News ID: 240193
Published: 0426 GMT March 13, 2019

Iraq, Iran build economic ties with US on the sidelines

Iraq, Iran build economic ties with US on the sidelines
Barham Saleh greets Hassan Rouhani at the Presidential palace in Baghdad on March 11.Photographer: Sabah Arar/AFP via Getty Images

In the contest for Iraq’s loyalty, geography is proving irresistible.

Baghdad is being urged to take sides in the US-Iran confrontation that’s escalated into one of the Middle East’s top flashpoints. President Donald Trump is pushing Iraq to stop buying natural gas and electricity from its neighbor. President Hassan Rouhani wants it to purchase more to ease the pain imposed by American sanctions.

So far, Rouhani’s winning. On a three-day state that ended Wednesday, he’s held a press conference alongside his Iraqi counterpart, addressed businessmen, visited important Muslim shrines and chatted with tribal leaders. In December, after a 16-year American military presence, Trump caused a diplomatic furor by arriving unannounced in the middle of the night at a US base, speaking to troops and leaving without meeting top officials.

“The essential part of Rouhani’s message is addressed to the US – Iran’s on the ground in a major way,” said Ihsan al-Shammari, an Iraqi political analyst. Tehran “is bolstering its relations in a broad way to support its political position inside Iraq.”


Visas, trade


The two countries signed transportation and trade agreements, including one for the construction of a railroad link between the Iranian city of Shalamcheh and Iraq’s oil hub at Basra. From next month, the neighbors will drop visa charges for each other’s citizens, Iran’s state-run Press TV reported. And Rouhani said officials planned to boost bilateral trade to $20 billion from the current $12 billion.

Obstacles to banking between the two nations have also been cleared, Secretary of the Iran-Iraq Chamber of Commerce Hamid Hosseini told Tasnim News Agency. Respective central bank governors signed an accord last month to make payments for oil and gas trade through non-US dollar bank accounts, using euros and Iraqi dinars to skirt US sanctions.

This week, Iraq paid the first installment of $2 billion it owes for the import of Iranian gas and electricity, according to a report by Iran’s Chamber of Commerce, which didn’t specify the amount transferred. The payment had been delayed by the reimposition of US sanctions last year.

Iran and Baghdad have shared a unique alliance since the ouster of the former Iraqi dictator Saddam Hussein in 2003.

Iran played a significant role in pushing Daesh terrorists out of Iraqi territory.


Not part of US policies


“We were standing by the Iraqi nation when times were hard and at a time of peace and security, we are at their side too,” Rouhani said in comments on Monday, according to Iranian state media.

Secretary of State Mike Pompeo visited Iraq in January amid Arab doubts over the US commitment to their region following Trump’s announcement that he wanted to pull troops from Syria. While those talks focused on security issues, Pompeo also spoke about reducing Iraq’s reliance on imported energy that mostly comes from Iran.

He didn’t get far, it seems. In a February interview in Moscow, Abdulkarim Hashim Mustafa, special adviser to Iraq’s prime minister, put the record straight. “These are American sanctions and we have the right to protect our national interests,” he said. “We tell them always: We are your friends but we are not part of your policies in the region.”

The above article is excerpted from a news analysis by Bloomberg’s journalists, Ladane Nasseri and Khalid al-Ansary, on March 13, 2019.


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