Photographs by Moises Saman/Magnum, for The New York Times
held the Baghdad airport’s director of civil avi-
ation at gunpoint and forced him to hire a man
loyal to them as his nominal deputy. In late Octo-
ber, a Kataib Hezbollah front company received
a 12-year contract at the Baghdad and Basra air-
ports, worth tens of millions of dollars a year,
even though the fi rm — the blandly named Gulf
corporation — was only two months old and did
not have the necessary accreditation or licensing
and its founder had been barred from the airport.
The contract has since been terminated, but the
company that took over the V.I.P. terminal and
hotel from Hussein Laqees remains in place.
The Baghdad airport is just one of the eco-
nomic gateways that the militias now control.
They have used the ISIS threat to install them-
selves at most of the country’s land borders.
And the militias have dominated much of the
trade through Iraq’s southern seaports for more
than a decade. In eff ect, the militias operate a
shadow state, charging importers higher fees in
exchange for expedited processing and delivery.
They have economic committees with offi ces in
Baghdad, where private companies can make
deals that brazenly circumvent the country’s
legal channels. ‘‘For example, if I’m bringing
100 cars in from Dubai, if I do the legal process
it might take two months to clear,’’ the airport
offi cial told me. ‘‘If I pay Kataib Hezbollah, say,
$10,000 to $15,000, it might take only two days.’’
THE
CASH
THAT
(^) HAS
fueled Iraq’s descent into kleptocracy originates,
for the most part, from a heavily guarded Fed-
eral Reserve compound in East Rutherford, N.J.
There, every month or so, a truck is loaded with
more than 10 tons of plastic-wrapped U.S. cur-
rency, a haul worth $1 billion to $2 billion. The
money is then driven to an Air Force base and
fl own to Baghdad. It belongs to the Iraqi govern-
ment, which routes the proceeds of its oil sales
through an account at the New York Federal
Reserve. This unusual arrangement is a legacy of
the U.S. occupation, when America directly con-
trolled the Iraqi government and its fi nances. It
has remained in place because it suits both sides:
The Iraqis get quick, preferential access to dollars,
and the United States retains tremendous lever-
age over Iraq’s economy. Ostensibly, the periodic
dollar shipments (a small part of the country’s
overall oil revenue) are to meet the needs of Iraqi
exchange houses and importers, who require
hard cash. In practice, many of the dollars have
found their way into the hands of money laun-
derers, terrorist groups and Iran’s Revolutionary
Guards, thanks to a little-known ritual run by the
central bank of Iraq: the ‘‘dollar auction.’’
The dollar auction has been called the ‘‘sew-
age system of Iraqi corruption,’’ but its inner
workings have rarely been written about. The
fraud schemes that revolve around it have
fueled every side in the Syrian civil war, includ-
ing ISIS. The U.S. Treasury Department has
made serious eff orts to keep auction dollars out
of the hands of ISIS and Iran, but it has often
turned a blind eye to other kinds of money
laundering. And terrorists have repeatedly
found new companies and methods to disguise
their participation in the auction, often with
the complicity of central-bank offi cials.
The auction’s name is misleading; it is a daily
process in which Iraq’s central bank provides dol-
lars to a limited number of the country’s commer-
cial banks in exchange for Iraqi dinars. The Amer-
ican occupation authorities established it in 2003
to serve two purposes: collecting enough dinars
to pay salaries in cash to Iraq’s vast armada of gov-
ernment employees and helping the country pay
for badly needed imports in dollars. In principle,
the auction is similar to the process used by some
other countries to facilitate foreign trade. It was
meant to work like this: A company intending to
import shoes from India, for instance, would go
its local Iraqi bank with an invoice from the Indian
shoe company. The local bank would authenticate
the transaction and deposit the required amount
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