Iraq has halted selling dollars to top banks in the country’s autonomous Kurdish region, as part of Baghdad’s retaliation against the recent Kurdish independence referendum, Reuters reported.
Iraqi also banned international flights to Kurdistan’s airports on Friday.
“The condition for ending the dollar sale prohibition is to have the Kurdish banks under the central bank's control,” an unnamed Iraqi official was quoted by Reuters as saying.
However, according to a Kurdish official in Erbil, Kurdistan’s banks are already reporting to Iraq’s central bank in Baghdad.
Iraqi central government’s latest move is likely to squeeze foreign workers in Kurdistan, whose pay and remittances are usually given in dollars.
The new sanctions are expected to add further inconvenience for expats, who are already facing difficulties for taking longer routes and pay higher travel fares to find alternative routes to Iraqi Kurdistan.
The move came a day after Iraqi parliament voted to impose financial sanctions on the Kurdish leadership, while ensuring to “preserve the interests” of the region’s citizens.
Baghdad has rejected offers from the Kurds to discuss Kurdish independence, maintaining its non-recognition of the referendum and its result.
Iran and Turkey have also joined Iraq in imposing sanctions on Iraqi Kurdistan. The two countries also have significant Kurdish populations.