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The Iraq Report: Iraq moves closer to Iran while appeasing the US

Iranian President Hassan Rouhani and Iraqi Prime Minister Adil Abdulmehdi shake hands in March [Anadolu/Getty]

Date of publication: 13 July, 2019

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This week, Iraq finds new ways to bypass sanctions on Iran while trying to appease anger from Washington.

Iraq is once again caught playing a dangerous double game where it is on the one hand trying to appease the US and on the other assisting its Iranian allies to skirt US sanctions. The Iraqi government's inability to reconcile its reliance on Tehran's patronage and on Washington's goodwill to survive will mean that such games will be the norm in Baghdad's international relations.

Iraq faces further threats from homegrown extremism as its prisons have been criticised by human rights monitors as being potential breeding grounds for radicalisation due to the degrading conditions people are being put through. If Baghdad does not soon get a handle on the spiralling human rights situation, then there would have been little point in defeating the Islamic State (IS) group only for it or a splinter group to re-emerge and drag the country back into a devastating and bloody conflict.

Iraq bypasses US sanctions despite waivers

Earlier this month AFP reported that Iraq was coordinating with the United States and Iran in order to set up a "loophole" that it could exploit to continue purchasing electricity and other energy products from Iran despite US sanctions.

The workaround is apparently the result of months of diplomatic lobbying and will allow Iraq to purchase Iranian energy by using Iraqi dinars as the currency of exchange with all money being deposited into a special Iraqi bank account. Tehran will not be able to directly access this money, but will be allowed to use the account to buy "humanitarian goods" from vendors outside Iraq.

While the US embassy in Baghdad declined to comment and Iran's embassy did not respond, a US official told AFP that Washington was aware of the mechanism.

Iraq has framed its decision as a desire to pay back debts it owes Tehran that Iranian Oil Minister Bijan Zangeneh says now stand at $2 billion worth of gas and electricity purchases.

It seems clear that the Iraqi government has placed its loyalty with the Iranians rather than the United States who are the very reason they are in power today.

"How else is Iraq supposed to pay what it owes Iran? We have no other choice," one Iraqi official said.

However, Iraq does have a choice in that, while the US has been encouraging them to wean themselves off Iranian energy, the White House continues to grant Baghdad sanctions waivers to continue to conduct business with Tehran without placing itself at risk of blowback.

Iraq imports around 1,400 MW of electricity and 28 million cubic meters (988 million cubic feet) of gas for power stations from neighbouring Iran, which together make up about a third of Iraq's power supply.

That reliance has angered the US, which slapped tough sanctions on Iran last year but has granted Iraq several temporary waivers to keep purchasing Iranian power until October. However, considering precedents, Washington will likely continue to grant Baghdad these waivers.

The US insists Iraq wean itself off Iranian energy, but Baghdad has said that could take up to four years, during which it would need to keep purchasing at least Iranian gas.

To do so, the central banks of Iran and Iraq agreed in February to create a payment method that steers clear of US sanctions, Iran's state news agency IRNA said, without providing additional details.

Iraq's new loophole appears to be the culmination of its diplomatic shuttling between Iran and the US. It also raises questions about how this mechanism could be abused by pro-Tehran factions to help Iran bypass US sanctions which could draw American ire and risk damaging Iraq’s long-term interests.

While sanctions have been hard on Iran, it seems clear that the Iraqi government has placed its loyalty with the Iranians rather than the United States who are the very reason they are in power today. Iraq even defended Iran by stating on Wednesday that the reconstruction of Mosul had been delayed due to US sanctions.

US sanctions have been in effect since November 2018. Mosul was recaptured in July 2017.

Should the Trump administration decide Iraq is no longer worth the strategic investment, it could make it subject to the sanctions against Iran. As Iraq's economy is primarily based on exporting oil in US dollars, this could mean that Baghdad would become cash strapped and extremely vulnerable to any American punitive measures.

Pro-Iran militants told to join the army

Iraqi Prime Minister Adel Abdul-Mahdi issued a decree earlier this month saying that the offices of militias that continue to operate independently within or outside of Iraqi cities will be closed and any armed faction working "openly or secretly" against the new orders will be considered illegitimate.

Abdul-Mahdi has indicated that all militias should be pressed into service in the "battalions and brigades" of the conventional Iraqi army, and that any militia that wanted to maintain its unique identity should lower their arms and join the political process as parties.

The move follows revelations late last month that the US government had determined that attacks on Saudi Arabian oil infrastructure in May was not the handiwork of the Houthi rebels in Yemen, as originally claimed, but was actually launched by pro-Iran Shia militants based in southern Iraq.

The US top diplomat Mike Pompeo was said to have applied pressure on the Iraqi government to curb the influence and power of pro-Iran militants. While the Iraqi government denied groups loyal to Iran had launched the attacks on Saudi from Iraqi soil, the prime minister did not wait long after communicating with Secretary Pompeo before issuing the decree.

The prime minister's decree does not solve the underlying issue of the questionable loyalties of the militias

Perhaps counterintuitively for stated US objectives of weakening Iranian influence in Iraq, the decree was welcomed by several top Shia militias who enjoyed support from Iran's Islamic Revolutionary Guard Corps (IRGC).

Kataeb Hezbollah, Asaib Ahl ul-Haq, Saraya al-Salam and others all welcomed the move and vowed to implement Abdul-Mahdi's decree, with Shia cleric and election winner Muqtada al-Sadr hailing it as an important "first step" in building a state.

However, the prime minister's decree does not solve the underlying issue of the questionable loyalties of the militias. While they may change uniforms into defence ministry-issued fatigues, they will still be serving as cohesive units within the military.

Much like how the IRGC-backed Badr Organisation has controlled the interior ministry for almost the better part of two decades and its men wear police and SWAT uniforms, militias fighting under the already legalised Popular Mobilisation Forces' banner will simply change their appearance but otherwise continue to serve the same interests.

HRW: Prisoners held in 'degrading' conditions

Human Rights Watch slammed Iraq's prison authorities last Thursday for detaining several thousand men, women and children in overcrowded and "degrading" conditions that amount to ill treatment. 

The rights group said it had acquired photographs from Tal Keif prison in Nineveh province that suggested it, along with the nearby Faisaliyah and Tasfirat facility, did not fit basic international standards.

One photograph depicted dozens of teenage boys packed into a juvenile detention centre, some in foetal positions. 

The floor was not visible amid the sea of limbs. 

Another showed a room full of women and gaunt toddlers, with clothes and plastic houseware goods hung from the walls. 

"Two years ago, we documented deaths in custody simply because of overcrowding," said HRW Iraq researcher Belkis Wille. 

"To see these kinds of conditions persist means the prison population is still under threat. It’s incredibly frustrating."

According to HRW, Tal Keif, Faisaliyah and Tasfirat were holding about 4,500 people, mostly on terrorism charges, nearly double their combined capacity of 2,500.

Nearly a third of detainees had already been convicted and should have been transferred from the three northern prisons to Baghdad, some as long as six months ago. 

Legal advocates have no access to their clients according to a leading Iraqi specialist who visited the prisons and provided HRW with the photographs.

Iraq declared victory over the Islamic State group in late 2017 but has continued to carry out arrests of suspected IS members, including in Nineveh province and its capital Mosul, once IS's main Iraqi bastion.

The government does not provide figures on detention centres or prisoners, but some studies estimate 20,000 are being held for alleged IS links.

The prison system has long been fiercely criticised for its abysmal conditions, with security forces accused of torturing prisoners to extract confessions.

Such abuse could lead to the radicalisation of vulnerable prisoners, analysts have warned.

"The authorities should ensure that the conditions in Iraq's prisons do not foster more grievances in the future," said HRW's acting regional director Lama Fakih.

The Iraq Report is a fortnightly feature at The New Arab.

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