A recent report published by the Washington Institute has considered that US sanctions imposed on Iran as good for Iraqis, saying that the embassy in Baghdad should use all available channels to ensure that the Iraqi people understand how sanctions can facilitate their benefits.
Iraq indicated intentions to comply with U.S. sanctions and move toward energy independence, asking Washington for some flexibility with its electricity shortfall problems, especially during summer months.
“To pressure Iran without cornering Iraq, U.S. officials should set a program of activities with achievable timeframes, supported by public diplomacy,” said the report entitled “Designing Win-Win Economic Policies in Washington and Baghdad”.
It indicated three ongoing concerns for Washington relating to Iraqi trade with Iran, including payments for Iranian electricity, purchases of Iranian gas as well as Iranian efforts to secure U.S. dollars. It noted that “diversifying the sources of energy purchases could reduce the price of exorbitantly expensive imports from Iran.”
“Financial and sanctions experts should assess the risks of diverting Iraqi payments to Iran and, relatedly, the capacity of Iraqi financial institutions and their regulators to comply with the waiver conditions,” it said. Thus, it suggested the need to set realistic timeframes and prioritize projects that can show immediate effects. It also recommended that each of US, Germany, and other parties should work to bring Saudi Arabia, Kuwait, and Jordan together on the sidelines of the January 9 Middle East Strategic Alliance meeting in Oman, with the aim of discussing electricity exports to Iraq.
U.S. and Iraqi authorities should continue their robust exchange of information related to troubling trends in U.S. dollar demand within Iraq, it noted. “The Central Bank of Iraq should identify and ban exchange houses and front companies attempting to access U.S. dollars on Iran’s behalf.”
“To reform its financial sector, Iraq needs prodding and technical assistance in switching public payrolls from cash handouts to bank debits,” it concluded saying that Washington “should also offer technical assistance to increase regulators’ capacity to implement counter-illicit finance regulations.”