Iran Seeks to Increase Exports to Iraq Under Sanctions Pressure

Iranian traders and companies have a significant and active presence at the Baghdad International Exhibition currently taking place. This exhibition has always been important for exporting Iranian goods to Iraq, which heavily relies on imports, but this year it holds even greater significance. According to the Associated Press, Iraj Masjedi, Iran's ambassador to Iraq, promised that Iran's exports to Iraq, which are already substantial, will increase, adding, "Sanctions will not affect the relations between the two countries." The U.S. government decided to implement nuclear sanctions against Iran after withdrawing from the JCPOA in May of this year. Donald Trump has announced that he will impose the "toughest sanctions" against Iran. Under the pressure of U.S. sanctions, the value of the Iranian currency has decreased by more than 50%, and experts say that Iran's oil exports have dropped by about one million barrels. The second wave of U.S. sanctions, aimed primarily at cutting oil exports and limiting the activities of Iranian banks and financial institutions, was implemented last Monday. However, other signatories of the nuclear agreement, including Europe, China, and Russia, have opposed these sanctions, and Iran can still trade with other countries. The International Atomic Energy Agency also confirmed in its latest report, published after the implementation of the second wave of U.S. sanctions, that Iran has remained faithful to its commitments under the JCPOA. Iraq is Iran's second-largest export market. Since the U.S. invasion of Iraq in 2003, Iraq has depended on Iran for many of its needs, from food and machinery to electricity and natural gas. Iraj Masjedi stated that the trade volume between the two countries will reach $8.5 billion this year, with Iran's plan to increase this figure to $22 billion in the coming years, although he did not provide specific details of this plan. Despite the sanctions, non-American companies that do not trade with the U.S. and do not use its financial markets can still trade with Iran. The Iranian ambassador in Baghdad added, "We will not limit ourselves to dollar transactions." More than 60 Iranian companies are participating in the Baghdad International Exhibition, which continues until November 19. Mir Zad, the director of Sam Tajhiz, a producer of generators and other electrical machinery, hopes to sign contracts worth one million dollars during this year's exhibition. He is not worried about the restrictions related to using the dollar, stating that contracts can be made using the Iraqi dinar. However, the majority of transactions between the two countries are in the energy sector and cannot ignore the limitations imposed by U.S. sanctions. The Iraqi government, which maintains good relations with both Iran and the U.S., finds itself in a difficult position. Given the severe weakness of Iraq's electricity industry, the country is heavily reliant on Iranian gas and electricity. Last summer, widespread unrest occurred in southern provinces of Iraq due to a temporary reduction in electricity supply. The U.S. embassy in Baghdad announced last week that it has exempted Iraq from the recent sanctions for 45 days to allow it to continue purchasing gas and electricity from Iran, enabling Iraq to "take steps toward energy independence." However, economic experts in Iraq say achieving energy independence may take a year or even longer. Iraq may have no choice but to continue importing from Iran. At the same time, Iran's extensive influence in Iraq's political and military affairs complicates the situation. Although one of the main goals of U.S. sanctions is to reduce the Iranian government's influence in the region, Iran can still destabilize Iraq's politics.