Iraq’s economy is heavily dependent on oil exports, which account for roughly 90% of the state's total revenue. The mechanism for managing these funds is deeply tied to the United States, primarily due to the way oil proceeds are processed. Following the 2003 invasion, the Development Fund for Iraq was established, and while the formal oversight structures have evolved, the financial architecture remains centered on the Federal Reserve Bank of New York.

Under current arrangements, Iraq’s oil sales are deposited into an account at the Federal Reserve. This system was originally designed to protect Iraq's assets from legal claims and ensure transparency during the country's post-conflict reconstruction. However, this setup grants the U.S. government a unique position of leverage. By controlling the flow of these funds, Washington can theoretically restrict or delay access to cash reserves, which directly impacts the Iraqi government's ability to pay salaries, fund public services, and manage its national debt.

Critics and some Iraqi officials argue that this arrangement infringes upon Iraqi sovereignty, as the U.S. can use the threat of withholding funds to exert pressure on Iraqi political decisions. Conversely, proponents of the system argue that it provides essential stability, preventing corruption and ensuring that oil wealth is not diverted by non-state actors or sanctioned entities. While the U.S. maintains that its role is purely administrative and intended to safeguard Iraq’s financial integrity, the reality of the arrangement ensures that American foreign policy goals remain closely linked to the financial health of the Iraqi state.