Iraq positioning after return of US sanctions against Iran

With the start of the first round of US sanctions against Iran, different countries announced their position regarding the sanctions. The Iraqi Prime Minister, Haider al-Abadi, had initially said that while he opposes sanctions on Iran, he would uphold them in order to maintain his country’s interests. After several days he clarified his position saying that he only meant US dollar sanctions and that his country would maintain trade with Iran using different currencies.

Etemad newspaper writes that after Turkey, Iran is Iraq’s biggest trade partner. Iran’s exports 6.5 billion dollars’ worth of goods and services to Iraq each year. The main exports include automobiles, auto parts, construction material and foodstuff. Stopping these exports only in the auto parts sector would lead to the loss of 5000 Iraqi jobs.

Although Iraqi exports to Iran are limited to 77 million dollars, in the tourism sector, 2 to 3 million Iranian pilgrims visit Iraq every year which is a significant income for Iraq. Etemad believes that due to the volume of trade and close knit ties between the two countries, a cutting of relations is unlikely between the two countries.

A number of business people believe that the rise in the exchange rate for the US dollar is due to dollars no longer entering Iran via Iraq. However, the Head of the Iran and Iraq Chamber of Commerce has guaranteed that there are no problems in this regard. Saudi Arabia which is Iran’s main rival in the region is also seeking to improve relations with Iraq. Which neighboring country attracts Iraq more, remains to be seen.