January 21, 2020
Iranian gas station
- The head of the Council of the Iraqi Bank for Trade said on Tuesday to Agence France-Presse that his bank will not be a party to the mechanism of paying Iran's financial dues for the gas and electricity that Iraq imports, in the event that Washington does not renew the exemption from sanctions that ends next month.
Washington imposed tough sanctions on the Iranian energy sector in 2018, but it has given Iraq a series of temporary exemptions over the past 15 months, allowing Baghdad to buy gas from Tehran.
Baghdad pays the price of imports by depositing the Iraqi dinar through the state-owned Iraqi Trade Bank, which initially allows Iran to use it to purchase non-sanctioned goods.
"If the exception is over, I am sure that the bank cannot pay any gas dues, and it cannot deal with any Iranian entity regarding gas and electricity, of course," the bank’s chairman, Faisal Al-Heims, told AFP.
He added, "As a bank, the most important thing we have is to be committed (local regulations of the Central Bank of Iraq and international regulations), so the world trusts us."
Any entity that deals with institutions or countries that the United States has blacklisted is subject to secondary sanctions that restrict its access to the US dollar.
The American exemption protected Iraq from similar sanctions, which allowed it to continue importing about 1,400 megawatts of electricity and 28 million cubic meters (988 million cubic feet) of gas from Iran.
Meanwhile, Iran and Iraq have agreed to a payment plan that is in line with US regulations through an account in Iraqi dinars at the Iraqi Bank of Commerce.
Starting last year, Iraq had a bill due to amount to about two billion dollars for previous purchases of gas and electricity, according to Iranian Oil Minister Bijan Zangana.
Heims refused to disclose the amount paid in the account or the amount still due, but assured France Press that "the exception allowed it to be paid to the electricity and gas exporters. Several payments were made according to this mechanism, but the problem is that the disposal of the money that was paid was not possible."
Iraq fears the escalation of tension between Iran and the United States, both of which are allies of Baghdad.
The Iraqi parliament voted earlier this month to authorize the government to end the presence of foreign forces in the country, including about 5,200 American soldiers, following a US air strike in which Washington assassinated influential Iranian General Qassem Soleimani and deputy head of the Popular Mobilization Authority, Abu Mahdi al-Muhandis.
US President Donald Trump has threatened to impose severe sanctions on Iraq if Baghdad insists that US forces should leave Iraq.
The United States informed Iraq that it is considering freezing bank accounts belonging to Baghdad in the banks of the United States, where Iraq maintains oil revenues that constitute 90 percent of the country's budget.
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