The proposed exchange of Iranian natural gas for Iraqi oil, as the Iraqi prime minister made clear earlier this week, would likely violate US sanctions against Tehran unless the US grants a waiver, according to three former US officials. On Tuesday, Iraqi Prime Minister Muhammad Shia’ al-Sudani announced that Iraq plans to launch this barter system to settle Tehran’s arrears, which require US approval.
Al-Sudani revealed that Iran has cut its gas exports to Iraq by more than 50% since July 1 as Baghdad failed to obtain US approval to pay the money owed. But now an agreement has been reached that Iran will resume exporting gas in exchange for crude oil. Details of the potential swap remain scarce, but it is likely to ease political woes in Sudan, where power outages spark widespread resentment during Iraq’s sweltering summer, when temperatures often exceed 50 degrees Celsius.
But US officials have warned that this barter system is likely to run counter to US sanctions. Without compromising US national security, this type of transaction with Iran would be a violation of US sanctions, said Richard Goldberg of the Foundation for Defense of Democracies, a think tank.
Goldberg further explained that such transactions are prohibited under Iran’s anti-Iran law, which prohibits all energy-related transactions with Iran. Goldberg was previously a member of the Trump administration’s National Security Council.
On March 21, Secretary of State Antony Blinken granted a 120-day waiver, according to a State Department official who spoke on condition of anonymity, allowing Iraq to pay Iran only for electricity imports, but not for natural gas needed for Iraq’s domestic power generation. .
There was speculation about the possibility of amending the exemption to allow barter deals, but there was no official comment on that, or on reports of a planned barter deal between Iraq and Iran.
Former US officials have pointed this out The Treasury Department, which oversees most US sanctions against Iran, interprets the term “deal” so broadly that it would involve quid pro quo. They added that while there may be some flexibility of interpretation that would allow the United States to ignore such an agreement, it remains primarily for political rather than legal reasons.
Source: Reuters
Cover photo: A fisherman filters fish carcasses from the Ezz River in Mizan Governorate, southeastern Iraq, on July 6, 2023. According to the competent water authorities, three tons of fish died in the past few days in the river, which is rapidly declining due to the continued lack of rain, and the low water level. Oxygen in its waters due to the heat. MTI/AP/Nabil Al-Jourani
