US Intimidates Iraq to Kill Siemens Deal in Favor of GE

The Trump administration intervened to quash a $15 billion deal for Siemens AG to develop power stations in Iraq, instead persuading Baghdad to sign an agreement with General Electric Co., two administration officials said.

Iraq signed a memorandum of understanding with GE on Monday, after senior US officials warned Iraqi Prime Minister Haider al-Abadi that the future of the US-Iraq relationship would be at risk if his government accepted the deal with Siemens, according to the officials, who asked not to be identified discussing private deliberations, Bloomberg reported. 

The US officials said they want to wean Iraq of its dependence on Iranian natural gas and suspect Iran had spurred Iraqi leaders to pursue the Siemens deal as a way of undercutting ties with the US

“This is part of very strong campaign of engagement in Iraqi government formation and a very targeted effort to support the Iraqi government and minimize Iranian influence,” said Garrett Marquis, a National Security Council spokesman. “It’s part of our overall effort to evict the Iranians rather than to invite them in."

Alongside the GE deal, the US signed a broader memorandum of understanding with Iraq on Sunday to build its energy sector and make the country energy-independent, the officials said. That aims to solve what has long been a source of frustration for Washington: Iraq relies on Iran to import natural gas because it doesn’t have the infrastructure to capture its own ample reserves, 60% of which are flared off.

According to the US Institute of Peace, Iran supplies Iraq with about 12 million cubic meters of natural gas a day and accounts for one-fifth of its power generation.

The two deals follow a flurry of activity by both Germany and the Trump administration on behalf of their companies.

The US government learned in early September that Iraq was wrapping up talks with the Munich-based Siemens over a contract to revamp the country’s entire power sector and swap out infrastructure that had been built by GE. Siemens CEO Joe Kaeser had met with Abadi in late September to discuss the plan to install 11 gigawatts of power generation capacity over four years and create thousands of jobs.