Middle East

Caught in the Middle: How Trump's Anti-Iran Sanctions Inflicting Pain on Iraqis

Get short URL

Baghdad is walking a tightrope between Iran and the US following the resumption of anti-Iranian measures by Donald Trump. Given Iraq's close political and economic ties with the Islamic Republic the US sanctions could hurt it severely and push it further into the arms of Tehran.

Baghdad has found itself between the devil and the deep blue sea, as Donald Trump's first round of anti-Iranian sanctions came into force on August 7.

"As a matter of principle we are against sanctions in the region. Blockade and sanctions destroy societies and do not weaken regimes," Iraqi Prime Minister Haider al-Abadi stated on August 7. "We consider them [sanctions on Iran] a strategic mistake and incorrect but we will abide by them to protect the interests of our people. We will not interact with them or support them but we will abide by them."

However, on August 13, al-Abadi somewhat backpedaled on his commitment: "I did not say we abide by the sanctions, I said we abide by not using dollars in transactions. We have no choice," he noted.

A senior Iraqi diplomat working in Washington told Sputnik that "the US understands the complexity of Iraq's relations with Iran," but "continue to exert pressure." According to him, Baghdad is in a situation when it needs to maintain good relations with both the US and Iran.

Abadi's recent remarks have not gone unnoticed by Washington: During an August 14 press conference State Department Spokesperson Heather Nauer made it clear that the US "will continue to hold countries accountable for any violation of sanctions."

The first round of sanctions imposed on Tehran on August 7, envisages placing restrictions on Iran's automotive sector, the rial and on the country's trade in gold and precious metals. The second batch of sanctions that is expected to take effect on November 5 will target Iran's energy sector, including petroleum-related transactions, as well as transactions by foreign financial institutions with the Central Bank of Iran.

The US is resuming its sanctions regime against the Islamic Republic after Donald Trump's withdrawal from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, in May 2018.

Bound Together by Politics and Trade

Washington's unilateral move has already backfired on Iraqis. Following Washington's pullout from the nuclear deal the Iranian national currency has plummeted by almost 50 percent, inflicting pain on Iraqi investors. According to The Washington Post, during the 2015 Daesh (ISIS/ISIL)* onslaught the people of Iraq poured millions of dollars into Iranian banks seeking a safe haven for their life-savings.

Besides, Iranian banks offered up to 20 percent interest in 2015 expecting an economic boom after the lifting of the anti-Iranian sanctions by the US and the EU. Now, the Iraqi deposits have gone down in value.

Meanwhile, Iran, who shares a 1,500-kilometer border with Iraq, remains Baghdad's second-largest trading partner after Turkey. The Islamic republic supplies its neighbor with almost everything from milk to cement and bricks: "Walk into almost any market in Iraq and the shelves are filled with goods from Iran — milk, yogurt, chicken," The New York Times wrote in July 2017. Moreover, Iraq is dependent on Iranian natural gas to operate its electric power stations.

Under these circumstances, "Iraq has no choice but to violate sanctions," Politico presumed, adding that it could "drive the country further into Iran's sphere of influence," — exactly what the Trump administration is fighting against.

According to the media outlet, if Iraq chooses to abide by the US sanctions policy, Iran could exert substantial economic and political pressure on its neighbor.

Al-Monitor echoes this stance, saying that "Iran has enough influence to replace Abadi with other candidates" in case he follows the US suit. The online newspaper noted that the Iraqi prime minister had recently come under heavy criticism from the pro-Iranian Fatah Alliance, the second biggest winner in the May parliamentary elections after Muqtada al-Sadr's Sairun, and even his own Islamic Dawa Party. In addition, the representative of the Kurdistan Regional Government (KRG) in Iran, Nazem Dabbagh, has signaled Erbil's support for Iran and slammed Abadi for obeying Washington.

*Daesh (ISIS/ISIL/Islamic State), is a terrorist group banned in Russia.