Two phases of sanctions, with just three months in-between, are considered “a declaration of economic war” on Iran. The US sanctions, described with “the most powerful sanctions in history” by Mike Pompeo, US secretary of state, had its impact on the Iraqi security, political and economic affairs. The first phase that started on the 8th of August had its influence on Iraq and the course of government’s formation by the usage of protests and demonstrations in southern Iraq and Basra city in favor of the Iranian dominance. The first phase of the sanctions target Iranian transactions of civil aircraft, spare parts of aircraft and cars, metals, gold and US dollars. The second phase, starting on the 4th of November, will target petrochemical industries and Iranian oil exports. Its effects on Iraq are more serious than those imposed during the first phase, as the serious economic impact of sanctions on Iran will affect Iraq through the reaction of Iranian allies of political powers and militias. The Sunni and Shiite political powers issued statements denying that the first phase of sanctions and declaring their support of Iran. Politically, they (the Sunni and Shiite powers) refused to abide by the sanctions. Kurdish attitudes, however, were not clear. The Kurdish side preferred to keep silent and not to take the sides of Washington or Tehran.
Iran depends on its nuclear agreement’s allies (Britain, France, China and Russia) and friends in the region to support it at economic and political levels to relieve the sanctions. Moreover, it tries to use the Middle East financial outlets. Iraq comes first in the list of the Iranian allies expected to help in relieving sanctions. Iran depends on its ideological allies of the ruling parties, political powers and militias who declared their intention to break out the sanctions. Especially that they had a previous experience with former prime minister Nouri al-Maliki and the ideological militias in reducing the effect of the sanctions by smuggling hard currency from Iraq through the borders, the close banks to the ruling parties, like Alhuda Bank close to Dawa party, or continuing the smuggling and selling of oil in the black market.
Before the application of the second phase of sanctions, Iran will reinforce its influence on Iraq through the support of some militias, refusal of any Washington supporter candidate and making sure that prime minister or main ministers are allies or at least sympathizers who are ready to relieve sanctions. Iran uses its militias in Iraq to face US existence, military and security challenges. It increases their force of deterrence introducing ballistic missiles into Iraq or targeting certain districts in Syria and Iraq as happened a few weeks ago when Iranian military targeted far-away districts. Its allies, the militias, or even the Iranian Revolutionary Guard Corps, are used to threaten the existence of US in the region, could use such operations to hit Washington allies and US interests in the region.
US sanctions on Iran have their immediate impacts on Iraq; the common factors between the two countries aren’t just the Shiite symbolical and religious side, political dominance and geographical borders, but there are also ideological militias, military, security, service and economic overlaps. All these files intermingled and every file affects the rest ex: the file of cutting the Iranian electricity supplies to Iraq, the political usage of the break out of the protests, setting the Iranian consulate in Basra on fire and Iranian mortar shells targeting the American consulate in Basra.
The volume of trade between Iraq and Iran reached $13 billion in 2017. Iraq imports include most of its needs of food stuffs. Many Iraqi economic sections depend on Iran ex agricultural tools, cars, goods, main food stuffs and oil products. The Iraqi economy will be negatively affected and could suffer a recession if the Iraqi government doesn’t find a Chinese, Turkish, Kuwaiti or Saudi counterpart for the indispensable Iranian goods for the Iraqi market because of their affordable prices, abundance and availability.
Iraq suffers complicated and chronic problems. It is easy for Iran to press on the new Iraqi government if it abides by the US sanctions. Iran could use the files of Iraqi corruption, counterfeiting, violation of law, legislative and sectarian crisis, militias’ weapons, electricity supplies, water and salinity.
Thus, Iran could have its influence on Iraq. It is difficult for Iraq to abide by the US sanctions without any alternative. Moreover, the Iraqi political system, its militias and influencing political powers are connected to Iran. Any struggle for influence and enforcement of wills could lead to a conflict between Washington and the Iranian allies and the return of the whirlpool of terrorism and chaos in the region.
Finally, I think Iraq will abide by the US sanctions on Iran or at least declare this in its media, but it will exclude some files in coordination with the US. Moreover, Iranian allies of militias, parties and political powers will help relieving the sanctions through goods, hard currency and oil smuggling. Iraqi border crossings, especially with Iran, are uncontrollable. One couldn’t neglect the geographical facts, mutual relations, and Iranian economic and trade’s reach, similar to that of the militias, in different Iraqi sectors. We would depend on Prime Minister Adel abdul-Mahdi, a well known economy and politician expert, to find an economic solution for Iraq through the political relations with Iran and the US, and decrease the impact of sanctions on the Iraqi daily life and economy. If (Abdel Mahdi’s cabinet would only get the approval of the parliament) and he would be given the freedom of working.