Baghdad torn between Tehran’s pressures and US sanctions

The biggest challenge for Baghdad is Washington’s unilaterally reimposed economic sanctions against the Iran.
Sunday 25/11/2018
Iranian President Hassan Rohani (R) speaks during a joint news conference with his Iraqi counterpart Barham Salih at the Saadabad Palace in Tehran, on November 17. (Iranian Presidency)
Dangerous association. Iranian President Hassan Rohani (R) speaks during a joint news conference with his Iraqi counterpart Barham Salih at the Saadabad Palace in Tehran, on November 17. (Iranian Presidency)

Iraqi President Barham Salih’s visits to Tehran on November 17 and Riyadh a day later reflect the delicate balance Baghdad seeks to maintain in a region where two powerful neighbours battle for supremacy. The biggest challenge for Baghdad, however, is Washington’s unilaterally reimposed economic sanctions against Iran. Can Salih maintain the balance between Tehran on the one hand and Washington and its allies on the other? If so, how?

Receiving Salih, Iranian Supreme Leader Ayatollah Ali Khamenei warned the Iraqi president against “certain ill-wishing governments and states, which do not want the people of Iraq to taste victory… and do not want Iraq and the region to experience calm.” The ayatollah further warned against “some governments, within and outside of the region, who bear extreme grudges against Islam… and interfere in internal affairs of Iraq.”

However, the principle of non-interference in the internal affairs of other countries did not prevent Khamenei from making the following statement about the situation in Iraq: “Formation of The Popular Mobilisation Forces in the struggle against terrorism is an example of relying on the youth, and it must be preserved.”

The Popular Mobilisation Forces are an umbrella organisation composed of various Shia militias, some of which report to the Islamic Revolutionary Guard Corps rather than to the Iraqi government. In Iraq’s recent parliamentary elections, several of those militias were organised into a coalition called the Fatah Alliance. Doubling up as political parties, the militias did well and won a significant number of seats in parliament. Thus, this parallel politico-military structure provides Tehran with leverage over Iraq. It’s leverage Washington is keen to end as part of its general policy of containing Iran’s influence in the region.

At a news conference with Iranian President Hassan Rohani, Salih also had to negotiate the diplomatic minefield between Tehran and Washington. Calling for bilateral relations to be boosted, Salih disclosed he had ordered the Iraqi Foreign Ministry and the Ministry of Industry to expand the relationship with Iran.

Commenting on the establishment of an economic free trade zone along the Iran-Iraq border, Salih said: “Connecting the railroads of the two countries would be a great help [in] transporting Iranian pilgrims to Iraq, but it must further be considered as an important move for the economic infrastructure of the two countries.” In the same vein, Rohani said the two neighbours can raise annual bilateral trade to $20 billion from the current $12 billion.

Salih’s promised expansion of economic ties with Iran comes soon after Washington gave Iraq 45 days to stop purchasing natural gas from Iran. The Iraqi government dismissed the demand, citing the risk of an energy crisis. “Stopping Iranian gas after the deadline will create a real power crisis. We need more time… The Americans are aware of how desperately we need Iranian gas,” an unnamed Iraqi government official recently said. However, he stopped short of referring to the violent protests in the port of Basra in the summer, which took place partly because of a halt to electricity imports from Iran.

Any boosting of the Iran-Iraq economic relationship may also be seen as a prelude to large-scale circumvention of American sanctions. Iran will most likely rebrand Iranian products, including oil, as Iraqi in order to maintain its exports to the world market. This will doubtless increase transaction costs for Tehran, but it will help the regime secure foreign currency flows under the sanctions.

Despite Washington’s opposition, there is little Salih can do. This is partly because of the politico-military parallel structure of the Shia militias. And there is Iran’s constant threat to cut power exports to Iraq under the pretence of “meeting domestic demand.” This clearly shows Tehran’s willingness and ability to hold Baghdad hostage in its row with Washington. Time will tell if Washington is willing and able to devise a strategy for Iraq that weakens Tehran’s leverage over Baghdad.