How will increased US pressure on Tehran affect Iraq?

Abdul-Mahdi said Iraq was not part of the sanctions issue and would wait to see what happened after the US decision was implemented.
Sunday 28/04/2019
A man counts Iranian rials at a currency exchange shop in Basra. (Reuters)
Limited options. A man counts Iranian rials at a currency exchange shop in Basra. (Reuters)

LONDON - The Trump administration has implemented additional measures to increase pressure on Iran, announcing the end of waivers for the import of Iranian oil.

“Today I am announcing that we will no longer grant any exemptions,” US Secretary of State Mike Pompeo said. The waivers allowed eight countries to import Iranian oil. The decision follows a recent designation of Iran’s Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organisation.

The IRGC designation is “significant,” said Muhanad Seloom, honorary research fellow at the Institute of Arab and Islamic Studies at the University of Exeter. “It gives the United States legal cover to target the IRGC” inside and outside Iran.

Iran reacted with defiance to Pompeo’s announcement. Iranian Supreme Leader Ayatollah Ali Khamenei said in a speech that “such attempts will lead nowhere and we are capable of exporting as much oil as we need and want.”

An IRGC commander said Iran would interrupt the global flow of oil through the Strait of Hormuz if it was prevented from using it.

Iran’s economy is highly dependent on oil revenue and Tehran will need to find ways to continue to export oil, which may include illicit methods such as smuggling, said Renad Mansour, research fellow at the Chatham House think-tank in London. “This will impact Iraq because a lot of this will go to Iraq and from [there] elsewhere,” Mansour said.

The end of the sanctions waivers does not apply to Iraq, a major oil producer, but Baghdad has relied on an exemption to import Iranian gas and electricity. Iraqi officials have said the local energy sector needed Iranian supply to cope with power shortages. There has been no indication from Washington on whether it plans to end the exemption for Iraq, which expires in June.

Iraqi Prime Minister Adel Abdul-Mahdi said Iraq was not part of the sanctions issue and would wait to see what happened after the US decision was implemented. An Iraqi Oil Ministry spokesman said any decision to raise oil production levels would be taken collectively by OPEC members.

One day after Pompeo’s remarks, Iranian lawmakers on April 23 declared the entire US military a terrorist entity, a particularly relevant issue for US forces in Iraq and Syria, where the IRGC commands strong influence.

“Iran may look at Iraq as a way to undermine US interests. We know that Iran is much more powerful than the US in Iraq,” said Mansour. If the escalation of tensions turned into a zero-sum issue between Iran and the United States in Iraq, it would turn into a problem for the Iraqi government, which does not want to choose between the two sides, he said.

Seloom said Iran’s relationship with key Iraqi politicians, such as Hadi al-Amiri and Abdul-Mahdi goes back decades but stressed that the United States also commands much influence in the country, for example by re-establishing its military presence since 2014 and controlling Iraq’s international financial transactions.

Powerful Iraqi politicians rejected the US sanctions against Iran but others warned of the dangers of non-compliance, with one likening it to “playing with fire.”

Looming over an increase in tensions between Washington and Tehran is the threat of violence between armed groups close to Iran and US forces. Iran can rely on a vast network of heavily armed groups and allied politicians in Iraq.

“Iran will pursue, as much as possible, political and legal ways to combat US influence,” said Mansour, referring to efforts in the Iraqi parliament to pass legislation mandating US troops to leave. If that does not work, he said, it can resort to violent tactics.

Seloom said he was sceptical of the likelihood of an armed confrontation between Iran-linked groups and US troops, calling it an “extreme option.” “Even if the US attacks Iran… I don’t see Iran asking anyone attacking US interests because the US has so much force Iran is not capable of confronting,” he said.

Amid this, Iraq is trying to change its position from being a playground to becoming a mediator, said Mansour.

On April 20, parliamentary officials from regional countries gathered in Baghdad. The meeting was a rare occasion in which Saudi and Iranian officials attended the same event. Since taking office last year, Abdul-Mahdi has struck trade and political agreements with Jordan, Saudi Arabia, Iran and Syria.

“Both Iran and Saudi Arabia are happy to have someone in between,” said Seloom, adding that Iraq was not in a position to become “the strong country in the middle” but could act as a messenger. “There is some flirtation between Saudi Arabia and Iran through Iraq,” he said.

Mansour said despite glimpses of hope, Iraq faces many internal challenges. “Because the state is weak and governance is weak and the actors are fighting with each other Iraq is unable to have a single foreign policy when it comes to negotiating at the regional level,” he said.

Direct armed conflict between Tehran and Washington remains unlikely. Speaking to Reuters, Iranian Foreign Minister Mohammad Javad Zarif said he did not believe US President Donald Trump “wants war… but that doesn’t exclude him being basically lured into one.”