Barter Deal Between Iraq and Iran for Gas and Oil Raises Concerns over US Sanctions

Shafaq News/ Bartering Iranian natural gas for Iraqi oil, as announced by Iraqi Prime Minister Mohammed Shia al-Sudani, could potentially violate US sanctions against Iran unless a waiver is issued by the United States, according to three former US officials.

Al-Sudani revealed on Tuesday that Iraq would initiate a barter agreement to exchange crude oil for Iranian gas, aiming to resolve payment delays caused by the need for US approval for such transactions.

According to Reuters, the former officials expressed concerns that such a barter arrangement would likely counter US sanctions.

Richard Goldberg of the Foundation for Defense of Democracies think tank stated that this trade-off with Iran would violate US sanctions unless a national security exception is granted. Goldberg referred to the Iran Freedom and Nuclear Non-Proliferation Act, which prohibits energy-related transactions with Iran.

A US State Department official clarified that an exception was issued on March 21, allowing Iraq to pay Iran solely for electricity imports, not for natural gas used in generating electricity.

Speculation has arisen regarding modifying the exception to permit barter arrangements, but the official declined to comment on potential future decisions.

The US Treasury Department, responsible for overseeing most US sanctions against Iran, broadly defines the term "transaction," potentially encompassing barter.

While there may be room for maneuverability, a former senior Treasury official emphasized that, from a strictly legal standpoint, the barter arrangement would indeed violate US sanctions.

The Iraqi Embassy in Washington has yet to respond to Reuters' requests for comment. Whether a barter agreement between Iraq and Iran is permitted will depend on political considerations and potential US waivers or exceptions.