The Trump administration revoked a waiver on Saturday that had allowed Iraqi authorities to pay Iran for electricity as part of President Donald Trump's "maximum pressure" campaign against Tehran, a U.S. State Department spokesperson said.
The decision to let Iraq's waiver lapse upon its expiration "ensures we do not allow Iran any degree of economic or financial relief," the spokesperson said, adding that Trump's campaign on Iran aims "to end its nuclear threat, curtail its ballistic missile program and stop it from supporting terrorist groups."
The move was confirmed by a spokesperson for the U.S. embassy in Baghdad on Sunday, who said Washington has declined to renew a sanctions waiver that allowed Iraq to buy electricity from its neighbor.
Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet its energy needs.
"On March 8, the U.S. Department of State did not renew the waiver for Iraq to purchase Iranian electricity," the embassy spokesperson said, reiterating that the decision "ensures we do not allow Iran any degree of economic or financial relief."
The statement did not mention Iranian gas imports, which are crucial for Iraq's domestic electricity generation.
The waiver was introduced in 2018 when Washington reimposed sanctions on Tehran after Trump abandoned a nuclear deal with Iran – a multinational agreement to prevent Iran from developing nuclear weapons – during his first term in office.
Since returning to the White House in January, Trump has reinstated his "maximum pressure" policy against Iran.
The U.S. government has said it wants to isolate Iran from the global economy and eliminate its oil export revenues to slow Tehran's development of a nuclear weapon.
Iran denies pursuing nuclear weapons and says its program is peaceful.
"The President's maximum pressure campaign is designed to end Iran's nuclear threat, curtail its ballistic missile program, and stop it from supporting terrorist groups," the embassy spokesperson said Sunday, as per an Agence France-Presse (AFP) report.
Calling Iran "an unreliable energy supplier," the spokesperson urged Baghdad "to eliminate its dependence on Iranian sources of energy as soon as possible."
Iraqi government spokesperson Bassem al-Awadi told state media on Saturday that authorities had prepared "for all scenarios" regarding the waiver.
Baghdad has repeatedly stressed the need to diversify energy sources to reduce its dependence on Iran and to ease Iraq's chronic power outages, especially during the summer.
Yet, for Iraq, the end of the waiver also "presents temporary operational challenges," said Farhad Alaaeldin, foreign affairs adviser to Prime Minister Mohammed S. Al Sudani.
"The government is actively working on alternatives to sustain electricity supply and mitigate any potential disruptions," Alaaeldin told Reuters.
"Strengthening energy security remains a national priority, and efforts to enhance domestic production, improve grid efficiency and invest in new technologies will continue at full pace."
Washington has imposed a range of sanctions on Tehran over its nuclear program and support for certain organizations, effectively banning countries that do business with Iran from doing business with the U.S.
"President Trump has been clear that the Iranian Regime must cease its ambitions for a nuclear weapon or face Maximum Pressure," said National Security spokesperson James Hewitt. "We hope the regime will put the interests of its people and the region ahead of its destabilizing policies."
Trump initially granted waivers to several buyers to meet consumer energy needs when he reimposed sanctions on Iran's energy exports in 2018, citing its nuclear program and what the U.S. calls its meddling in the Middle East.
His administration and that of Joe Biden repeatedly renewed Iraq's waiver while urging Baghdad to reduce its dependence on Iranian electricity. The State Department spokesperson reiterated that call on Saturday.
Moreover, the U.S. has used the waiver review in part to increase pressure on Baghdad to allow Kurdish crude oil exports via Türkiye, sources have told Reuters. The aim is to boost supply to the global market and keep prices in check, giving the U.S. more room to pursue efforts to choke off Iranian oil exports.
Iraq’s negotiations with its semi-autonomous Kurdish region over the resumption of oil exports have been fraught so far.
"Iraq’s energy transition provides opportunities for U.S. companies, which are world-leading experts in increasing the productivity of power plants, improving electricity grids, and developing electricity interconnections with reliable partners," the State Department spokesperson said.
The spokesperson played down the impact of Iranian electricity imports on Iraq's power grid, saying, "In 2023, electricity imports from Iran were only 4% of electricity consumption in Iraq."
