America’s Long History of Bankrolling Its Own Enemies

• Iraqi banks are using financial systems established by the United States to fund Iran and Iranian-backed militias

• America has a history of sending aid to countries, only to have it later turned against itself

• Ongoing interventions, like in Ukraine, could backfire on the United States in unpredictable ways

The story

In the 1980s, the United States aided a group of Islamist freedom fighters in Afghanistan in their fight against the Soviet Union, which had invaded the country in an attempt to secure a communist regime. That aid included billions of dollars, logistical support, food, and weapons supplies.

The operation, known as Operation Cyclone, was initially a success: the Soviets were forced out and humiliated, with their failure contributing ultimately to the end of the Cold War.

But the freedom fighters, known as the Mujahideen, soon fractured amongst themselves. With the weapons they were given by the United States, they fought a civil war — won by a new, more dangerous group: the Taliban. Just five years later, Al-Qaeda, the terrorist group that the Taliban gave safe haven, orchestrated mass terror attacks on September 11.

The United States could not predict that their aid to combat the Soviet Union would ultimately lead to the 9/11 attacks. However, in the nearly 25 years since that lesson, Washington's foreign policy establishment still fails to grasp how short-term thinking can lead to unpredictable long-term consequences.

Enter a recent bombshell by the Wall Street Journal. It found that Iraqi banks have been using banking systems America created in the aftermath of the Iraq War to fund Iran and Iran-backed militias. Some of these groups have attacked US troops in the past and continue to today.

The system came about because of the nature of the Iraq War; Saddam Hussein’s government had been completely dismantled, and where there were holes — like the banking system — the United States had to plug them.

In this case, it was oil dollars; the US agreed to hold the earnings, and the Federal Reserve started sending cash to Baghdad and handling international wire transfers from Iraq’s private banks to boost its economy, which had been devastated by years of war and sanctions.

However, America’s system did not force Iraqi banks to explain where their wire transfers were going, allowing as much as $200 million to fund dangerous militia groups.

The politics

While the Iraq War was launched by a Republican administration, the original vote for war passed the House and Senate with overwhelming bipartisan majorities. Since then, the Republican Party has moved sharply away from supporting interventions.

Former president Donald Trump repeatedly tried to get the United States out of the Middle East during his presidency, though he was stymied by military aides who lied to him about how many troops were in Syria. Many argue that his unpredictability and readiness to use strong military deterrence helped prevent major conflicts, such as Russia's invasion of Ukraine.

The Democrats, while not having become a fully interventionist party (it was President Joe Biden who completed the Afghanistan withdrawal), have consistently aided Iran.

Democratic administrations, beginning with former President Barack Obama’s and then Biden’s, have unfrozen hundreds of millions of dollars for Iran, which they then use to fund their terrorist proxies to target Americans and American allies.

Beyond the headlines

When Americans think of the dual Afghanistan and Iraq wars, they think of them as failures; one poll in 2018 found that 53 percent of Americans believed the US failed to achieve its goals in Iraq, and only 39 percent believed it succeeded.

However, while Afghanistan may have failed — the botched withdrawal in 2021 left the Taliban in charge — Iraq, by the stated goals of the George W. Bush administration, could be considered to have, at least temporarily, been a success. Democracy was introduced in that country, and the parliamentary system established by the United States continues to pass laws.

The issue is that the goal of promoting democracy may not have been worth pursuing. With their freedom, the Iraqi government has set about passing laws like legalizing marriage for children at the age of nine, and they have opened their country to Iranian influence.

Considering Iran is the “octopus” of the Middle East, with tentacles spread throughout the region, it has been able to aid Hamas in Gaza, Bashar al-Assad’s regime in Syria, and the Houthi militants in Yemen, among others.

It has even started to send missiles to Russia to be used in Ukraine. When coupled with the fact that the United States is supplying Ukraine with anti-missile defenses, a sick irony becomes clear: America is paying for missiles to be launched at a country it is also paying to defend.

Why it matters

Since emerging as the world’s superpower after World War II, America’s efforts to maintain global order have often funneled its own funds into the hands of its enemies. The chaos and unpredictability of global events have then forced America to battle against the very powers it once meant to support as allies.

Now, the United States is, perhaps inadvertently, playing both sides in Ukraine, similar to its role with Afghan Mujahideen in the 1980s.

As America turns its focus away to countering China, Ukraine — feeling betrayed by its allies for potentially having to concede territory to Russia and now heavily armed — could evolve into something unpredictable and dangerous, much like the unforeseen consequences of aiding Afghan fighters decades ago.