Iraq to Respect Dollar Ban But Not All US Sanctions on Iran

EghtesadOnline: Iraqi Prime Minister Haider al-Abadi stepped back from his proclamation to abide by new US sanctions on Iran on Monday, saying his government would only respect the dollar ban in transactions with Iran.

News ID: ۷۴۵۸۸۳

15 August 2018

“I did not say we abide by the sanctions; I said we abide by not using dollars in transactions. We have no other choice,” Abadi told a news conference in Baghdad, Reuters reported.

Imports paid in US dollars have already ground to a halt, as the Central Bank of Iraq has reportedly notified all domestic banks that using dollars with Iranian banks has been banned, according to Financial Tribune.

«To comply with the American sanctions, we›ve stopped imports of Iranian cars,» said a senior official in the auto import industry, AFP reported earlier this week.

The official, who asked not to be named, said Baghdad had asked for an exemption from Washington to allow imports of Iranian spare parts for car assembly facilities in Iraq.

«Production has ground to a halt with 5,000 jobs on the line,» he said.

Last week, he said Iraq disagreed with the US sanctions on Iran but would abide by them to safeguard its own interests, triggering criticisms from Iran-allied Iraqi politicians.

The United States and Iran, increasingly at odds, are Iraq’s two biggest allies and the sanctions put Abadi’s outgoing government in a difficult position. Caught in the crossfire between Tehran and Washington, Iraq›s economy could suffer the heaviest collateral damage from the US reimposition of sanctions against Iran.

For Iraq, recently emerged from an expensive war on militants, the embargo on its neighbor could hit jobs and cut off a crucial source of cheap imports. The sanctions target Iran’s trade in gold and other precious metals, its purchases of US dollars and its car industry.

Asked if Baghdad would stop imports of commodities, appliances and equipment by government companies from Iran, he said the matter was still being reviewed.

“We honestly have not made any decision regarding this issue until now.”

Iraq relies on neighboring Iran as a source of cheap imports.

In 2017, Iraq imported around $6.6 billion worth of products from Iran, ranging from cars and washing machines to agricultural goods.

It also buys Iran-generated electricity in efforts to deal with chronic power cuts that have been a key factor sparking mass protests in recent weeks.

Abadi cancelled a visit to Iran scheduled for next week, citing «busy schedule», his press office said on Sunday.