Trump Administration
The Trump administration announced on Saturday that it had rescinded a waiver allowing Iraq to pay Iran for electricity, marking another step in US President Donald Trump’s renewed “maximum pressure” campaign against Tehran.
A spokesperson from the State Department confirmed the decision, stating that the move was intended to ensure Iran does not receive any economic or financial relief. The campaign, the spokesperson added, is designed to halt Iran’s nuclear ambitions, curb its ballistic missile program, and prevent it from supporting terrorist organizations.
Trump reinstated his aggressive stance on Iran after returning to office in January, following his earlier decision in his first term to withdraw the United States from the 2015 Iran nuclear deal. That agreement, a multinational effort, sought to limit Iran’s nuclear capabilities in exchange for sanctions relief.
The US government has consistently argued that Iran should be economically isolated to curtail its ability to develop nuclear weapons. Tehran, however, denies any intention of producing nuclear arms, asserting that its nuclear program is strictly for peaceful purposes.
For Iraq, the waiver’s expiration presents immediate energy challenges. Farhad Alaaeldin, the foreign affairs adviser to Iraqi Prime Minister Mohammed Shia al-Sudani, acknowledged the difficulties but reassured that the government was actively working on alternatives to ensure electricity supply remains stable. Alaaeldin emphasized that energy security is a national priority and that Iraq is focusing on boosting domestic production, improving grid efficiency, and investing in new technologies to reduce reliance on Iranian electricity.
The US has imposed a range of economic sanctions on Iran, targeting its nuclear program and alleged support for armed groups. These sanctions effectively prohibit other nations from conducting business with Iran without facing US penalties.
National Security spokesperson James Hewitt reinforced the administration’s stance, stating, “President Trump has been clear that the Iranian regime must cease its ambitions for a nuclear weapon or face maximum pressure. We hope the regime will prioritize the well-being of its people and the region over its destabilizing policies.”
Trump initially granted waivers to several countries, including Iraq, when he reinstated sanctions on Iranian energy exports in 2018. The goal was to allow some nations to meet their immediate energy needs while finding alternative sources.
Both the Trump and Biden administrations repeatedly renewed Iraq’s waiver while urging Baghdad to reduce its dependence on Iranian electricity. The State Department once again reiterated this call on Saturday, emphasizing that Iraq should work toward energy independence.
“We urge the Iraqi government to eliminate its dependence on Iranian sources of energy as soon as possible,” the spokesperson said, describing Iran as an “unreliable energy supplier.” The US has also used the waiver renewal process as leverage to pressure Iraq into allowing crude oil exports from the semi-autonomous Kurdish region via Türkiye, sources told Reuters.
The move is aimed at increasing global oil supply, stabilizing prices, and limiting Iran’s ability to export its own oil. However, negotiations between Iraq’s federal government and the Kurdish authorities over resuming these exports have been complicated and remain unresolved.
Despite these tensions, the US has positioned itself as a potential energy partner for Iraq. The State Department spokesperson noted that Iraq’s transition away from Iranian energy dependence could create business opportunities for American companies specializing in power plant efficiency, grid modernization, and electricity interconnections with reliable regional partners.
The US downplayed the overall impact of Iranian electricity imports on Iraq’s energy system, noting that in 2023, such imports accounted for only 4% of Iraq’s total electricity consumption.
Nevertheless, the end of the waiver signals a shift in US-Iraq relations and could push Baghdad to expedite its search for alternative energy sources while navigating the complexities of regional politics and economic pressures.
