Iran and Iraq are holding talks for the release of blocked Iranian assets in the Arab country. According to Yahya Al-e Es’haq, head of the Iran-Iraq Joint Chamber of Commerce, the ongoing talks so far have been “positive.”
Al-e Es’haq said Tehran’s claims from Iraq “differ but are estimated between $7 billion to $10 billion. Most of the debt “will be paid soon given Iran's agreement [last week] with Saudi Arabia and other positive developments in the region,” IBENA quoted him as saying.
Iran and Saudi Arabia on Friday agreed to restore diplomatic ties after almost seven years with China’s mediation.
The two countries severed diplomatic ties in 2016 after a group of hardline Iranians stormed the Saudi Embassy in Tehran following the kingdom’s execution of a prominent Shia cleric.
Both Tehran and Riyadh had been showing signs of interest in reconciliation for some time, marked by five rounds of negotiations in the Iraqi capital Baghdad, as well as mediatory efforts by the Sultanate of Oman.
In the first phase of repaying Iran's debt, Iraq released $500 million, but Al-e Es’haq said the manner of receiving this amount is still unclear and must be sorted out.
Iraq was unable to pay its 2020 arrears because of the complex mechanism its authorities are forced to follow to be eligible for waivers from the unilateral US sanctions imposed on Iran.
Moreover, $3 billion are locked by the Trade Bank of Iraq due to the US economic blockade and tough banking restrictions. Iran has exported 65 billion kilowatt-hours of electricity to the neighbor since 2005 worth an estimated $6.2 billion.
Biggest Regional Energy Market
The country is one of the biggest regional markets for Iranian energy. Twenty million cubic meters of gas is exported daily to Iraq (worth $200 million/month).
Back in June, Iraq paid $1.6 billion of its debt related to Iranian natural gas imports.
The chamber official noted that the release of Iran's resources in Iraq will lead to an increase in the availability of foreign currency in the market and help curb the rates unseen in Iran’s history.
Al-e Es’haq is of the opinion that Baghdad has no problem repaying the debt in dinar. However, as Iran's needs and expenses are largely dollar-based.
In January, the governor of the Central Bank of Iran, Mohammad Reza Farzin, said the CBI gained access to a “big part of its blocked assets” in some foreign countries and was using it to control currency rates.
He said the CBI had supplied the Nima market $300 million from the $10 billion of its assets in the Trade Bank of Iraq.
Nima is an online platform affiliated to the CBI through which exporters sell their overseas currency in the form of hawala. Companies buy the currency for importing goods, machinery, equipment and raw materials. In this system, importers declare their currency needs, exporters register their proceeds and banks and authorized moneychangers are brokers.
He stressed that Iran has no problem with Iraq, neither politically nor economically. “The point is that Iraqi officials are indeed trying to resolve the problem and are not reluctant to pay” what they owe.
Al-e Es’haq blamed the United States' interference and obstructionism for the delay in the payment of Iran's debts. He said that the main problem is not that Iraq does not want to pay or has financial problems. “The main problem is the unjustified US interference.”
Iran and Iraq traded 11.62 million tons of goods worth $4.14 billion during the first eight months of the current Iranian year (March 21-Nov. 21). Iran’s exports hit $4.02 billion, down 26.5% on the corresponding period last year. Imports from Iraq plunged 88% from the same time the year before.
