ERBIL, Kurdistan Region – Breaking economic ties with Iran to comply with US sanction will not be a simple task, the Kurdistan Regional Government (KRG) representative to Tehran warns, particularly now Iraq’s sanctions waiver is nearing expiry.
As the Region shares a long border and close business relations with neighboring Iran, ending these ties is “not easy”, Nazim Dabagh, the KRG representative to Iran, told Rudaw English.
“We will have more losses than benefits if we start enmity with Iran or Turkey,” the Region's two biggest trading partners, he warned.
Besides the loss of business and cheap imports, Dabagh warns such a move could cause a backlash similar to the economic squeeze placed on the Region by Iran following the Kurdistan independence referendum of September 2017 when Tehran closed the border.
“In the best case scenario, the Kurdistan Region can commit itself to Iraq’s policy because Baghdad can protect the Kurdistan Region better,” Dabagh said.
Nechirvan Barzani, prime minister of the Kurdistan Region, has more than once said his government’s policy will reflect the avenues pursued in Baghdad.
Kurdistan and Iraq share several border crossings with Iran, with annual trade volume standing at $12 billion. Iraq also imports electricity and fuel to supplement its ramshackle power grid.
US President Donald Trump pulled the US out of the 2015 Iran nuclear deal in May 2018, arguing the agreement did not prevent Tehran from developing nuclear capabilities and did not stop it from interfering in regional conflicts.
In November that year it imposed a raft of sanctions targeting Iran’s economy, particularly its oil and banking sectors. The measures wiped 60 percent off the value of Iran’s currency, squeezing ordinary Iranians.
Several of Iran’s major oil customers, including China, India, Japan, Greece, and South Korea, were given special temporary exemptions in order to gradually wean off Iranian oil and find suppliers elsewhere – namely Saudi Arabia, the UAE, and the US.
Iraq was also given an exemption, twice renewed.
However, US Secretary of State Mike Pompeo announced earlier this month that no further waivers would be granted. It is not yet clear whether Iraq will get special dispensation.
The US has also designated Iran’s powerful Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization, accusing it of “actively engaging in terrorism” while it “masquerades as a legitimate military organization.”
The designation, which took effect on April 15, saw IRGC assets frozen in areas under US jurisdiction and Americans banned from doing business with the organization.
Washington says any country that continues to do business with Iran or the IRGC stands to lose out. Meanwhile, those complying with sanctions will prosper and reap the benefits of US support.
“I feel like there will be a middle ground solution for this,” Dabagh said.
Such a middle ground could either see the KRG commit to the stance taken by Iraq, or to try to further balance relations with both the US and Iran, he said.
Dabagh criticized Washington’s lack of understanding and flexibility.
“I think Iran has understanding. We ask that both Iran and America be understanding,” he urged. “We have to take into consideration our geography.”
The main victims of sanctions are the people of Iran, he said.
“Such way of dealing by America and the outside world with the Islamic Republic of Iran has reflected on the market and livelihoods of the people,” claimed Dabagh.
However, the KRG official said Tehran may well weather Trump’s “maximum pressure” policy, just as it survived the Iran-Iraq War (1980-88) against an adversary funded and armed by the west.