EghtesadOnline: The secretary-general of Iran-Iraq Chamber of Commerce said only the import of goods not included in the US sanctions list is possible through the trade channel designed to facilitate trade between the two neighboring countries.
Hamid Hosseini added that Iran can only purchase non-sanctioned goods via a bank account held with Trade Bank of Iraq, IBENA reported.
Economic sanctions imposed by the United States don’t ban other countries from trading in humanitarian goods, like food and medicine, with Iran.
Hosseini added that TBI’s “asset management” is supervised by an American bank that also holds a stake in the Iraqi bank, noting that this has made it practically impossible to purchase goods listed on the sanctions list, Financial Tribune reported.
TBI has handled most of the Iraqi government's international transactions since its establishment in the aftermath of the US-led invasion in 2003.
Citing senior Iraqi officials, AFP reported on Tuesday that the Iraqi government will continue to pay Iran for gas by depositing money into a special bank account inside Iraq in Iraqi dinars.
Iran will not be able to withdraw the money, but will be able to use it to purchase goods from outside Iraq.
“Iran is estimated to export $5 billion worth of gas and electricity to Iraq in the current [fiscal] year [started March 21] to Iraq and the Central Bank of Iran would be able to use the earned money to meet its import needs,” Hosseini said.
According to media reports, Iraq has an outstanding bill of $2 billion for previous gas and electricity purchases. Iraq says it cannot pay the debts because of the US sanctions.
The US reimposed tough sanctions on Iran last year but has granted Iraq several temporary waivers to keep purchasing Iranian power until October.
To offset its power shortages, Iraq imports around 1,400 MW of electricity and 28 million cubic meters (988 million cubic feet) of gas for power stations from neighboring Iran, which together make up about a third of Iraq's power supply.
The heads of the central banks of Iran and Iraq signed an agreement in February to establish a monetary channel for facilitating bilateral payments.
As per the agreement, CBI will open bank accounts in Iraq to be used for settling oil and gas export payments.
It is said the system would work much like INSTEX, a mechanism recently activated by Britain, Germany and France to trade legitimately with Iran without falling foul of US sanctions.