US grants Iraq 120-day waiver to import energy from Iran

Iraqi Prime Minister Mustafa al-Kadhimi (L) meets US President Joe Biden at the White House in Washington, DC on July 26, 2021.

The US has granted Iraq another 120-day sanctions waiver enabling continued cross-border imports of energy from Iran without triggering penalties, a State Department official has said. 

A written statement by the official, cited by industry magazine Iraq Oil Report, said the waiver will allow Iraq to pay for electricity imports from Iran. 

“The Secretary of State has renewed the sanctions waiver for Iraq to engage in financial transactions related to the import of electricity from Iran," it quoted the unnamed official's statement as saying.

"The waiver ensures that Iraq is able to meet its short-term energy needs while it takes steps to reduce its dependence on Iranian energy imports.”

Iraq needs more than 23,000 megawatts of electricity to meet its domestic demand but years of war following the 2003 US invasion have left its power infrastructure in tatters and a deficit of some 7,000 megawatts.

The US has had to repeatedly extend sanctions exemption by 45, 90 or 120 days, to allow Baghdad to import Iranian energy, but it is unhappy with close relationship and trade between Baghdad and Tehran.

In the past, officials in Baghdad have said there is no easy substitute to imports from Iran because it would take years to adequately build up Iraq’s energy infrastructure.

They have said American demand acknowledges neither Iraq’s energy needs nor the complex relations between Baghdad and Tehran.

Gas imports from Iran generate as much as 45 percent of Iraq's 14,000 megawatts of electricity consumed daily. Iran transmits another 1,000 megawatts directly, making itself an indispensable energy source for its Arab neighbor.

The exports have continued despite illegal US sanctions, but Tehran has faced numerous problems for repatriation of its money from those sales.

The exact amount of the Iraqi debt is not known. In the past, Iranian officials have said between $6 billion and $7 billion of Iranian funds are held in the Arab country. 

Iraq imports a wide range of goods from Iran, including food, agricultural products, home appliances, air conditioners and car parts.

It imported more than $8.2 billion of Iranian goods in the 11 months of the last Persian year which ended on March 20, up 20% from the same period in the previous year, new data released by Iran's Ministry of Mining, Industry and Trade showed.  

That made Iraq the second importer from Iran after China which took in more than $12.6 billion of non-oil Iranian goods during the period. Turkey was the third importer of non-oil Iranian goods worth $5.6 billion, the figures showed.