US extends sanctions waiver to allow Iraq to buy Iranian power

An official from the US Department of State revealed that the United States has extended its four-month sanctions waiver to Iraq so that it can buy electricity from Iran.

Tehran can only use the funds for non-sanctionable transactions, such as purchasing food and agricultural items for humanitarian purposes.

Since 2018, the United States has consistently granted exemptions to Iraq to enable it to fulfill its immediate energy requirements without violating US sanctions.

Baghdad has been urged by Washington to lessen its reliance on Iranian energy and natural gas, while stiff sanctions are still in place against Tehran.

During his meeting with officials from the Treasury Department in Washington earlier in July, Iraq’s Foreign Minister, Fuad Hussein, talked about Iraq’s reliance on US exemptions for Iranian oil imports, according to Al-Monitor.

The step comes at a time when Iraqis are experiencing frequent power outages due to temperatures exceeding 50 degrees Celsius (120 degrees Fahrenheit) and high demand for air conditioning, which is placing additional stress on the country’s aging electrical infrastructure.

The United States has placed sanctions on Iran due to Tehran’s nuclear program and backing for extremist groups.

Iraq is the first destination for Iranian exports, as the value of Iranian exports to Iraq between March 2022 and March 2023 reached $10.23 billion.

Gas imports from Iran are extremely important for Iraq to generate electricity. However, US sanctions imposed on Iran make it difficult for Baghdad to pay for the Iranian gas.

Tehran is putting Baghdad under pressure to get US permission to disburse funds by stopping Iranian natural gas exports to Iraq, reducing Iraq’s ability to generate electricity, and forcing the country to cut off electricity during the hot summer, according to Reuters.

The US sanctions imposed on Iran force Iraq to pay for Iranian electricity only through restricted bank accounts in Iraq, which Iran can use to purchase its humanitarian needs after obtaining permission from the United States.

Iraq heavily relies on gas imports from Iran but has recently invested in many projects to start taking advantage of flared gas and using renewable energy to generate electricity.