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Iraq may have serious problems in securing its energy needs if the United States doesn’t extend a waiver for an Iraqi bank to process payments for Iraq’s imports of electricity and natural gas from Iran, the head of the Iraqi bank told AFP on Tuesday.
Major Iraqi power plants are dependent on Iranian natural gas supply, and Iraq imports electricity from Iran, as Baghdad’s power generation is not enough to ensure domestic supply.
The U.S. has regularly extended the waivers for Iraq to continue buying natural gas and electricity from Iran, even after the U.S. slapped sanctions on Iran and continued to ramp up those sanctions over the past year.
The waiver for the Iraqi bank handling the payments to Iran in Iraqi dinars expires next month. If the U.S. doesn’t extend the waiver, the bank—
Trade Bank of Iraq (TBI)—will stop processing payments, the head of the bank Faisal al-Haimus told AFP on Tuesday.
“If the waiver ended, of course TBI will not pay for any gas or deal with any Iranian entity over gas or electricity. Absolutely,” the bank’s executive told the agency.
The bank cannot afford not to comply with all regulations, including U.S. sanctions on Iranian entities, he said.
The U.S. sanctions typically work by cutting off access to the U.S. banking system of persons or entities that deal with sanctioned countries and businesses, as is the case with Iran.
Iraq’s energy sector may become collateral damage in the recent U.S.-Iran tensions which unfolded on Iraq’s territory.
U.S. President Donald Trump threatened sanctions on Iraq earlier this month, after Iraq’s parliament called on the Iraqi government to expel foreign troops out of the country.
If the U.S. follows through with the threat, it could block Iraq’s access to a U.S.-based account, where Iraq deposits its oil revenues that make up 90 percent of the Iraqi budget. Such a sanction move could cause an economic “collapse” in Iraq, local officials told AFP last week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.