BAGHDAD (Dispatches) -- Iran has signed a two-year contract with Iraq to export electricity to the neighboring country, IRNA on Thursday quoted the country’s Energy Minister Reza Ardakanian as saying.
"We signed a contract with Iraq for exporting electricity in 2020 and 2021,” said Ardakanian, who travelled to Iraq on Wednesday. "With coordination of the Iranian embassy in Iraq, half of the disbursement worth $400 million was received during the trip.”
U.S. Secretary of State Mike Pompeo said in May that Washington would grant a 120-day sanctions waiver for Iraq to continue importing electricity from Iran to help the new Iraqi government succeed.
Washington has repeatedly extended the sanctions exemption for Baghdad to use crucial Iranian energy supplies for its power grid for periods of 90 or 120 days.
Ardakanian said Tehran and Baghdad have reviewed a three-year plan for reconstructing the Iraqi electricity industry by the Iranian private sector.
"Iranian technical and expert delegations will visit Iraq next week to sign two important contracts on reducing power grid losses and repairing electricity equipment,” Ardakanian said.
In Baghdad, he met his new Iraqi counterpart Majid Mahdi Hantoush and other senior officials of the country during the one-day visit.
Tasnim news agency said "development of Tehran-Baghdad cooperation in the field of electricity, synchronization of the Iran-Iraq electricity network and cooperation in the field of
education and development of the electricity network of the two countries” were among the topics of discussions.
Iraq relies on Iran for electricity imports, but the extensive cooperation does not sit well with the United States which has long been trying to drive a commercial wedge between Baghdad and Tehran.
The U.S. has been enlisting its companies and allies such as Saudi Arabia to replace Iran as Iraq’s source of energy, but the idea has not moved beyond the level of theory.
So for all the ado, Iraq continues to buy gas and electricity from Iran. Tehran provides the Arab country with natural gas that generates as much as 45% of its electricity. Iran transmits another 1,000-1,500 megawatts directly, making itself an indispensable energy source for its southwestern neighbor.
Much of Iraq’s infrastructure remains in tatters from years of conflicts under Saddam Hussein who was backed by the West before the U.S. fell out with the former dictator and invaded Iraq, touching off a ferocious cycle of war, violence and turmoil which laid the country to waste.
While Iraq has replaced Iran as the OPEC’s second-biggest oil producer for years, a rampant shortage of electricity has crippled its economy.
According to government figures, about 35,000 factories have been shut down since the U.S. invasion of the country in 2003, leaving almost seven million people without jobs.
Iraq’s infrastructure was severely paralyzed in 1991 when the United States attacked to incapacitate Saddam in response to his invasion of Kuwait. Wide-scale military operations which were followed by long-term economic sanctions worsened the situation.
Moreover, years of occupation by U.S., British and other foreign troops led to the emergence of violent terrorist groups such as Daesh which once seized about a third of Iraq’s territories and wreaked havoc in the areas they held.
The national grid now, officials say, supplies no less than 12,000 megawatts on average while the real need is 21,000 megawatts. They say there is no easy substitute to Iran because it would take three years or more to adequately build up Iraq’s energy infrastructure.
According to the New York Times, Iraqi officials have said the American demand acknowledges neither Iraq’s energy needs nor the complex relations between Baghdad and Tehran.
Iraq’s former prime minister Haider al-Abadi told the New York Times in 2019 that Baghdad was in a precarious situation with the United States because the Americans failed to "look at the geopolitics of Iraq”.
"We happen to be neighbors of Iran; the U.S. is not. We happen to have the longest border with Iran; the US does not. And we don’t have that powerful an economy,” the paper cited him as saying.
Iraq and Iran share a 1,400-kilometer-long border. Except for oil, Iraq depends on Iran for everything from food, fruits and vegetables to machinery and home appliances.
Iraqi leaders are especially wary of violent riots which have broken out in the past to protest the acute shortage of electricity and drinking water.
Ardakanian’s visit comes as temperatures are approaching 50 degrees Celsius (122 Fahrenheit) and beyond in Iraq, putting pressure on the national grid.
Violent protests broke out in Basra in September 2018 which spread to other Iraqi cities after Iran cut down supplies to meet domestic demand amid a surge in consumption during scorching summer heat.
The visit also come after Iraq’s new finance minister Ali al-Allawi traveled to Saudi Arabia last month, with observers in Iran and elsewhere closely watching Prime Minister Mustafa al-Khadhimi’s moves after forming a cabinet.