Oman Agrees to Channel Iraqi Debt Payments to Iran

Oman has agreed to act as a conduit for the transfer of debt owed by Iraq ( Gas Exports to Iraq ) to Iran. In a significant move, the US has allowed Iran to receive payments for its energy exports to Iraq, providing the sanction-stricken nation a much-needed economic respite.

The US Department of State stated that even though sanctions would remain in place, Iran will receive hundreds of millions of dollars from Iraq for the energy products it has sold to its neighbor. According to Reuters, in June, Iraq agreed to pay about US$2.76 billion in gas and electricity debt to Iran after receiving a sanctions waiver from the US.

At a news briefing in Washington, State Department Spokesperson Matthew Miller confirmed that Oman will manage the account, in which Iraq would deposit the money, while Iran would be able to use it, with some restrictions. Also, a spokesperson for the Iranian Foreign Ministry said Oman and Qatar had agreed to manage the proposed transactions.

Asked to confirm the Iranian official’s claim, Miller said, “I can confirm that Oman has indicated willingness to receive a portion of those funds and we believe that it’s an important step. “It’s important to get that money out of Iraq because it’s a source of leverage that Iran uses against its neighbor.”

Explaining further, Miller said this money will be held in a fund or an account in Oman, but will still be subject to the same restrictions that were in place. The money, he added, can only be used for “non-sanctionable activities such as humanitarian assistance” and that all the transactions need to be approved by the US Treasury Department in advance.

Due to decades of conflict and sanctions, Iraq is dependent on imports from Iran for a lot of its gas needs. However, US sanctions on Iranian oil and gas have hampered Iraq’s payments for imports, putting it in heavy arrears and leading Iran to retaliate by cutting gas flows regularly. - Muscat Daily