Iran sanctions are testing US relations with Iraq

The Trump team’s policy of trying to nudge Iraq away from Iran through a carrots-and-sticks approach is unlikely to succeed.
Sunday 02/12/2018
Tug of war. An Iraqi vendor sells Iranian currency in a street in Najaf.  (AFP)
Tug of war. An Iraqi vendor sells Iranian currency in a street in Najaf. (AFP)

The Trump administration has generally been cautious in criticising Iraqi officials largely because, after so much blood and treasure has been spent there, it wants Iraq to be in the US orbit.

It also wants to continue its training mission with the Iraqi Army, which proved very important in the defeat of the Islamic State. A stable, friendly Iraq is a clear US goal.

However, the administration’s Iran sanctions policy is severely testing the US-Iraqi relationship. US national security adviser John Bolton’s comment that the administration wants to “squeeze them [the Iranians] until the pips squeak” runs counter to the strong economic and cultural ties between Iraq and Iran that have developed since the toppling of Saddam Hussein.

Even though it has substantial oil resources, Iraq is dependent on Iran for a significant portion of its energy needs; natural gas from Iran accounts for 45% of Iraq’s electricity consumption, the Wall Street Journal reported.

The United States granted Baghdad a 45-day waiver from its most recent sanctions against Iran but US energy officials acknowledged that it will take Iraq much longer to develop alternatives to importing energy from Iran.

The United States is pursuing a two-pronged approach. It is encouraging US energy companies to sign deals with Iraq to capture natural gas from some of its oil fields to be used to produce electricity. It is also pushing the Saudis to invest in energy and electricity projects in southern Iraq, an area that faced severe electricity shortages over the summer that led to widespread protests.

Outside of the energy sector, there is much trade between Iran and Iraq. From March through October, for example, Iraq imported about $6 billion in non-crude Iranian goods. In addition, Iran has developed medical facilities along the Iran-Iraq border to attract medical tourism from Iraq and has invested in infrastructure in Shia holy cities in southern Iraq. Tens of thousands of Iranian religious pilgrims visit those sites every year, which helps to shore up Iraq’s economy.

In short, it would be difficult for Iraq to substantially diminish its economic links to Iran.

Politically, Iraqi leaders want to show that, despite their country’s strategic ties to the United States, they will pursue an independent foreign policy, which includes maintaining friendly relations with Iran. Iraqi President Barham Salih travelled to Tehran in November for high-level meetings. Salih and Iranian leaders pledged to boost economic ties despite the US sanctions.

Shortly after Salih’s visit, Iraqi Prime Minister Adel Abdul-Mahdi said Baghdad would not respect the US sanctions on Iran, which he described as an American “diktat,” not an international decision that has UN approval.

Interestingly, the United States has not openly criticised those statements by Iraqi leaders but is clearly worried about Iraq’s ties to Iran, particularly in the military sphere. One of the demands on Iran that US Secretary of State Mike Pompeo enunciated in May, when the United States pulled out of the nuclear deal, was for Tehran to not hinder the “disarming, demobilisation and reintegration of the Shia militias,” also known as the Popular Mobilisation Forces (PMF), in Iraq.

The PMF played a crucial role in defending Baghdad in the summer of 2014 when the Islamic State was on the march and helped to defeat the jihadist group. Although the PMF includes Shia factions with varying loyalties, a significant part of its forces is under the sway of pro-Iran factions. Iran’s al-Quds force, the intelligence arm of the Islamic Revolutionary Guard Corps, has been instrumental in training the PMF.

US State Department spokeswoman Heather Nauert has reiterated that Tehran “must respect the sovereignty of the Iraqi government and permit the disarming, demobilisation and reintegration of Shia militias.” In response, the Iraqi Foreign Ministry rejected what it said was US “interference” in Iraq’s internal affairs and Abdul-Mahdi pledged to continue to support the PMF.

It is not just the Trump administration that opposes the PMF and wants its disarming and demobilisation. The US Congress has become involved through bipartisan legislation in the House of Representatives, called the Iranian Proxies Terrorist Sanctions Act, that would sanction several groups within the PMF. Prominent members of Congress have pressed the Trump administration on why it has not designated such groups as terrorist organisations, given their close ties to Iran.

Despite its efforts, the Trump team’s policy of trying to nudge Iraq away from Iran through a carrots-and-sticks approach is unlikely to succeed because Iraq’s leaders see merit in maintaining multifaceted ties to Iran.