Iraq Can’t Pay Its Bills And The Power Grid Suffers

(Georgetown Journal of International Affairs)

On May 16 the Iraqi Supreme Court ruled that the Kazemi administration was an interim government and therefore could not pass any major laws. That meant it could not make any decisions regarding politics or the economy. That is having widespread ramifications for the country.

 

One is the supply of electricity. Iraq is dependent upon Iranian imports of electricity and natural gas for its power plants, but owes Tehran $1.69 billion. That was due to the collapse of oil prices and COVID that started in 2020. As a result, in October 2021 Iran cut off its exports which were only resumed in April of this year. Now because Baghdad cannot pass any spending bills it will not be able to pay Iran. That could lead to an increase in blackouts during the summer when demand skyrockets. In turn, there could be a new round of protests as has often happened over the last ten plus years. That will put added pressure on the government which has no way to make up for the shortfall created if Iranian exports are ended.

 

Until the next government is formed which is not going to happen any time soon because of a political deadlock, this problem will fester. Only a new administration will be able to pass a budget and take care of the nation’s bills.

 

SOURCES

 

Al Aalem, “The caretaker government falls with the Federal Court punch? Did the latter open a door to a solution,” 5/16/22

 

Bas News, “Iran Halts Pumping Gas to Iraqi Power Plants: Report,” 10/14/21

 

Chalak, Chenar, “Iran to resume gas supplies to Iraq in summer,” Rudaw, 4/29/22

 

Al Mada, “Iranian threat to cut off gas from power stations due to non-payment of dues,” 5/25/22

 

Mahmoud, Sinan, Tollast, Robert, “New rulings by Iraq’s supreme court further shackles government,” The National, 5/16/22