The United States on Tuesday moved to let Iraq pay Iran for electricity via non-Iraqi banks, a US official said, a step Washington hopes may keep Tehran from forcing unpopular power cuts during the sweltering Iraqi summer.
Secretary of State Antony Blinken signed a 120-day national security waiver allowing Iraq - heavily dependent on Iranian electricity - to deposit such payments into non-Iraqi banks in third countries instead of into restricted accounts in Iraq, said the official who spoke to Reuters on condition of anonymity.
Monies put into the non-Iraqi accounts, like those deposited into Iraqi banks, will also be restricted, still requiring US permission for Iran to get access to them and only for spending on humanitarian goods.
Tehran has in the past pushed Baghdad to secure US permission to release such funds by cutting Iranian natural gas exports to Iraq, limiting Iraq's ability to generate power and forcing deeply unpopular electricity cuts.
Shifting Pressure
The latest waiver was expanded to permit payments to banks outside Iraq at the request of the Iraqi government, apparently in the hopes that this might transfer some of the pressure that Iran has exerted on Baghdad to other countries.
"We have to help the Iraqis with this perennial pressure from the Iranians to access the money," said the US official.
"The Iraqis have requested, and now we have agreed, to expand the waiver," said the US official, saying this might help ensure better compliance with the US requirement that any disbursements be for humanitarian purposes.
"It also helps the Iraqis, at least somewhat, to have an argument to make (to Iran) that they are not in control of the money that they have paid (into non-Iraqi accounts)," he added.
Greater Leverage
It is not clear, however, whether Iran might ease up on Iraq as a result. Tehran could decide it has greater leverage over Iraq than over other nations and continue to exert pressure.
Iran's mission to the United Nations did not immediately respond to a request for comment.
Iran is under extensive US economic sanctions reimposed in 2018 after then-US president Donald Trump abandoned the nuclear deal that Tehran struck with major powers Britain, China, France, Germany, Russia and the United States in 2015.
Trump believed his policy of "maximum pressure" on Iran would force it to accept more stringent restrictions to its nuclear program, which the United States, European powers and Israel claim may be designed to obtain a nuclear weapon. Iran has long denied such ambitions.
As a result of Trump's withdrawal from the deal and US President Joe Biden's failure to revive it, Iran could make the fissile material for one bomb in 12 days or so, according to US estimates, down from a year when the accord was in force.
Despite its large oil and gas reserves, Iraq relies on Iran for natural gas that generates as much as 45% of its 14,000 megawatts of daily electricity consumption.
Indispensable Source
Iran also supplies Iraq with another 1,000 MW directly, making itself an indispensable energy source for its Arab neighbor.
Iraq’s energy sector is closely tied to Iran. Baghdad depends on electricity and natural gas imports from its neighbor to power its national grid.
Iraqi officials have said it would be impossible to sever ties with Iran to comply with US sanctions. Iraq has been repeatedly granted waivers by the US to continue its Iranian imports.
In the past two years, Iran received about $2.73 billion from Iraq regarding its gas debts and this way, the Arab nation settled all payments related to purchases from the National Iranian Gas Company.
The NIGC produces over 1 billion cubic meters of gas per day, of which more than 90% are used domestically and the rest is exported. Iran supplies gas through two pipelines to Iraqi power plants.
Close to 2,000 MW of power plants have been built in Iraq by Iranian companies with Iraqi investment. Knowledge-based companies from Iran's private sector are building 1,700 MW of power plants in the neighboring country.
Iraq has been the biggest importer of Iranian electricity for more than a decade. It needs more than 23,000 MW of electricity for domestic demand but decades of war, civil strife and terror attacks have destroyed its power infrastructure.
Iraq has a 7,000-MW power deficit and large parts of the country have for years struggled with systematic blackouts of several hours a day.
Iran has exported more than 65 billion kilowatt hours of electricity worth more than $6.2 billion to Iraq since 2005.
