Iraq’s prime minister wrapped his high-profile Washington visit — what did he secure so far?

Iraq’s Prime Minister Ali Al Zaidi ended his Washington tour with what could be big wins for the country’s energy and banking sectors. The big one: The Central Bank of Iraq (CBI) reached an understanding with the US Treasury to return seven restricted banks to external correspondent channels with the Fed — and JPMorgan has agreed to open a branch in Iraq to help finance US companies in the country, Al Zaidi's office said. Iraqi officials signed 48-plus MoUs spanning energy, healthcare, and tech worth some USD 60 bn — if they turn into something real.

The caveat: None of the announced USD 60 bn MoUs is a done deal — all are non-binding agreements, still awaiting several milestones before becoming final investment decisions.

BACKGROUND- These developments share a common denominator, which is the US leverage over Iraq's access to the USD — the same leverage that cancelled at least two USD shipments to Baghdad this year, including one of c. USD 500 mn. For a state with an imminent payroll crisis, as we detailed in May, and whose exports remain throttled by Hormuz, releasing access to foreign reserves is critical. Washington, in turn, hopes to get tighter policing of Iranian financial networks in Iraq, which thrive in its cash-based economy, and to clear the way for US oil majors to work the country’s vast hydrocarbons reserves.

The seven banks are re-opening correspondent channels in foreign currencies other than the USD. Clearance in greenbacks will follow only after further compliance measures, CBI Governor Nizar Nasser Hussein said. The CBI hasn’t confirmed the names of the seven banks, but Iraqi daily Al Mustaqila says they include:

• Mosul Bank
• Investment Bank of Iraq
• Al Arabiya Islamic Bank
• Al Janoob Islamic Bank
• International Development Bank
• Mashreq Al Arabi Bank
• Kurdistan International Islamic Bank

And the JPMorgan branch opening, if it happens, is the more novel development. Al Zaidi’s office told Reuters the bank agreed to open a branch to finance projects US companies execute in Iraq — the first US bank presence of its kind there. The outpost would bring sovereign-loan arrangements, large-project finance, and risk-management tools local banks can't offer, Mazhar Sale, the finance advisor to the PM, told Iraqi outlet Al Mada. JPMorgan is yet to make an announcement.

On energy, the USD 60 bn is made up entirely of non-binding MoUs, with signatories ExxonMobil, KBR, GE Vernova, Shell, and Halliburton. Here’s the rundown of the top agreements:

• ConocoPhillips is taking up 42% of BP's Kirkuk redevelopment JV, which covers four northern fields with 3 bn barrels of oil equivalent.
• Chevron signed three agreements — to develop the southern West Qurna 2 and Nasiriyah fields, where Russia’s Lukoil is on the way out, and to invest in the Iraq-Syria export pipeline.
• GE Vernova's framework targets adding 15 GW of electricity generation capacity, which Electricity Minister Ali Saadi Waheeb says would cut Iraq's 35-40 GW deficit by more than a third.

SOUND SMART- Correspondent banking is the plumbing that lets a local bank move money across borders by holding an account at a foreign bank that clears the transaction. An Iraqi bank cut off from those relationships — USD ones especially — can't settle international trade or take in foreign investment. That’s why the sequencing matters: The banking access has to come before US majors can start committing capital to oil and energy projects.