Economy

Iraq must settle gas import dues for Tehran: pro-Iran parties

Iraq, ravaged by decades of conflict and international sanctions, relies on gas imported from its eastern neighbour for a third of its energy needs.

AFP 2023/07/09 23:00

Iraq strikes deal with Iran to secure summer gas imports Iraq depends on imports from neighbouring Iran for a third of its gas needs (Photo: Hussein Faleh AFP/File)

Iraq Gas Iran US Energy

A powerful alliance of pro-Iran factions in Iraq called Sunday on Baghdad to pressure the United States to unlock pending payments to Tehran for crucial gas imports.

Iraq, ravaged by decades of conflict and international sanctions, relies on gas imported from its eastern neighbour for a third of its energy needs.

But US sanctions on Iranian oil and gas impose restrictions on how Baghdad can pay for the imports.

Iraq cannot directly hand over cash to Iran, but payments must be held in a bank account and be used by Tehran to fund imports of food and medicines.

The payment system has left Iraq in heavy arrears and prompted Iran to respond by periodically switching off the taps.

The Coordination Framework, a coalition of Iran-linked Shiite parties that dominates Iraqi parliament, called on the government in a statement "to contact the US side and urge the immediate unlocking of the unpaid bills related to Iranian gas imports".

The pro-Iran coalition denounced frequent power outages across much of the country during the hot summer months, when temperatures regularly reach 50 degrees Celsius (122 degrees Fahrenheit).

Iraq has deposited all payments for Iranian energy imports in an account at the Trade Bank of Iraq, electricity ministry spokesman Ahmed Moussa told AFP last month, saying the sum amounted to $11 billion.

However, all payment must be approved by Washington to clear the account.

The United States last month confirmed having authorised a certain payment, without disclosing the amount.

"We approved a transaction, consistent with previous transactions that have been approved, to allow Iran to access funds held in accounts in Iraq for humanitarian and other non-sanctionable transactions," State Department spokesperson Matthew Miller told a news conference in mid-June.

To reduce their dependence on Iranian gas, Iraq has been exploring several possibilities including imports from Gulf countries like Qatar, as well as recovering flared gas from oil fields.