Iraq is feeling the squeeze from US President Donald Trump’s ‘maximum pressure’ policy on Iran, with the president’s recent memorandum (MEES, 7 February) already threatening the waivers Baghdad requires to import Iranian electricity. With the most recent 120-day waiver having been approved on 7 November, the US State and Treasury departments are now mulling whether to cancel that waiver outright or let it expire in early March. Under the waivers, the US grants Iraq a ‘national security’ exemption to financial sanctions on Iran to enable it to pay for power imports.
Iraq is heavily dependent on imports of both electricity and natural gas from Iran: together they contribute up to 40% of the country’s maximum available power supply during the peak summer demand months. In contrast to the precarious 120-day waiver regime governing power imports, those for gas are on a firmer footing given that the 2012 US Iran Freedom and Counter-Proliferation Act (IFCA) inherently grants Iraq a “significant reduction exception” to pay for imports of Iranian gas via deposits made in an Iraqi bank account. The waiver allows electricity dues to be similarly deposited in an escrow account in Iraq (MEES, 21 July 2023). But US banking restrictions prevent direct transfers to Iran in either case, prompting the latter to regularly cut supplies to Iraq to force payment as dues mount (MEES, 16 June 2023). (CONTINUED - 1930 WORDS)
