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    US Extends Iranian Waiver for Baghdad


The brief duration this time reflects US determination to make life harder for Iran but Iraq will also lose out if the waiver ends in a month.

by: Dalga Khatinoglu

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US Extends Iranian Waiver for Baghdad

Washington gave Iraq a waiver that allows it to continue importing Iranian gas and power. At the same time it slapped sanctions on dozen of Iraqi individuals and companies for bypassing Iranian-related sanctions.

US has given several waivers to Iraq since October 2018 to continue Iranian gas and power imports, mostly for 90 to 120 days, but the previous waiver was for just 45 days and the latest at just 30 days was the shortest, suggesting US patience with Iran is wearing thin.

Iraqi sources have told media that the US was angered by Iran’s interference in its western neighbour’s affairs and its attacks on American troops and its ambassador. A source told AFP that this is the final waiver that Iraq can expect. Another source told Russian TV that US would not extend the waivers if the attacks continued.

Iraq depends on Iran for about a third of its electricity supply. As well as electricity itself, last summer it imported 25-28mn m3/d for its generators, but only 3mn-4mn m3/d arrived in winter as Iran needed gas for domestic heating.

However, according to Iran’s electricity ministry’s statistics, its overall exports increased by 34% to 7.8 TWh during March 2019-February 2020. Winter exports saw the most growth. Iraq imports 85% of Iran’s total electricity exports.

Iran’s oil minister Bijan Zanganeh said February 2019 that Iraq had failed to pay off its $2bn-debt to Iran for importing gas and electricity and each month its debts increases by $200mn due to sanctions.

Iraq says it is paying the cash into an Iranian bank account in Iraqi Trade Bank, but Tehran can only use these funds for importing Iraqi goods, based on sanctions. 

If US stops granting waivers for Iraq, it would be a huge challenge for both Iraq and Iran. Iran has allowed for revenues of $4bn from gas sales to Iraq and Turkey in the current budget, which is about 17% more than last year.

Iraq depends on Iranian gas and power imports. The country is fighting the Covid-19 crisis while the oil price has plunged to below $27/barrel. According to the International Monetary Fund’s calculation last October, Iraq needs crude to cost above $60/barrel if it is to balance its 2020 budget. Adding a power shortage to the economic challenges would put Iraq's government under great pressure.