Washington renews sanctions waiver allowing Iraq pay Iran for electricity

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US officials announced on Tuesday that Iraq has been granted a 120-day waiver to pay Iran for power.

The officials emphasized that the money provided to Tehran could only be used for humanitarian needs in an effort to ease criticism of the US decision, according to Reuters.

In July, a waiver was granted which allowed Iraq to make payments to restricted Iranian accounts within the country, as well as to accounts in foreign countries with similar restrictions. The most recent waiver is identical to the first one.

The funds may only be used for non-sanctioned transactions, such as buying food and agricultural items for humanitarian purposes.

The United States imposed sanctions on Iran for its nuclear program and support of extremist groups.

Iraq is Iran’s top export destination with $10.23 billion in exports from March 2022 to March 2023.

Iran’s current goal is to increase its trade volume with Iraq to $20 billion.

In August, Matthew Miller, the spokesperson for the US Department of State, announced that the US government is working closely with Iraq to ensure that Iran’s energy payments comply with US sanctions and cannot be misused for any illicit activities.

Iraq relies heavily on gas imports from Iran for electricity generation, but US sanctions have made it difficult for Baghdad to pay for the gas.

According to Reuters, Tehran is pressuring Baghdad to obtain US permission to disburse funds by halting its natural gas exports to Iraq, which reduces Iraq’s ability to generate electricity. Iran is also forcing Iraq to cut off electricity during the hot summer season.

The US sanctions imposed on Iran require Iraq to pay for Iranian electricity through restricted bank accounts, which can be used by Iran to purchase its humanitarian needs upon obtaining permission from the United States.

Iraq relies heavily on gas imports from Iran, but has invested in projects to utilize flared gas and renewable energy for electricity production.