The launch of the gas industry will help Iraq move out of the Iranian orbit and improve its economy

Iraqis are hopeful that their country will be able to move out of the Iranian orbit by developing gas projects and increasing oil production. This will help improve the country's energy situation, which is likely to lead to greater economic independence. However, there is great uncertainty about the future of these initiatives, as success depends to a large extent on political stability and relations with Iran.

Iraq is one of the countries in the Middle East that is highly dependent on its neighbour, Iran, for its energy supply. This dependence has increased in recent years as Iraq has experienced a deep energy crisis. The country's dependence for energy supply is mainly due to a lack of energy infrastructure. This dependence is a concern for the Iraqi government, as it increases the possibility of the Islamic Republic of Iran using its influence as a form of political coercion. The Iraqi government is trying to reduce its dependence on Iran. This includes developing its own power plants and modernising the energy infrastructure. In addition, the executive is looking for new ways to obtain fuel to generate electricity. However, this will take time and Iraq's dependence on Iran is likely to be a reality for some years to come. 

The US government must work with the Iraqi government to help it develop a more sustainable electricity grid that can meet Iraq's energy needs and reduce its dependence on Iran. This will require considerable investment in infrastructure and technology, as well as technical assistance from the US. This could lead to greater US involvement in Iraq's energy sector, which in turn could help reduce Iran's influence.

Iranian officials stressed that the latest cut in gas supplies was due to financial problems related to Iraq's non-compliance with its obligations to Iran. The reduction in gas supplies also affected electricity supplies. This caused great concern among Iraqi citizens, who had to face extremely high temperatures without electricity supply.

The Iraqi authorities eventually agreed to pay the arrears to Iran, which allowed for the restoration of gas and electricity supplies. In addition, Iran also agreed to increase gas supplies to Iraq by one million cubic metres. With the additional increase, the electricity supply situation is expected to improve considerably. 

In addition, the US has pledged to help Iraq modernise its electricity grid by adopting state-of-the-art technologies, including the installation of wireless transmission systems and improving grid efficiency. This will allow the country to improve its power generation at lower prices and increase its production capacity to meet the country's energy demand. The United States will also promote regional energy cooperation, which will help Iraq connect its power grid with that of its neighbours. This will allow the countries to exchange energy resources and help reduce Iraq's dependence on a single energy supply. It will also facilitate cross-border trade and contribute to economic development in the region.

Simon Watkins, an analyst with American Oil Price, says the Iraqi government is a telling example of Iraqi officials who have reneged on commitments to the US. The US granted Iraq funds in May 2020 to continue importing gas and electricity from Iran for 120 days. However, Iraq signed an agreement with Iran to continue importing gas and electricity for two years. This shows that the Iraqis were not interested in complying with US commitments.

As a result, the US imposed sanctions on twenty individuals and entities for violating Iraqi sovereignty and transferring funds to the Iranian Revolutionary Guard's Quds Force. This reinforced the belief that Iraq's political class was largely influenced by Iran. These sanctions include asset freezes, travel bans and trade bans. 

The US is concerned that Iran could increase its influence in Iraq's energy sector. This could affect the supply of Iranian oil and gas to export markets in southern Europe and Asia, especially China, and they fear that increased Iranian influence in Iraq's energy sector would obstruct access for international companies and diminish Iraq's revenues. In addition, the US is concerned about Iran's potential to use control of oil and gas supplies to force countries to accept its own policies.

Iraq's Oil Ministry recently announced that it will allow specialised Iranian companies to participate in oil and gas projects in the country. This decision marks an important step towards improving cooperation between Iraq and Iran in the energy sector.

Americas Coordinator: José Antonio Sierra.