Iran-Iraq Joint Chamber of Commerce head Yahya al-Eshagh told local Iranian media on 11 December that Baghdad has paid “part of” its outstanding debt of $7bn to Tehran. An arrangement between the neighbors’ central banks has enabled Iraq to pay off its debt via purchases of commodities rather than cash to avoid falling foul of sanctions. For instance, Iraq has provided Iran with approximately $250mn worth of the Russian-made Sputnik Covid vaccine.

MEES understands that so far Iraq has managed to reduce its debt by around $1bn and that the process is being coordinated with the US. The debt stems from Iranian supplies of gas and electricity, without which Iraq’s power sector would risk collapse. However, Iran’s own domestic requirements mean that such supplies are increasingly unreliable (MEES, 20 August). Iranian supplies of gas were again curtailed earlier this month.  (CONTINUED - 140 WORDS)