While Western nations pressure Iran with sanctions, Iraq is helping its neighbor by smuggling oil and letting Iran secretly move cash through daily bank auctions, the New York Times reports. President Obama has already reprimanded one Iraqi bank that helped Iran, but now a Treasury official says the US is "actively pursuing" efforts to stop Iran from skirting sanctions "in Iraq or anywhere else." Prime Minister Nouri al-Maliki all but controls Iraq's central bank and is "right in the middle of this,” said a former US intelligence official.
Even worse, Iraqi and US officials say Iranian organizations have de facto control over four Iraqi banks—which violates sanctions by giving Iran access to the world's financial system. An Iraqi official insists that Iraq "is not intending to break any rules," but "we also have good relations with Iran that we do not want to break." As for the oil smuggling, sources say Iraq is smuggling fuel oil into Iran and allowing at least some Iranian oil to find its way to Iraqi ports for sale. (Read more Iraq stories.)