The United States has started flying pallets of cash back into Baghdad. After more than two months of blocking physical dollar shipments to Iraq, Washington has reversed course, ending a standoff that had quietly rattled Iraq’s domestic economy and its currency markets.
The first batches of US banknotes arrived in Baghdad in early May 2026, according to Mazhar Mohammed Saleh, the economic advisor to Iraqi Prime Minister Mohammed Shia al-Sudani. The resumption followed what officials described as improved regional airspace conditions and stabilized security.
What happened and why it matters
Here’s some context that makes this story stranger than it sounds: Iraq sells oil, earns dollars, and those dollars sit in an account at the Federal Reserve Bank of New York. When Iraq needs physical cash for its domestic economy, the US arranges air shipments of banknotes from that account back to Baghdad. It’s Iraq’s own money, but it moves through American infrastructure.
In April 2026, the Trump administration blocked a cargo plane from delivering nearly $500 million in banknotes to Iraq. The reason was tied to concerns about Iranian-backed militias and their proximity to Iraqi government operations.
