An official from the US Department of State disclosed that Iraq has been granted a four-month extension to its sanctions exemption in order to enable it to purchase electricity from Iran.
The money can only be used for non-sanctionable things like buying food and agricultural products for humanitarian use.
Iraq has consistently received exemptions from US sanctions since 2018, allowing it to meet its immediate energy needs without breaking them.
While severe sanctions are still in place against Tehran, Washington has urged Baghdad to reduce its reliance on Iranian energy and natural gas.
According to Al-Monitor, Iraq’s Foreign Minister Fuad Hussein discussed Iraq’s reliance on US exemptions for Iranian oil imports during his meeting with Treasury Department officials in Washington earlier in July.
The move comes at a time when Iraqis are experiencing frequent power outages as a result of high demand for air conditioning and temperatures above 50 degrees Celsius (120 degrees Fahrenheit). This is putting additional strain on the country’s aging electrical infrastructure.
Due to Iran’s support for extremist groups and its nuclear program, the United States has imposed sanctions on the country.
The first destination for Iranian exports is Iraq, as the value of Iranian exports to Iraq reached $10.23 billion between March 2022 and March 2023.
Iraq cannot generate electricity without importing gas from Iran. However, Baghdad finds it difficult to pay for Iranian gas due to US sanctions on Iran.
According to Reuters, Tehran is making it more difficult for Baghdad to obtain permission from the United States to distribute funds by preventing Iran from exporting natural gas to Iraq, reducing the country’s capacity to generate electricity, and requiring the country to turn off its electricity during the hot summer months.
The sanctions imposed by the United States on Iran require Iraq to pay for Iranian electricity only through restricted bank accounts in Iraq. Iran is permitted to use these accounts to purchase supplies for its humanitarian needs if the United States grants permission.
Iraq imports a lot of gas from Iran, but the country has recently invested in a lot of projects to start using flared gas and renewable energy to make electricity.
