Iraq insisted on Monday that its trade with neighbouring Iran was above board, and denied reports that it was helping the Islamic republic skirt sanctions by smuggling oil and secretly moving cash. [AFP]

ON MONDAY, Iraq officially denied they were aiding Iran in ducking sanctions. Ali al-Moussawi, Prime Minister Nuri al-Maliki’s media advisor, spoke with AFP amid the charges from a New York Times article over the weekend.

From the article:

The little-known bank singled out by the United States, the Elaf Islamic Bank, is only part of a network of financial institutions and oil-smuggling operations that, according to current and former American and Iraqi government officials and experts on the Iraqi banking sector, has provided Iran with a crucial flow of dollars at a time when sanctions are squeezing its economy.

[…] In one recent instance, when American officials learned that the Iraqi government was aiding the Iranians by allowing them to use Iraqi airspace to ferry supplies to Syria, Mr. Obama called Mr. Maliki to complain. The Iranian planes flew another route.

Some current and former American and Iraqi officials, along with banking and oil experts, say that Iraqi government officials are turning a blind eye to the large financial flows, smuggling and other trade with Iran. In some cases, they say, government officials, including some close to Mr. Maliki, are directly profiting from the activities.

“Maliki’s government is right in the middle of this,” said one former senior American intelligence official who now does business in Iraq.