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Iraq caught in crossfire of US sanctions on Iran
BAGHDAD, Aug 9, 2018 (BSS/AFP) – Caught in the crossfire between its key
allies Tehran and Washington, Iraq’s economy could suffer the heaviest
collateral damage from the US reimposing sanctions against Iran.
Washington slapped unilateral sanctions back on Tehran on Tuesday, after
pulling out of a landmark 2015 nuclear deal in May.
For Iraq, recently emerged from an expensive war on jihadists, the embargo
on its neighbour could hit jobs and cut off a crucial source of cheap
imports.
In 2017, Iraq imported around $6.6 billion (5.7 billion euros) worth of
products from Iran, ranging from cars and washing machines to agricultural
goods.
Iraq has already witnessed a month of protests over a stagnant economy,
widespread corruption, unemployment, chronic power cuts and an agriculture
sector devastated by drought.
“Eighty percent of products on the market are Iranian-made, so if the
border closes, it will be a crisis for us,” said Ali Ajlan, whose Baghdad
store sells household electrical items.
Another importer, Abbas Mukhaylef, said he can’t even imagine an
alternative to Iran as a supplier.
“Each year we import between 200,000 and 300,000 containers of air coolers”
from Iran, he said. “We depend on Iran for most goods.”
For the Iraqi consumer, Iranian goods have a big advantage: they are the
cheapest on the market.
Iraqi Prime Minister Haider al-Abadi said on Tuesday he would reluctantly
comply with the new American embargo.
“We don’t support the sanctions because they are a strategic error, but we
will comply with them,” Abadi said. “In general, sanctions are unjust.”
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– Car imports stopped –
Baghdad is allied with Washington, a strategic partner in the war that saw
Iraq declare “victory” over Islamic State group jihadists in December 2017.
But Baghdad also has strong ties to Tehran, a Shiite powerhouse that is
heavily involved in the politics of Shiite-majority Iraq.
Imports paid in US dollars have already ground to a halt.
“To comply with the American sanctions, we’ve stopped imports of Iranian
cars,” said a senior official in the auto import industry.
The official, who asked not to be named, said Baghdad had asked for an
exemption from Washington to allow imports of Iranian spare parts for car
assembly facilities in Iraq.
Production has ground to a halt with 5,000 jobs on the line, he said.
While Iraq’s exporters won’t feel too much of a pinch — Iran only imported
$77 million worth of Iraqi goods last year — economic tourism looks set to
take a hit.
“The two or three million Iranian pilgrims who come each year (to Shiite
holy sites) represent a major economic activity that Iraq could now be
deprived of,” warned Muzhar Mohammed Salah, an economic advisor to Iraq’s
prime minister.
– Winners and losers –
The big winner will be the black market, which will feed demand for Iranian
goods, predicted trader Ajlan, pointing out the border between the two
countries runs more than 1,000 kilometres (600 miles).
“Imports will continue, even if, officially, they are prohibited,” he said.
Yassin Faraj of the chamber of commerce in Sulaymaniyah, an Iraqi Kurdish
province bordering Iran, told AFP smugglers could use several unofficial
crossing points.
He also forecast that tougher US sanctions on Tehran would spark “an influx
of Iranian workers”, especially to the autonomous Kurdistan region, in a
fresh blow to Iraq’s own workforce.
Iraq can ill afford further economic and social troubles.
At least 14 people have been killed since protests erupted in early July in
the southern province of Basra before spreading north, including to Baghdad.
Iraq itself endured more than 12 years of international sanctions after
late dictator Saddam Hussein’s 1990 invasion of Kuwait.
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