BAGHDAD Aug 20 Iraq on Monday said its trade
and financial ties with Iran were in compliance with
international law, rejecting a report it was helping its
neighbour get around U.S. and European sanctions imposed because
of Tehran's nuclear programme.
The U.S. government in December signed a law imposing
sanctions on financial institutions dealing with Iran's central
bank, the main channel for its oil revenues and the European
Union has also announced a ban on Iranian oil shipments.
The New York Times reported at the weekend that Iraq has
helped Iran skirt sanctions on Tehran, using financial
institutions and oil-smuggling operations that are providing
Iran with a crucial flow of dollars.
The newspaper, citing sources in Washington, current and
former American and Iraqi officials and banking and oil experts,
said Washington has privately complained to Iraqi officials
about financial and logistical ties between Baghdad and Tehran.
"Iraq is not involved in any practices violating
international laws," said Prime Minister Nuri al-Maliki's media
advisor Ali al-Moussawi. "Iraq has been allowed to deal with
Iran as have many other countries."
Moussawi said Iraq did not have a formal waiver from
Washington on sanctions on Iran - something Baghdad considered
earlier this year because of its high trade with Iran and to
protect its foreign reserves from penalties - but he said its
current economic ties were not in violation of sanctions.
Iraq's Shi'ite-led government has moved closer to Tehran
since the 2003 invasion and Iran is now Iraq's main trade
partner after neighboring Turkey. Tehran said last year it
planned to boost bilateral trade to $10 billion in 2011 from $6
billion in 2010.
Iraq in February said it was considering seeking a waiver on
Under the U.S. law, Washington can exempt institutions in a
country that has significantly reduced its dealings with Iran
and in situations where a waiver is in the interest of U.S.
national security or necessary for energy market stability.
Iraq has $60 billion in foreign reserves, most of which are
generated by its oil revenues. Countries and companies trading
with Iran risk being barred from the U.S. financial system under
the terms of the sanctions. London-based bank Standard Chartered
Plc had to reach a $340 million settlement with New
York regulators last week over transactions linked to Iran.
Iran provides Iraq with fuel and electricity for its
domestic market as well as food, construction materials,
petrochemicals and medical equipment. Iran has invested heavily
as part of Iraq's post-war reconstruction.