Iraq communicates with the US over $10 billion debt to Iran
The sun sets behind the transmission lines of electric power from Iran to Iraq in Basra, Iraq. Photo: AP
Baghdad (IraqiNews.com) – The Iraqi Prime Minister, Mohammed Shia Al-Sudani, stated on Tuesday that Baghdad is communicating with the United States on settling outstanding debts of $10 billion the country owes Iran for gas imports, according to AFP.
Gas imports from Iran are extremely important for Iraq to generate electricity. However, US sanctions imposed on Iran make it difficult for Baghdad to pay for Iranian gas imports.
Iraq cannot directly deliver cash payments to Iran. Payments must be deposited in a bank account and used by Tehran to pay for its imports of food and medicines.
On July 11, Al-Sudani announced that Iraq had reached an agreement with Iran regarding gas imports, which Iraq needs to operate power plants.
The Iraqi Prime Minister elaborated that Iraq agreed to provide Iran with crude oil in exchange for gas, explaining that the decision will ensure the continuation of gas supplies from Iran and will end the crisis.
Tehran is putting Baghdad under pressure to get US permission to disburse funds by stopping Iranian natural gas exports to Iraq, reducing Iraq’s ability to generate electricity, and forcing the country to cut off electricity during the hot summer, according to Reuters.
The US sanctions imposed on Iran force Iraq to pay for Iranian electricity only through restricted bank accounts in Iraq, which Iran can use to purchase its humanitarian needs after obtaining permission from the United States.
About a month ago, the Iranian Minister of Economy, Ehsan Khandouzi, revealed that Iraq has pledged to facilitate Iran’s access to its frozen assets in Iraq, according to the Islamic Republic News Agency (IRNA).
The Head of the Iran-Iraq Joint Chamber of Commerce, Yahya Al-Eshaq, mentioned earlier that Iraq has paid all dues of $10 billion to Iran, Al-Arabiya News reported.
Al-Eshaq elaborated that Iraq has paid its overdue debts to Iran through the Trade Bank of Iraq (TBI), and the two countries have agreed that the money will be used for the purchase of goods that are not included in the embargo imposed on Iran, such as medicine, IRNA reported.
Iraq heavily relies on gas imports from Iran but has recently invested in many projects to start taking advantage of flared gas and using renewable energy to generate electricity.