council warning neighbouring nations against imposing a US flight ban.

Iranian airlines are now relying on a few reduced routes, including Turkiye, Russia, China and Armenia, to remain operational.

“We cannot say that Iran is totally cut off from air traffic, but shrunk considerably,” said Al Jazeera’s Sinem Koseoglu, reporting from Tehran.

Reporting from Baghdad, Al Jazeera’s Jack Hewson said Iraq’s central government has made no statement about the flight suspensions, likely because it “doesn’t want to antagonise” pro-Iranian factions in Iraq’s parliament.

Explaining the country’s decision to comply with the US move, Hewson said: “Companies providing ground services, like refuelling, baggage, it appears, are not willing to risk secondary sanctions and being frozen out of the international US dollar system.”

“Iraq’s in a very difficult position,” Hewson added. “It’s tied to the US, but it’s also tied to Iran. And at times like these, it’s squeezed between the two.”

Iraqi Prime Minister al-Zaidi and Turkish President Erdogan pledged deeper security cooperation at UNGA.

Turkiye and Iraq have agreed to a gradual transfer of Ankara’s military base in Bashiqa to Baghdad, according to a statement released by the Iraqi prime minister’s office.

The announcement followed a meeting on Wednesday between Iraqi Prime Minister Ali al-Zaidi and Turkiye’s President Recep Tayyip Erdogan on the sidelines of the United Nations General Assembly in New York.

“Within this framework, they reached an agreement on fully establishing state authority in Sinjar and ending the presence of outlawed foreign armed elements,” Iraq’s prime minister’s office announced, in an apparent reference to the Kurdistan Workers’ Party (PKK), which has maintained a presence in the mountainous Sinjar region of northern Iraq.

“The two sides also agreed to expand the volume of bilateral trade and investment, to implement signed agreements immediately, and to accelerate joint strategic projects, particularly the Development Road project,” the office added.

The decision to transfer the facility addresses a longstanding flashpoint between the two neighbours.

Turkiye first established the base in Bashiqa, northeast of Mosul, in December 2015 through an agreement with the autonomous Kurdistan Regional Government to train local forces fighting the ISIL (ISIS) group.

The deployment of up to 600 Turkish soldiers drew criticism from Baghdad, which viewed the presence as a violation of Iraqi sovereignty.

The Sinjar region has long been a focal point for Turkish military operations targeting fighters from the PKK.

Cross-border operations in Sinjar had eased following a landmark peace process between Ankara and the PKK in 2025, paving the way for federal authorities to assert control over the border zone.

Wednesday’s accord caps months of efforts by Baghdad to consolidate state authority over northern flashpoints, while aligning with Ankara on trade corridors and security coordination along their shared frontier.

Iran’s aviation officials negotiate with Oman and Iraq as Secretary Bessent targets carriers seven months into the conflict.

Flights from Iran to Baghdad and Muscat will be cancelled starting at midnight ahead of new United States sanctions taking effect Wednesday, Tasnim News Agency reported.

A spokesman for Iran’s Civil Aviation Organization told the news agency on Tuesday that the agency is “negotiating so that flights whose destination is Baghdad can be redirected to [Iraq’s] Najaf Airport”.

Iran’s ISNA news agency reported that negotiations with Oman were likewise ongoing, adding that all remaining international flights, including those to Istanbul, will operate as scheduled.

US Treasury Secretary Scott Bessent said on Monday that all Iranian airlines would be shut down on September 23 through the threat of secondary sanctions on aviation service providers, seven months into the war between the US and Iran.

Bessent told CNBC that when Iranian carriers land at an airport, “you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system”.

The move marks the latest step in Washington’s expanding sanctions campaign against Tehran. Aviation analysts told Al Jazeera that although the US lacks authority to close foreign airspace, targeting local refuelling and ground-handling providers achieves a similar outcome by cutting off essential operational support.

Earlier this month, the US issued stricter measures administered by the Treasury Department’s Office of Foreign Assets Control (OFAC), placing restrictions on trade, energy and financial institutions.

The administration of President Donald Trump also expanded secondary sanctions in late August, warning that foreign firms doing business with Iran across shipping, technology, gold and digital assets face penalties of their own.

Tehran, however, signalled on Saturday that it remains open to talks mediated by Qatar to reach a long-term resolution, while maintaining a combative stance towards Washington.

“It is in Washington’s interest to accept these conditions,” Mohsen Rezaei, Iran’s security chief, told Al Jazeera in an interview last week. “Trump’s threats will not achieve any results. We are prepared for a decisive war.”

The war in Yemen intensifies with mounting clashes and reciprocal attacks between Saudi forces and the Houthis.

Yemen’s Houthi rebels have said Saudi Arabia carried out 26 strikes against areas under the group’s control in the past 24 hours, as the two sides continue trading attacks amid an escalating war in Yemen, according to the AFP news agency.

On Friday, the group claimed Saudi strikes on Houthi-held territory had reached 300 over the past week alone, hitting positions across the areas it controls, AFP reported.

Yemen’s government, backed by Saudi Arabia, said on Friday its forces had killed 30 Houthi rebels and wounded more than 60 in clashes in the al-Wazi’iyah district of Taiz province, one of several fronts where combat has picked up this week.

The exchange has come on the heels of a widening escalation of fighting in Yemen between the government’s military and the Houthi fighters.

Tens of thousands marched through Sanaa on Friday in a show of support for the Iran-backed Houthis and against Saudi Arabia, as the rebels press gains that have brought large stretches of Yemen’s Red Sea coast, including the strategic Bab al-Mandeb Strait, under their control.

Earlier this week, the intensifying attacks between the Yemeni government and the Houthi rebels killed at least five people, including three children, according to reports from both sides.

Saudi Arabia said one person was killed in the Taif governorate after a Houthi drone was intercepted, while Houthi-linked media reported deaths from Saudi strikes in Taiz and the town of Abs.

The escalation has drawn in Washington, though reluctantly.

US officials met Houthi representatives at the US embassy in the Omani capital, Muscat, over the weekend after the group’s rapid territorial gains raised concern over shipping through Bab al-Mandeb, a vital corridor for global trade.

The Houthis reportedly assured Washington that vessels not linked to Saudi Arabia would not be targeted.

Despite appeals from Riyadh for US President Donald Trump to strike the Houthis directly, Washington has so far held back, wary of opening a new front while still fighting a costly war with Iran.

Meanwhile, European Union foreign policy chief Kaja Kallas said on Friday the bloc’s Red Sea naval mission, Operation Aspides, had raised its alert level as the situation in the region worsened, the Reuters news agency reported.

“Houthi attacks on Saudi Arabia are unacceptable and sabotage the global economy,” Kallas said in a post on X.

She added that she had spoken with Saudi Foreign Minister Prince Faisal bin Farhan Al Saud about diplomatic efforts to end the fighting in Yemen and restore freedom of navigation in the Strait of Hormuz.