US forces are set to withdraw from their last bases in Iraq on Wednesday, a move celebrated by Iran and its allies after more than two decades of war in which 4,500 Americans died. Despite the military departure, Washington retains significant economic influence because Iraq’s oil revenues remain in custody at the Federal Reserve Bank of New York. The arrangement began after the 2003 invasion, when the US-led Coalition Provisional Authority created the Development Fund for Iraq at the New York Fed to collect oil income for reconstruction and shield it from claims linked to Saddam Hussein’s rule. The fund later became an account of the Central Bank of Iraq at the New York Fed. Oil provides about 90% of Iraq’s state budget, giving the US leverage over Baghdad’s economic and political stability. Iraqi officials told Reuters that the system supports financial stability, dollar access, exchange-rate confidence and protection from lawsuits, creditors and other shocks. However, US restrictions on dollar flows, including sanctions imposed last year on Iraqi banks and individuals accused of laundering money for Iran, helped create a parallel dollar market with a premium over the official exchange rate. Iraq ended its dollar-auction system, formally known as the foreign currency window, at the start of 2025 after significant US pressure over alleged diversion of dollars to sanctioned parties, especially Iran. The financial arrangement remains a key channel of US influence as Iraq seeks greater sovereignty and faces pressure from Iran and the campaign of maximum pressure pursued by President Donald Trump.