U.S. Sanctions Cast Long Shadow Over Iran’s Exports to Iraq

While Iranian authorities dismiss the economic impact of U.S. sanctions, Iranians involved in business with Iraq complain about U.S. sanctions, which, among other things, prevent the Iraqi government from paying its debts to Iran in U.S. dollars.

• May 30: Shargh Daily published a background article on Iran’s difficult business relations with Iraq, which are complicated by U.S. restrictions on Iraq’s ability to purchase Iranian products with dollars:
  • “Some time ago, Majid Chegini, Iran’s deputy oil minister … said Iraq owes Iran 8 billion euros,” or around $8.5 billion, “for natural gas exports … However, other sources provide different numbers … In June 2022, Oil Minister Javad Owji said the government had received $1.6 billion owed by Iraq to the previous Cabinet … Yahya Ale Eshaq, the chairman of the Iran-Iraq Chamber of Commerce, said $1.6 billion in Iraqi debt is ready to be paid and that the Central Bank of Iran should decide if the amount is to be sent to Iran in cash or transferred as credit to third countries so Iran can import products from those countries … In April 2023, Mohammad Kazem Al-e Sadeq, the Iranian ambassador to Iraq, said Iraq’s electricity and natural gas debts to Iran had reached $11 billion, which is close to the 8 billion euros announced by the deputy oil minister. What explains these discrepancies? Hamid Reza Salehi, the deputy head of the Iran Chamber of Commerce’s Energy Committee, says: ‘Our funds in Iraq are due to the export of natural gas and electricity, and it is only natural that this amount constantly grows. The little amount that has been paid to Iran came through the import to Iran of basic Iraqi goods, such as medicine or animal fodder. No cash has been directly transferred into the country. Many Iranian companies work with Iraq, but there are great difficulties in transferring payments due to U.S. restrictions, which limit us to purchasing animals, rice, medicine, or corn from Iraq in return for our exports … We don’t have any banking relations with foreign countries, and Iraq is no exception to this rule. Therefore, nobody can make money transfers from Iraqi banks to Iranian banks. Therefore, the only way is to purchase products in Iraq … Iraq clearly welcomes the accumulation of the funds over there, and this should not be interpreted as Iraq creating obstacles in the path of paying its debts to Iran, although it would not mind them! Perhaps we should invest in Iraq. For example, invest in oil refineries so we can benefit from the profits and build assets in the country.’”

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