Iraq and US agree on goods-based payments for Iran gas debt

Shafaq News- Baghdad

Iraq and the United States have reached an agreement allowing Baghdad to settle Iran's outstanding payments for gas imports through the supply of goods, including food and medicine, instead of cash transfers, a member of the Iraqi Parliament's Electricity and Energy Committee said on Monday.

Riyadh Uday told Shafaq News that Iran is seeking about $11 billion in unpaid dues from Iraq, adding that a part of the amount is currently held at the Trade Bank of Iraq (TBI) but cannot be transferred because of US sanctions imposed on Iran.

"There are ongoing discussions between the Iraqi and Iranian delegations to resolve the issue of these funds and resume the supply of Iranian gas to Iraq's power plants."

Last Thursday, Iranian Central Bank Governor Abd al-Naser Hemmati disclosed the value of Iran's outstanding claims against Iraq for exports of natural gas and electricity, noting that the issue was a key topic during talks with Iraqi Central Bank Governor Nizar Nasser Hussein on the sidelines of Iraqi Prime Minister Ali Falih Al-Zaidi's visit to Tehran.

“The Central Bank of Iran holds about $7 billion deposited in Iraq, in addition to more than $3 billion owed to Iran's Oil Ministry, bringing the total amount owed by the Iraqi government and Iraqi banks to between $10 billion and $11 billion.”

Under bilateral agreements, Iraq deposits payments for imported Iranian gas and electricity into accounts held at the Central Bank of Iraq and the Trade Bank of Iraq.

The original contracts stipulated that gas imports would be paid for in euros and electricity imports in US dollars. However, after the United States withdrew from the 2015 nuclear agreement with Iran in 2018 and reimposed sanctions, Iraq was no longer able to settle the payments in foreign currencies. The restrictions led to the accumulation of the funds within Iraq's banking system and limited how the money could be used.