By John Lee.

The Trump administration has reportedly granted Iraq a further 90-day extension to the waiver exempting it from US sanctions on Iran.

CNBC quotes a senior State Department official as saying on condition of anonymity:

“While this waiver is intended to help Iraq mitigate energy shortages, we continue to discuss our Iran-related sanctions with our partners in Iraq.”

According to some energy analysts, without continued sanctions exemptions, Iraq could lose more than a third of its power overnight.

More here.

(Source: CNBC)

From The Economist.

America is trying to get more out of its relationship with Iraq

US President Donald Trump thinks America is being ripped off. “We have spent $7trn—trillion with a T—$7trn in the Middle East,” he told a crowd last year, exaggerating slightly. “You know what we have for it? Nothing. Nothing.”

To right this perceived wrong, Mr Trump has long favoured seizing Iraq’s oil. But after he hinted at the idea with the Iraqi prime minister (who demurred), his aides admonished him. “We can’t do this and you shouldn’t talk about it,” said H.R. McMaster, the national security adviser at the time, according to reports. Still, Mr Trump may be getting what he wants from Iraq in other ways.

When America reimposed sanctions on Iran last year it gave some countries extra time to stop buying Iranian oil before they would lose access to the American market. Most were given 90-day exemptions. In November Iraq, which shares a long border with Iran, was given half that time to cut off electricity and gas imports.

As it negotiated for extensions, American companies made a push for Iraqi contracts. In December, Rick Perry, the energy secretary, led America’s largest trade delegation to Iraq in over a decade. “It was a quid pro quo,” says an oilman. “You give us priority and we’ll give you an exemption.”

Read the full article here (subscription needed).

Ambassador James Jeffrey Assumes Role of Special Envoy to the Global Coalition to Defeat ISIS

Ambassador James Jeffrey (pictured), the current Special Representative for Syria Engagement, has taken on the additional role of the Special Envoy to the Global Coalition to Defeat ISIS, effective January 4, 2019.

With this additional responsibility, Ambassador Jeffrey will lead and coordinate U.S. Department of State relations with the Global Coalition to defeat ISIS and Department efforts to implement President Trump’s announcement of a responsible U.S. troop withdrawal from Syria that is coordinated with our global Allies and partners consistent with U.S. goals for Syria and Iraq, including the enduring defeat of ISIS.

He takes over from Brett McGurk, who resigned following disagreements with President Donald Trump’s strategy on Syria.

Jeffrey has previously served as US Ambassador to Iraq.

(Sources: US State Department, Washington Free Beacon)

From AFP. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Trump declares end to US ‘policeman’ role in surprise Iraq visit

President Donald Trump uses a lightning visit to Iraq – his first with US troops in a conflict zone since being elected – to defend the withdrawal from Syria and declare an end to America’s role as the global “policeman.”

View on YouTube

By Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

With rising US pressure, Iran worries about losing ground in Iraq

Iraqi President Barham Salih met with Supreme Leader of the Islamic Revolution Ayatollah Ali Khamenei Nov. 17 in Tehran, where Khamenei underlined that Iraq must retain its Popular Mobilization Units (PMU). Khamenei stated that the PMU were among Iraq’s major achievements in the past few years.

Khamenei has reiterated this stance in previous meetings with Iraqi officials, including former Prime Minister Haider al-Abadi, which shows how important this matter is for Iran.

Meanwhile, the Donald Trump administration has insisted on the disarmament and disbanding of pro-Iran military factions in Iraq as part of the 12 conditions that US Secretary of State Mike Pompeo proposed to sign a new agreement with Iran instead of the 2015 Joint Comprehensive Plan of Action, which the United States exited this year.

Click here to read the full story.

By John Lee.

Germany’s Siemens may have to share a $15-billion contract to supply power-generation equipment to Iraq with US rival General Electric (GE).

The Financial Times reports that although it appeared that Siemens would win the deal, the Trump administration successfully intervened on behalf of GE.

Last month German business newspaper Handelsblatt reported that Chancellor Angela Merkel had personally intervened with Prime Minister Haider al-Abadi to persuade the Iraqi Government to award the contract to Siemens.

(Source: Financial Times)

By Fazel Hawramy for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

IRGC masses troops on Iraq border amid rising tensions with Kurdish groups

Iran’s Islamic Revolutionary Guard Corps (IRGC) is launching increasingly daring operations to degrade the capabilities of armed Kurdish opposition groups.

In its latest move, it has deployed thousands of troops to difficult mountain ranges in the western part of the country used as safe havens by the groups for decades.

The IRGC’s operations have taken on an air of urgency since US President Donald Trump’s May 8 announcement that he was withdrawing the United States from the Joint Comprehensive Plan of Action, the nuclear deal between Iran and six world powers, and re-imposing sanctions against Iran.

Click here to read the full story.

By Laura Rozen for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Concerned that tensions between Iran and the United States could blow back onto Iraq, a senior Iraqi diplomat said today that Iraq would be willing to facilitate dialogue between the two nations.

“Iraq is capable and willing to facilitate and create communication between not only … the US and Iran, but with all the countries in the region,” Ahmed Mahjoub, spokesperson for the Iraqi Ministry of Foreign Affairs, told a small group of journalists and analysts at the Iraqi Embassy in Washington.

“During the recent two years, Iraq was able to solve a couple of problems between states,” Mahjoub said, adding that he could not discuss the details because the parties agreed not to disclose the Iraqi role in those mediations. “But I assure you that Iraq managed to solve problems between states during the last few years, and I believe that Iraq is willing to continue to this role.”

Click here to read the full story.

By Youssef Ali.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

President Donald Trump’s decision to pull out of the nuclear deal and sign the executive order to reimpose sanctions on Iran has had a significant impact on the global oil markets.

This move poses a severe threat to the economies of major oil exporting countries including Iraq, the second largest oil exporter in OPEC after Saudi Arabia and the third in the world after Russia and Saudi Arabia by 4.4 million barrel per day. Many analysts are reflecting on the effects that this conflict has on the economy of Iraq, which heavily relies on oil.

The sanctions mainly target the Iranian energy sector, which supplies Iran with foreign exchange and at the same time represents about 40% of revenues of its budget. The goal of the sanctions is to prevent Iranian oil exports by imposing sanctions on its customers.

Eliminating Iranian oil supplies will cause unrest in the oil markets around the world because it will lead to price surges, hence substantial economic losses on importing countries, which are already fearing a potential recession. That is why the U.S. tried to convince some of OPEC’s members to increase their supplies contrary to the recent deal amongst OPEC and non-OPEC countries to decrease production, and that in order to compensate Iranian supplies and prevent the disruption of the oil market to prevent damage to the global economy.

This move led to massive disputes between the major suppliers and pushed Iran to threat blocking oil exports from the Middle East altogether if it was to be prevented from exporting its own oil to the international market. If Iran follows through with its threat, it would mean massive losses for the Gulf countries, including Iraq whose economy is primarily depended on oil exports.

That said, completely stopping Iranian oil exports would be practically unlikely for the following reasons:

The nature of oil markets which is volatile and is based on trust. If the OPEC members in the Gulf Region, especially Saudi Arabia and UAE decided to replace the sanctioned Iranian oil supplies, the possibility alone that Iran would follow through its threat of closing the Strait of Hormuz would diminish the trust in that market. The supplies which pass through the strait would be considered as unstable, importers would start looking for alternate sources. This would destroy energy markets in the Middle East, meaning massive losses to the economies of all parties involved, including neutral states such as Iraq.

On a global basis, the mentioned encounter will damage the international economy that is fearing a potential recession, because this encounter, if it happens will cause a massive increase in global oil prices, leading to a domino effect that would create a hike in the prices of many goods and services.

This is why it is expected that while the sanctions will be implemented, all parties involved will allow for under-the-table arrangements in order to avoid such mutual destruction by allowing Iran to open an limited channel to export its oil, as it has happened in the past. Prior to signing the nuclear deal, UAE oil brokerage companies and banks played such a role before they were shut down after the recent pull out of the nuclear deal by the U.S. Allowing for such back-channels would mean that the sanctions will have their impact on the Iranian economy by disrupting the traditional oil export routs and limiting its revenue, yet allowing for a backdoor deal that will help the international community avoiding a conflict that could have grave impact on the global economy.

There is a role for Iraq to play in this crisis. The current policy of Iraq in regards to this conflict, in which it is trying to mediate between the parties involved is a wise policy. It is in the interest of nobody to escalate the situation in the Gulf region. On the other hand, Iraq could, given the circumstances,  gain enormous benefits by performing the same role that UAE brokerage companies and banks were playing, which would be a win-win for everyone involved.

In other words, Iraq can empower its private sector to establish companies and banks that facilitate the financial transactions related to the Iranian oil export, which would add important revenues to the economy of Iraq and increase the financial movement in the country; at the same time it would ensure the interests of Iran and decrease the likelihood of an encounter in the Gulf, which would serve the Gulf Arabs well.

Iraq must exploit this opportunity, especially since the Europeans countries along with Russia and China have already expressed their willingness to play this role. This opportunity could also be a significant incentive for Iraq to improve its ailing banking system to be able to implement such operation.

However, this is not possible without  negotiating with the U.S. on this issue in order to avoid being subject of the sanctions. The U.S. has in the past exempted Iraq from the sanctions for dealing with Iran, given its special circumstances. The U.S. also has expressed its readiness this time to allow some exceptions. This could be Iraq’s chance to negotiate an arrangement that serves everyone well, at least for the short-term.

On the long term however, Iraq has to find alternate routes to export its oil in order to avoid the increasingly unstable oil routes of the Arabian Gulf. Viable solutions could be the Iraq-Jordan pipeline that would start in Basra and end in Aqaba. Iraq needs to accelerate building this pipeline. Another option is the rehabilitation of the Iraq-Syria pipeline that begins from Kirkuk and ends in Banias, which, of course, would only be an option if the security in Syria improves.

Iraq is either the core, or constantly caught in the middle of many crisis that are shaking the Gulf region. These reoccurring crisis pose huge obstacles in front of rebuilding and investment. If Iraq wants to survive them, it needs to play a constructive role and aim for stability and profit for all parties involved.

By Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Two pro-Iranian militias active in Iraq and Syria declared that possible US sanctions targeting them would be ineffective and claimed that such sanctions would actually strengthen their presence and expansion in the Middle East.

The US House of Representatives on May 24 passed sanctions against Asaib Ahl al-Haq and Harakat Hezbollah al-Nujaba as an amendment to annual defense legislation. The bill called for sanctions against “persons that are officials, agents, affiliates of or owned and controlled by” the two groups.

Laith al-Azari, a member of Asaib Ahl al-Haq’s political bureau, said on May 30, “Including Asaib Ahl al-Haq, along with some other Iraqi armed factions, on the terrorist list will increase our own ability to confront terrorism and confront US plans in Iraq.”

He did not explain how sanctions could lead to this result, but sees the action as an effort to thwart the pro-Iranian axis of resistance, which includes Iraq, Syria and Lebanon, and confront Islamist movements. The sanctions vote followed US President Donald Trump’s May 8 announcement withdrawing the United States from the Iranian nuclear deal, ostensibly in order to reach a better deal that would limit Iran’s military power in the region.

In a May 30 interview with Rudaw, Mohammad Mohi, spokesman for the Hezbollah Brigades, played down the importance of possible US sanctions, stating, “The US decision is not new as far as Harakat Hezbollah al-Nujaba is concerned. This is not a new issue, but one that has been tackled on an annual basis.” Nujaba leader Akram al-Kaabi was sanctioned in 2008 by the Treasury Department, which designated him an individual “fueling violence” in Iraq.

Mohi linked the House vote to a decision by the Iraqi parliament three months ago obligating the Iraqi government to schedule the withdrawal of US troops from Iraq, measures supported by the two groups targeted for sanctions. While condemning foreign interference in Iraqi affairs, including the US and Turkish military presence, Mohi praised the Iranian presence, stating, “Without Iranian support, Iraq would not have defeated the Islamic State [IS]. Had it not been for Iran’s support, Erbil would have fallen [to IS] along with Baghdad and other Iraqi cities. This is why Iran’s intervention was in the interest of the Iraqi people, and it came at a time when other countries were idly watching Iraq head toward an unknown fate.”

The House’s sanctions vote followed Iraq’s May 12 legislative elections, in which the political organizations of the pro-Iranian militias emerged as the second largest coalition, meaning they might have a shot at forming the new government. Asaib Ahl al-Haq looks like it will occupy at least 14 of the 47 seats won by the Al-Fateh Alliance, consisting of pro-Iran factions and headed by Hadi al-Amiri, leader of the Badr Organization. Al-Fateh came in second, behind the Sairoon Alliance, headed by the cleric Muqtada al-Sadr, which won 56 seats. There are 328 seats in the Council of Representatives.

Despite the Sairoon Alliance’s lead, its position could be undermined by independent candidates. It is being reported that a number of independents will be joining the Al-Fataeh Alliance. So far, only one such candidate for Shabak, Qusay Abbas, has joined Al-Fateh after winning a seat.

Sheikh Qais al-Khazali, leader of Asaib Ahl al-Haq, expects his movement to end up with at least 15 seats once the official results are announced, following the resolution of disputes over balloting irregularities. The Badr Organization is also thinking that it will be allotted additional seats after the results are in. Meanwhile, the State of Law Coalition, another ally of Iran, won 26 seats, and is fully prepared to forge an alliance with Al-Fateh given their common political agendas.

All this means that should Al-Fateh’s natural allies join it, it would beat out the Sairoon Alliance and be in a position to form a government consisting mostly of pro-Iranian factions. If this scenario transpires, the United States could find itself in the very awkward situation of having to deal with a government it is sanctioning, should the sanctions ultimately be adopted. Would the United States actually sever ties with the Iraqi government, a key partner since 2003, or, finding that scenario unpalatable, simply decide to waive or put off new sanctions?

Another scenario that might be even more difficult for the United States would see Sairoon and Al-Fateh coming together around their shared goal of US forces withdrawing from the country and curbing US influence in Iraq and the region. Before that could happen, however, big differences between the two alliances would have to be overcome. Al-Fateh opposes the United States in favor of expanding Tehran’s influence in Iraq and the region, while Sairoon wants an Iraq independent of Iran, free to manage its own internal affairs and regional positions.

Of note, Israeli-Russian understandings, with US buy-in, are being concluded to keep pro-Iranian militias away from the southern border of Syria, which would, of course, undermine the Iranian role in Syria. Regardless, in terms of US interests in Iraq, it appears the United States might ultimately find itself in the dilemma of having to choose between the lesser of evils.

The spokesman for Harakat Hezbollah al-Nujaba, Hashim al-Moussawi, believes Washington launched a war on the resistance axis when it reneged on the Iranian nuclear deal and then prepared to impose economic sanctions on Hezbollah supporters. “This is an expected reaction to the losses suffered by the US by the Islamic resistance factions,” he said. “The elections in Lebanon and Iraq and the victory of the resistance [against IS in Iraq] showed the US the high level of threat it is facing.”

Moussawi touts the showing by the Al-Fateh Alliance as a victory for the Iranian axis. “This is why it [the US] is seeking to plunge Iraq into the spiral of permanent chaos,” he said. “The entry of the resistance into political circles will embarrass Washington, which is politically seeking to bypass the axis of resistance.”