February 28, 2020
The United States has renewed sanctions waivers for Iraq so it can continue importing Iranian gas and electricity for another 45 days—and continue to pay Tehran for those imports.
A previous 120-day waiver, granted in October, was set to expire February 13. The State Department announced the renewal the day before the expiration. The extension requires Iraq to formulate a timeline detailing a plan to wean itself off Iranian gas. With a plan in place, the US has said it will continue to give Iraq sanctions waivers.
But it is likely to be at least two years before Iraq can do without Iranian gas. It will take at least that long to capture natural gas it is burning off at its oilfields now.
Iraqi officials said the new waiver would be a test of Baghdad-Washington ties after tensions soared following the January 3 US airstrike that killed Iranian Maj. Gen. Qassem Soleymani and senior Iraqi militia leader Abu Mahdi al-Muhandis.
Since then, Iraqi Shiite political leaders have pushed a non-binding resolution through parliament to pressure the government to oust US troops from the country. But many Iraqi politicians have said the measure was passed to placate hardliners and they do not really want to expel the Americans, which would leave Iran in the driver’s seat.
Iraq remains highly dependent on Iranian natural gas to meet electricity demands, especially during the scorching summer months when imports account for a third of consumption. Late payments by Baghdad for Iranian power and gas have resulted in interruptions in recent years. In the summer of 2018, that was one factor that lead to destabilizing protests in the southern oil-rich province of Basra.
The US waiver enables Iraq to avoid penalties while paying Iran billions of dollars for energy imports. Waivers have been granted successively since November 2018, when the Trump Administration re-imposed sanctions on Iran.
The Iraqi Cabinet moved toward placating Washington’s conditions to renew the sanctions waiver in late January, by approving six oil contracts awarded by the Oil Ministry in April 2018 that would boost domestic gas supply in over two years, according to a cabinet statement January 23.