Iraq, Iran to expand cooperation, despite US sanctions
November 17, 2018
Iran and Iraq have both said they want to cooperate more despite fresh US sanctions on Tehran. The gulf neighbors could increase bilateral trade by $8 billion.
Image: Reuters/Official President Website
Advertisement
Iran and Iraq could increase their annual bilateral trade to $20 billion (€17.5 billion) from $12 billion, Iranian President Hassan Rouhani said on Saturday. His remarks, made during a visit to Tehran by his Iraqi counterpart, President Barham Salih, came two weeks after fresh US sanctions against Iran went into effect.
"Bilateral cooperation is in the interest of both nations and should be continued without foreign interference," Rouhani said at a joint press conference. Salih also described relations between the two nations as strategic and "rooted in history."
"Our policies are therefore clear: We want strong and friendly relations between the two countries," Salih said.
Rouhani said cooperation in the fields of oil, gas, electricity and the expansion of rail networks would be under discussion.
Power cuts
The main targets of the US sanctions are Iran's oil exports and its financial sector. However, Iraq is plagued by chronic power shortages and is heavily dependent on Iranian gas for its electricity supply, so Washington granted Baghdad a 45-day waiver from the measures, allowing Iraq to import Iranian gas and energy supplies, as well as food items.
Power outages have frequently left Iraqi homes without electricity for up to 20 hours a day — a key factor behind weeks of protests in Iraq during the summer.
The first phase of US sanctions against Iran went back into effect in early August. Here's a breakdown of what the sanctions are targeting and how Iran has reacted to the measures.
Image: Reuters/TIMA/N. T. Yazdi
Sanctions signed off
US President Trump signed an executive order on August 5 aimed at piling financial pressure on Tehran to force a "comprehensive and lasting solution" to Iranian threats, including its development of missiles and regional "malign" activities. Trump warned that those who don't wind down their economic ties to Iran "risk severe consequences."
Image: Shealah Craighead
Where's the money?
The first phase, which took effect on August 7, targets the Islamic Republic's access to US banknotes, making transactions in a US-dollar dominated financial world difficult. A ban on Iran purchasing precious metals including gold further serves as an attempt to cut the country off from global markets.
Image: Getty Images/AFP/A. Kenare
Planes, cars and carpets
Phase one also hits key industries including the purchase of commercial planes, cars and carpets. Iranian imports of graphite, aluminum, steel, coal, gold and some software are also affected. German automaker Daimler called off the production and sale of Mercedes-Benz trucks in Iran indefinitely after the sanctions came into force.
Image: picture alliance/AP Photo
Fuel to the fire
A second phase of sanctions — which is due to take effect on November 5 and will block Iran's oil sales — is due to cause more damage. Several countries, however, including China, India and Turkey have indicated they are not willing to entirely cut their Iranian energy purchases.
Image: Reuters/R. Homavandi
'Psychological warfare'
Iranian President Hassan Rouhani said that the United States had launched "psychological warfare" against Iran to create division amongst its people. But he insisted that Iran still can rely on its allies China and Russia to keep its oil and banking sectors afloat. He has also demanded compensation for decades of American "intervention" in the Islamic Republic.
European Union foreign policy chief Federica Mogherini said the bloc is encouraging small and medium enterprises to increase their business with Iran. She said Tehran has been compliant with their nuclear-related commitments. The EU issued a "blocking statute" to protect European businesses from the impact of the sanctions.
Iraq's reliance on Iranian gas is uncomfortable for the United States, whose granting of a temporary waiver from sanctions appears to have come with a condition that Iraq reduce, and eventually stop, the use of Iranian electricity, according to Nussaibah Younes, a senior adviser for the European Institute of Peace.
"In order to get this exemption, the Iraqis had given some sort of roadmap idea," Younes sad.
Iraqi officials have said they need more time to find an alternative source.
Iran has been highly influential in Iraq since the toppling of Saddam Hussein in 2003, and more recently was a key partner in pushing back Islamic State.
