Speaking to Rudaw English, Hosseini said Iraq has already started depositing money owed to Iran into a special account at the privately-owned Trade Bank of Iraq (TBI).
Iran has struggled to recoup payments from Iraq since the US government withdrew from the 2015 nuclear deal and re-imposed economic sanctions on Tehran, which effectively cut Iran off from the global financial system.
In February, when Iranian central bank governor Abdolnasser Hemmati met with his counterpart in Baghdad, they signed an agreement on a payment mechanism for Iraq to settle its dues.
“The mechanism has been operational since the beginning of Ramadan,” Hosseini told Rudaw English, referring to the period in early May when the holy Islamic month began. “They have already deposited money in dinars into the account at TBI but I don’t know exactly how much they have deposited.”
Iran has exported electricity and natural gas to Iraq for more than a decade. Iraq currently owes Iran roughly $2 billion in unpaid debts, which US sanctions have prevented Baghdad from repaying.
Under the terms of the four consecutive sanction waivers Washington has granted to Baghdad, the country is obliged to stop trading with Iran in dollars.
“The Americans have no problem with this mechanism, even the [TBI] bank is affiliated with J.P. Morgan,” Hosseini said, referring to the US multinational investment bank.
One banking insider said the TBI handles most of the Iraqi government’s transactions, claiming it makes sense for them to open the account there. JP Morgan works closely with the TBI and provides it with SWIFT global transaction services.
Rudaw English has reached out to the TBI for comment, but has not received a reply.
Iran’s total non-petroleum export to other countries stands at $25 billion, with $9 billion going to Iraq alone, according to the Joint Chamber of Commerce.
Iraq has overtaken China and Turkey as Iran’s main trading partner since 2018. Iraq and the Kurdistan Region are critical markets for Iranian goods.
The number of land border crossings to facilitate trade is growing between the two countries. The current trade volume between Iraq and Iran stands at $13 billion, Hassan Danaeifar, secretary of the Committee to Develop Iranian Economic Ties with Iraq, said Monday.
Asked if the new mechanism includes the Kurdistan Region, Hosseini said the whole of Iraq is part of the agreement but said he is unaware whether the Kurdistan Regional Government (KRG) owes any dues to Iran.
