“The government plans to ask Washington for a waiver. It’s going to happen soon,” one Iraqi central bank official said, Reuters has reported on Tuesday.
The US Department of State has scrambled to keep good diplomatic relations with partners and allies, despite Trump's sanctions complicating their work. This is especially true in Iraq, a country that is close to forming a new government.
Iraqi Prime Minister Haider al-Abadi, who is seen as Washington's preference to retain the position, came under fire when on August 7 he said Iraq would abide by the sanctions, despite them being a mistake. Abadi noted the negative impact US sanctions had on Iraqis under the regime of Saddam Hussein in the 1990s.
He tried to backtrack on his stance a week later, saying Iraq will continue to do business with Iran, but not in US dollars. Iran then said the Iraqi premier was not welcome to visit — a response seen as a reaction to his previous remarks.
The US has supported Abadi's government and his fight against extremism in the ISIS conflict. Following Abadi's third-place finish in Iraq's parliamentary election on May 12, his Nasr list has sought to build alliances with blocs not seen to be under Iran's thumb.
"You know our concerns about Iran and about trading with Iran, and we will continue to hold countries accountable for any violation of sanctions," said US State Department Spokesperson Heather Nauert on August 14.
The European Union has tried to shield its business interests with Iran via a 'blocking statute.' However on Monday, French firm Total quit a multi-billion dollar gas project in Iran.
Much of Iraq's trade with Iran is already unregulated because of smugglers; Iraq and Iran do have multiple agreements in the fields of energy, commerce, and tourism which are dependent upon the US dollar.
A total embrace of US sanctions by Bagdad would back Iraq — and the Kurdistan Regional Government which says it will follow the lead of Baghdad — into an untenable situation at a time when Trump is slapping sanctions at the drop of a hat.
The State Department established the Iran Action Group (IAG) on Thursday to have a more "comprehensive approach to Iran."
“There is a fear that Washington will force Iraq into a ‘you are with us or against us’ situation,” said a Western diplomat, Reuters has reported. “They should not force Iraq to make that choice.”
Standing alongside Trump on Thursday, Treasury Secretary Steven Mnuchin reiterated that the trade sanctions are just the first round. Oil sanctions are expected to take effect in November.
"I’ll also just comment on the rollout of the Iran nuclear sanctions is going extremely well. We’re working closely with Secretary [Mike] Pompeo. Strongest sanctions in preventing things there."
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