Iran to Import Goods From Iraq Using Trapped Energy Revenues

(Bloomberg) --

Iran plans to import goods from Iraq using billions of dollars of gas and electricity revenues stuck in the country due to U.S. sanctions.

The nations’ central banks signed an agreement on Wednesday enabling the trade for the first time, the governor of Iran’s bank, Abdolnaser Hemmati, told state-run Islamic Republic News Agency. He met with his Iraqi counterpart Ali Mohsen Al-Alaq in Baghdad.

The U.S., which imposed tough penalties on Iran’s economy that limit its ability to make cross-border financial transactions, has told Iraqi officials to make efforts to curtail the country’s dependence on Iranian energy.

Hemmati didn’t give details on the type, value or quantity of goods involved in future trades under the agreement.

Earlier this month, Iranian Energy Minister Reza Ardakanian said Iraq owed Iran at least $800 million for electricity imports. In February last year, Tehran said Iraq owed around $2 billion for purchases of natural gas.

Iraq was Iran’s second-biggest trade partner after China in the year ending March 2019, the destination for around $9 billion worth of goods, according to Iranian customs data. Imports from Iraq accounted for just $58 million.

©2020 Bloomberg L.P.

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