US grants 3-month waiver for Iraq to import energy from Iran

The US State Department on Monday renewed a sanctions waiver allowing Iraq to import electricity and gas from Iran.

A spokesman said that the decision would ensure that “Iraq is able to meet its short-term energy needs while it takes steps to reduce its dependence on Iranian energy imports.”

On October 13, the Governor of Iran’s Central Bank Abdolnaser Hemmati said he had reached agreement with Iraqi officials over releasing the funds but on October 22 an official of the Central Bank of Iraq told Iran International that the bank was unable to honor the debt even in Iraqi dinars due to deepening US sanctions.

Since the US imposed stringent sanctions on Iran in 2018 after withdrawing from Iran’s 2015 nuclear deal with world powers, it has repeatedly issued sanctions waivers to Iraq, which relies on Iran for around a third of its electricity.

The new exemption, which is longer than previous extensions and lasts beyond the Trump administration’s end on January 20, was granted after “long discussions,” an Iraqi official told AFP on Monday.

While the waiver allows Iraq to import energy from Iran, there remain problems making payments due to Iraqi fears over US financial sanctions.

Several billion dollars owed to Iran, mostly for electricity and gas, are frozen in Iraq.