US sanctions on Iran puts Iraq in a catch-22

US sanctions against Iran has put Iraq in a precarious situation.

While Iraqi premier Haidar Al Abadi has agreed to abide by them, he has called them a ‘strategic error’.

Sanctions will undoubtedly lead to a decline in trade between the two countries as all money transfers and banking operations are conducting in the US dollar.

Bilateral trade between the two countries has surpassed $12 billion annually, raising fears about how the sanctions will affect the Iraqi economy.

When a new set of sanctions are imposed in November, Iraq will have to stop exporting oil to Iran as well or risk a standoff with the United States.

Iranian gas exports to Iraq will also have to stop, further aggravating the already critical electricity crisis in Iraq.

Undoubtedly this will affect Al Abadi’s ability to pay salaries and meet his government’s various financial obligations.

If he says no, however, Iraq’s banking sector would get automatically blacklisted by the Americans, putting him in further jeopardy.

Iran, upset at Al Abadi’s decision, cancelled a planned visit by the Iraqi premier scheduled for Tuesday.

Al Abadi may find that his decision to abide by the sanctions could cost him his political career and diminish whatever chances he had at a second round at the premiership.

Iran, after all, controls the two largest blocs that won the parliamentary elections last May, that of Moqtada Al Sadr and Hadi Al Amiri—two heavyweight Shiite militia leaders who collectively hold 101 seats in the 329-seat Iraqi Parliament.

If they withdraw support within the chamber, Al Abadi cannot remain prime minister.

Additionally, Iran might retaliate by invoking Article 6 of UN Resolution 598 (which ended the Iran-Iraq War).

According to that resolution, Iraq is required to pay $1.1 trillion dollars to Iran—something that the mullahs of Tehran overlooked after the downfall of Saddam, as most of the political newcomers were Iranian protégés or appointees.

Al Abadi has been a member of the Iran-backed Al Dawa Party since 1967, but unlike other Iraqi Shiites he chose Great Britain, rather than Iran, as lifelong exile under Saddam Hussain.

He first assumed government office as minister of communications back in 2003, shortly after Saddam’s overthrow, during the zenith of Iranian influence in Baghdad.

After assuming the premiership in the summer of 2014, he relied heavily on Iranian arms to fund Shiite militias that were tasked with fighting Daesh.

More recently, however, he has distanced himself from his former patrons, travelling twice to Saudi Arabia in 2017, where he met with its powerful Crown Prince Mohammad Bin Salman.

According to the Kuwaiti newspaper Al Jareedah, 1,200 paramilitary forces charged with Khamenei’s security, known as the Al Sabreen Brigade, have been deployed to the Iraqi-Iranian borders, side-by-side with the Quds Force that handles Iranian militias in Iraq.

The move came hours after Al Abadi’s decision to abide by US sanctions.

-With inputs from Layelle Saad/GCC Middle East Editor

Published in Gulf News on 13 August 2018.