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Iraq squeezed between US and Iran as sanctions disrupt flights

Responding to threats of US sanctions, Iraq has shut down ground services to multiple Iranian airlines at three major airports in the country, effectively ending flights between the two nations.

Various pro-Iranian politicians warned against bending to US sanctions, but those warnings were not heeded.

Iraq is in a difficult situation, allied both to America and to Iran. At times like this, it is squeezed between the two.

There is a strong pro-Iranian representation in the Iraqi parliament, and Iraq is strongly reliant on Iran for trade and the import of certain crucial goods, most notably gas, which powers much of the electricity network in the country.

Now that Iraq is responding to this US sanctions directive, Iran may push back, incurring economic consequences.

In general, though, the war has been very disruptive to the Iraqi economy. Iraq is hugely reliant on oil, which it exports primarily through the Strait of Hormuz, and has been massively impeded by the blockages that have been witnessed there.

Some blame Iran for this, feeling that Iran is too controlling of Iraq. Others blame the US and Israel for having started the war in the first place.

Either way, Iraq remains in a very delicate position between all of these larger and more powerful states, continuing to suffer economic consequences and the fallout itself.

Iraqi armed group leader urges MPs to reject US pressure over Iran

Abu Ala al-Walai, leader of the Iran-backed Iraqi armed group Kataib Sayyid al-Shuhada, has called on parliament to push the government to reject what he described as US pressure to support the blockade on Iran.

In a statement, al-Walai said Iraq should not become part of an “unjust blockade” on Iran, adding that Iraq’s position should be “no to the blockade”.

He urged members of parliament to push for a government decision rejecting US demands, pointing to Russia and China as examples of nations that have successfully opposed Western sanctions and what he termed “policies of diktat”.

Iraq seeks US sanctions exemption for Iranian flights

Iraqi Prime Minister Ali al-Zaidi’s office has said that Baghdad is “conducting direct dialogue with the American side to exempt some Iraqi airports” from the recent US Treasury policy threatening sanctions against airports hosting or assisting Iranian flights.

In a statement released on Saturday, PM office noted that the discussions are aimed at securing an exemption “in a manner that allows the resumption of air travel, for humanitarian reasons related to treatment, study, religious visits, and civilian interests.”

“While the Iraqi government is working to de-escalate the situation in the region, it affirms that the continuation of crises complicates the scene further, and calls on all parties to engage in dialogue and negotiation to reach solutions that end the current crisis and conflicts, in a way that achieves the interests of the region’s countries and peoples,” the statement added.

Pezeshkian says Iran ‘stands firm’ against US, Israel amid ‘miscalculated’ sanctions

Iran’s president says that those who “thought they could target the Iranian people with sanctions miscalculated”.

Pezeshkian said the US and Israel are seeking to “prevent Iran from relying on itself”, but Iran would invest in its people.

He also said the US and Israel “dragged” regional countries into war, thinking that the Iranian regime “would fall within days”.

Despite that, he said Iranians have “stood firm in the face of American and Israeli attacks, and we will continue to stand firm”.

He added that regional security can be achieved through “cooperation among its countries”, and that the region does not need a “policeman”.

Trump could be ‘to some degree understanding’ of Iraq’s plea for flight exemptions from US sanctions

Iraq’s prime minister has called for exemptions from US sanctions on any global companies doing business with Iranian airlines for flights involving civilian interests.

Lahib Higel, deputy director for the Middle East and North Africa at the International Crisis Group, said the request was reasonable given the number of flights between Iran and Iraq each day.

She said Iraqis travel to Iran for religious purposes and studies, and Iranians do the same in Iraq; “so this is impacting a whole lot of people, including Iraqis”.

While the Trump administration is trying to target the government in Tehran, “this has broad effects for the populations of both countries,” she added.

Higel said the prime minister’s good relationship with Trump might help him persuade the US president that some exemptions are needed, given the broad impact of the sanctions.

She said Trump could be “at least to some degree understanding” of the fact that Iran can also cause Iraq harm, a message she expects the prime minister to press.

Tehran airport executive says flights to East Asia unaffected

Ramin Kashefazar, the CEO of Imam Khomeini International Airport City in Tehran, has told Iran’s Fars news agency that flights to East Asia, including China, Vietnam and Malaysia, are operating without cancellations.

The US Treasury announced sanctions on Iran’s aviation sector earlier this month, targeting airlines and dozens of companies that support them in an effort to cut off Iran’s air links entirely.

Iraq has said that it is seeking an exemption from the US to host Iranian airlines.

Iran’s security council denies it intends to engage in military retaliation over airspace restrictions

Iran’s Supreme National Security Council has denied the “claim that Iran intends to engage in military retaliation in response to recent airspace restrictions”.

In a statement addressing what it said were “inaccurate interpretations” of quotes by its secretary, Mohsen Rezaei, the council’s secretariat said negotiations with relevant countries to lift certain “illegally imposed airspace restrictions are being pursued seriously”.

It said that various nonmilitary countermeasures would be implemented regarding specific airports should the need arise, adding, “we hope the situation does not reach that point”.

The statement comes after Rezaei warned on Wednesday that Tehran would retaliate against neighbouring countries cooperating with the US’s latest aviation sanctions on global companies doing business with Iranian airlines.

Disrupted oil exports, costlier imports, weaker currency expose Iraq’s economy

Iraq is heavily dependent on imports, from food and medicines to appliances, as well as raw materials for its industries.

Its one big export is oil and it sits on such a huge supply that revenues from sales abroad offset imports and ensured a positive trade surplus.

Things have changed since the start of the US-Israeli war on Iran in late February and the subsequent end to the free flow of shipping through the Strait of Hormuz, through which much of Iraq’s trade with the rest of the world passed.

Now, Iraq’s Prime Minister Ali al-Zaidi has described the country as “facing extraordinary economic challenges”.

Iraq says in talks with US to exempt some airports from restrictions on Iranian airlines

The Iraqi government is holding talks with the US to exempt some airports from restrictions on Iranian airlines, according to a statement shared on social media by Iraqi Prime Minister Ali al-Zaidi’s media office.

The exemption would allow flights related to humanitarian purposes, education, religious pilgrimages and medical treatment to resume.

Yesterday, four Iraqi airports suspended all flights to and from Iran, days after the US announced new aviation sanctions on any global companies doing business with Iranian airlines.

As tensions from the US-Israel war on Iran remain high throughout the region, Iraq “calls on all parties to engage in dialogue and negotiations to reach solutions that bring an end to the current crisis and conflicts in a manner that serves the interests of the countries and peoples of the region”, concluded the statement.

Iran’s ambassador to Iraq says decision on flights to be announced soon

The Iranian ambassador to Iraq, Mohammad Kazem al-Sadegh, has said that officials from the two countries are in contact and a new decision on flights is likely to be announced soon, Iran’s IRNA reports.

“About 12,000 to 13,000 people travel between Iran and Iraq via Iranian airlines every day, and this is not a small number,” Sadegh added.

We reported earlier that Iraq is holding talks with the US about exempting some airports from US aviation sanctions on companies doing business with Iranian airlines.

Iraq says it has reached understanding with US on cash dollar shipments

Iraq’s government spokesperson Haider al-Aboudi has said that Prime Minister Ali Faleh al-Zaidi has reached an understanding with the US to continue the shipment of cash dollars to Iraq.

In a statement to the Iraqi News Agency (INA), al-Aboudi said that a shipment was set to arrive in the coming days, and that the dollars will help “meet legitimate foreign currency needs”.

He added that the understanding came “in light of the progress Iraq has achieved in strengthening the oversight system for dollar distribution and regulating its uses”, as well as curbing the misuse of foreign currency, expanding electronic payment methods and proceeding with a gradual transition towards a digital economy.

Following the fall of President Saddam Hussein after the 2003 US invasion of Iraq, the country’s oil revenues were placed in a special account in the US, with money then transferred to Baghdad.

This transfer is renewed annually by the US president, with the stated purpose of safeguarding Iraq’s financial resources. But the system also gives Washington a large degree of oversight over the flow of dollars from the account to Iraq.

The US paused dollar cash shipments to Iraq in April, with some reporting indicating that this was linked to pressure over Iran-backed militias in Iraq, but some physical shipments resumed in July.

Iraq has two dollar accounts at the Federal Reserve Bank of New York (FRBNY), one where oil export revenues are deposited, and the other is the Central Bank of Iraq CBI’s foreign reserve account.