Heavy US sanctions imposed on Iran have done significant harm to the Iranian currency, the rial, in recent weeks, and has aimed to cut the Iranians off from international trade. Among the hardest hit are a lot of middle class Iraqis.
Iraq loses a valuable trading partner, sure, as the government has already conceded they’ll comply with US demands. But for many Iraqis, the sanctions are also destroying their investments in the Iranian private sector.
This reflects close economic ties between Iran and middle class Shi’ite Iraqis in the country’s east. But it is also an accident of recent history that Iraqis are invested so heavily in Iran. The massive ISIS gains in 2015 in Iraq had a lot of Iraqis looking to send assets abroad for protection, and this was around the same time the P5+1 nuclear deal was opening up Iran to international business.
Seeing a growth opportunity, many Iraqis smuggling their life savings across the border into Iran to invest. Iran’s economic woes now that the US has dishonored the P5+1 deal, and the collapsing currency, means many have suffered huge losses.
This could have an even bigger impact on Iraq than the lost trade, as a substantial number of Iraqis have lost a lot of their savings, and will no longer have that money to invest in the post-ISIS reconstruction domestically.