US imposes new sanctions, as it renews limited Iraqi waiver for Iranian electricity

The State Department announced new sanctions on Thursday, as it renewed an exemption for Iraq on financial transactions with Iran related to Baghdad’s purchase of electricity from its eastern neighbor.

WASHINGTON DC (Kurdistan 24) – The State Department announced new sanctions on Thursday, as it renewed an exemption for Iraq on financial transactions with Iran related to Baghdad’s purchase of electricity from its eastern neighbor.

The State Department also announced that it was imposing new sanctions on 20 individuals and entities that siphon funds from economic activity in Iraq to Iran’s Islamic Revolutionary Guard Corps’ Quds Force (IRGC-QF.) 

Limited Waiver for Imports related to Electricity from Iran 

US media reported that the renewal of the waiver for Iraq’s purchases from Iran related to the import of electricity was only for 30 days. Although this is the seventh time that the US has issued such a waiver, since it re-imposed sanctions on Iran in November 2018, the 30-day extension is the shortest ever. Previous waivers were for as long as 120 days.

“The shorter renewal period this time was a warning to Baghdad to speed up plans to replace supplies of energy from Iran,” The Wall Street Journal reported, citing a US official.

Despite receiving billions of dollars in aid from the US for reconstruction since the overthrow of Saddam Hussein’s regime in 2003, the Iraqi government has been unable to provide its population with a reliable supply of electricity. That is part of a bigger infrastructure problem and has repeatedly prompted protests, particularly in southern Iraq in the extremely hot summer months. 

Read More: Protests continue in Iraq’s southern city of Basra 

Corruption is a major factor contributing to poor public services in Iraq. According to Transparency International, Iraq ranks 162 out of 180 countries on its corruption index.

Nearly 40 percent of Iraqi electricity is generated with natural gas imported from Iran. Iraq, itself, has sufficient natural gas, produced in the course of pumping oil, to meet its needs for producing electricity. But Iraq lacks the infrastructure of pipelines that would allow the gas to be used, so, instead, it is flared. According to the estimate of the World Bank, Iraq loses $2.5 billion a year by burning, rather than using, its gas.

In addition to getting gas from Iran, Iraq also imports a significant amount of electricity to meet its needs. 

Sanctions on Iraqi-based entities run by the IRGC-QF 

In a statement issued by Spokesperson Morgan Ortagus, the State Department explained that the 20 sanctions designations announced on Thursday were aimed at those who “violate Iraqi sovereignty and exploit Iraq’s economy to funnel money” to the IRGC-QF.

A major focus of the new sanctions are three companies. One is called by the innocuous sounding name, Reconstruction of the Holy Shrines of Iraq (ROHSI.) It has ties to a construction company which was also sanctioned.

A Treasury Department statement described ROHSI as an “IRGC-QF-controlled organization based in Iran and Iraq, whose leadership was appointed by the late IRGC-QF commander Qasim Soleimani.”

“Though ostensibly a religious institution,” the statement continued, “ROHSI has transferred millions of dollars to the Iraq-based Bahjat al Kawthar Company for Construction and Trading,” an enterprise that is based in Iraq, but controlled by the IRGC-QF.

The company, also known as Kosar Company, “has served as a base for Iranian intelligence activities in Iraq,” according to the Treasury statement, “including the shipment of weapons and ammunition to Iranian-backed terrorist militia groups.”

In addition, it also appears that the Quds Force diverted donations from the faithful, meant for the upkeep of the shrines, for its own purposes.

“IRGC-QF officials have used ROHSI’s funds to supplement IRGC-QF budgets, likely embezzling public donations intended for the construction and maintenance of Shiite shrines in Iraq,” the statement said.

Al Khamael Maritime Services, based in Iraq’s Umm Qasr port and in which the IRGC-QF has a financial interest, was a third target of the sanctions announced on Thursday.

Al Khamael is involved in smuggling between Iran, Iraq, and Syria, including activities that benefit Kata’ib Hizbollah, an Iraqi militia which the US has designated a terrorist group, and which has been behind repeated attacks on Iraqi bases hosting troops from the US-led Coalition—including the attack on K-1 that killed a US contractor and helped precipitate the January 3 assassination of Qasim Soleimani.

Al Khamael is also involved in smuggling that circumvents US sanctions on behalf of the Quds Force, according to the Treasury Department. 

Adnan al-Hamidawi 

Among the individuals sanctioned on Thursday is a Special Operations Commander in Kata’ib Hizbollah, Adnan al-Hamidawi. Hamidawi is a long-time member of the organization, which was headed by Abu Mahdi al-Muhandis, until his assassination, along with Soleimani, as Muhandis greeted the IRGC-QF commander at the Baghdad airport.

In 2019—i.e. before the assassination of Soleimani and Muhandis, Hamidawi “planned to intimidate Iraqi politicians who did not support the removal of US forces from Iraq,” the Treasury Department said. Hamidawi was designated for acting on behalf of a terrorist organization.

Editing by John J. Catherine