The President Donald Trump administration in November granted Iraq a 45-day waiver to continue its energy purchases — and at the risk of setting off more instability in the country, the U.S. is now expected to continue allowing transactions with Iran under yet-to-be-decided conditions.
But the sanctions provide a new urgency to accomplish something Baghdad and Washington have been pursuing for some time: reducing the war-weary country's economic reliance on Tehran.
And after billions spent on years of war and occupation, Washington has a real interest in Iraq's success, he added, "not least of which is as a bulwark against Iran." A determination will be made to extend Iraq's waiver, a state department official told CNBC, though a decision has yet to be reached.
Iran is Iraq's third-largest trading partner, with an estimated $12 billion in cross-border trade per year, and the majority-Shia countries share strong cultural, religious and geographic ties. And despite being OPEC's second-largest producer of oil, Iraq is dependent on Iranian natural gas plants for up to 45 percent of its electricity — a setup now facing potential jeopardy amid U.S. sanctions.