US grants Iraq new waiver to import Iranian energy

This will be the fourth such waiver Iraq has received since the US re-imposed sanctions on Iran last November, after Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA), also known as the 2015 Iran nuclear deal in May.

Last November, the US granted Iraq a 45-day waiver to allow them time to gradually reduce their reliance on Iranian electricity and energy imports.

Iraq was given a second waiver in late December for 90 days, which was set to expire in late March. Iraq’s third waiver, also valid for 90 days, was set to expire on June 18.

Iraqi parliament speaker Mohammed al-Halbousi had called on the US administration during his visit to Washington in March to allow Iraq to continue importing electricity and gas from Iran as the country needed Iranian energy for another three years. 

Iraq suffers chronic power shortages. Years of mismanagement, corruption, and old distribution networks have contributed to a defective electricity grid and dependency on Iranian energy imports.

Iraq imports around 1,300 MW of electricity from its neighbor each year, accounting for nearly one third of its supply. 

Riots broke out in Iraq’s southern city of Basra last summer when Iran briefly cut is electricity exports, over unpaid power bills, and because of rising consumption demands among its own citizens. 

Sanctions targeting Iran’s oil and finance sectors have devastated the economy and sent the currency tumbling.

Iranian oil exports fell to 400,000 barrels per day (bpd) in May, half the amount it exported in April, indicating the US ‘maximum pressure’ campaign to drive down Tehran’s main source of revenue is succeeding.  

Meanwhile, tensions between the US and Iran have continued to mount. The US accused Iran of being behind explosions that hit two oil tankers in the Gulf of Oman on Thursday. Iran strenuously denies the allegations.

The US  announced May 6, it was deploying an aircraft carrier and bomber task force to the Persian Gulf,  to “send a clear and unmistakable message to the Iranian regime”, National Security Adviser John Bolton said in a statement. 

In a similar incident on May 12, four vessels including two Saudi oil tankers were damaged in incidents which were described as “sabotage attacks.” Bolton alleged Iran was behind those attacks. 

As tensions escalate, there are concerns that Baghdad could once again get caught in the middle, just as it is on the path to recovery. 

Iraq hosts more than 5,000 US troops, and is home to powerful Iranian-backed militias, some of whom want those US forces to leave.

For now, Iraq will continue to import electricity from Iran, but with temperatures set to soar over the summer and into the fall, it's unclear how they will cope after the expiration of this current waiver.