Saturday, October 27, 2018

Iraq Starts Following US Sanctions On Iran

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Both former Prime Minister Haidar Al-Abadi and new Premier Adel Abdul Mahdi said they did not agree with U.S. sanctions on Iran. Abadi sent a delegation to Washington to try to get some exemptions, but the White House was firm. As a result, the Oil Ministry announced that it will no longer be trucking petroleum to Iran.

New Prime Minister Mahdi said that Iraq would follow its own interests on U.S. sanctions on Iran, but the reality is that it will likely have to comply with them at least partially. Reuters reported that the Oil Ministry will stop trucking oil from Kirkuk to Iran in November to follow the American sanctions. Iraq is currently sending 30,000 barrels a day to a refinery in eastern Iran.

Ex-PM Abadi worked on an alternative destination for this oil making a deal with the Kurdistan Regional Government (KRG) in October to restart using its pipeline to Turkey. Baghdad has used this route before, but constantly stopped due to budget and political disputes with the KRG. If Mahdi signed off on the agreement it would be a sign that relations are improving between the regional and central government after the Kurdish independence referendum that resulted in federal forces re-occupying the disputed areas of Iraq including Kirkuk.

Originally, the Abadi government attempted to get exemptions from Washington on its sanctions, but that failed. The former PM sent a delegation to the U.S. in August, but in October the Treasury Department said it would not budge on the issue. This was a huge blow to Baghdad as Iran is a major trading partner. According to the Iran-Iraq Chamber of Commerce Iran exported $4.1 billion worth of goods to Iraq in the first half of 2018, a 31% increase from the previous year. This includes essentials such as electricity and natural gas that fuels power plants. Without this trade Iraq could lose up to 1/3 of its electricity supply. That would have a devastating effect on a country that constantly suffers from power shortages. It’s yet to be seen whether the Mahdi administration will follow all of the American restrictions, but ending the oil deliveries could be a sign of further action.

SOURCES

Aboulenein, Ahmed, “Iraq will prioitise own interests regarding Iran sanctions: new PM,” Reuters, 10/25/18

Iraq Oil Report, “Iraq seeks sanctions waiver on vital Iran energy trade,” 9/23/18

Kurd Press, “Iran exports 4.165b dollar goods to Iraq in first six months: official,” 9/27/18

Al Masalah, “The US Treasury rules out Iraq’s exclusion from sanctions against Iran,” 10/23/18

Radio Free Europe/Radio Liberty, “Iraq Seeking Exemptions From Some U.S. Sanctions On Iran,” 8/29/18

Rasheed, Ahmed, “UPDATE 2-Iraq to halt Kirkuk oil exports to Iran, may resume them to Turkey,” Reuters, 10/26/18

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