The different impact of Iran sanctions on Iraq, KRG economies

ERBIL, Kurdistan Region—Former Iraqi deputy finance minister believes that US sanctions on Iran will have an impact on trade with Iraq and that it will harm the Iraqi economy if the sanctions continue, adding that the Kurdistan Region will largely be spared the effects.

“The US sanctions on Iran will affect business exchanges between Iraq and Iran because there is a big oil and gas trade between these two countries,” Dr. Fazil Nabi, former Iraqi deputy finance minister, told Rudaw.

Nabi believes that despite strong economic ties between the two countries Iraq cannot afford to violate the US sanctions.

“Iraq does its financial transactions through US banks, especially JP Morgan which supports Iraq to stand on its feet,” Nabi said.

He warned that “Iraq will face the biggest financial failure only if this bank stops supporting it.”

The former deputy finance minister did not expect the US sanctions on Iran to have the same impact on the Kurdistan Region.

“The sanctions on the Iranian oil sector will not have a big impact on the Kurdistan Region because it doesn’t have any energy connections with Iran, although they will negatively affect revenue made at border gates of the Kurdistan Region,” he predicted.

On the contrary, Nabi explained, the Kurdistan Region can seize this opportunity for cheaper imports from Iran.

“Because of the falling prices of toman the people of Kurdistan Region can currently get Iranian goods for cheap,” he said. “In addition, instead of importing Iranian goods, the government can facilitate things for investors to build big factories in Kurdistan to produce Iranian food items.”

After Turkey Iran is Kurdistan Region’s second largest trade partner with several official gates and customs zone connecting both countries commercially.

Nabi’s advice has already been put into practice by Kurdish businessmen.

“Due to falling prices of toman traders have now turned to importing Iranian goods,” Nawzad Adham, director of trade at KRG’s ministry of trade and industry told Rudaw. “Importing Iranian goods to the Kurdistan Region is on the rise.”

Kurdish leaders chief among them Prime Minister Nechirvan Barzani have said that they respect the US sanctions given that they receive clear guidelines and that Erbil will take the same stance as the Iraqi government.

“In terms of commitment to US sanctions on Iran, the Kurdistan Region will act within the framework of decisions made by Iraq and will commit to Iraq’s decisions in this regard,” PM Barzani told the media last week.