Iran and Iraq reach agreement on how to release trapped funds

Iran has secured a trade agreement with Iraq that will enable it to access funds trapped in Baghdad because of US sanctions, the state-run Islamic Republic News Agency (IRNA) reported.

Abdolnaser Hemmati, head of the Central Bank of Iran, visited Baghdad on Monday to finalize the deal, which allows Iran to use accumulated payments from energy exports to buy essential goods from Iraq, IRNA reported, quoting Hemmati. He didn’t give any figures or a time frame for the agreement.

In June, Iranian Energy Minister Reza Ardakanian said Iraq owed Iran at least $800 million for electricity imports. In February last year, Tehran said Iraq owed around $2 billion for purchases of natural gas.

Iraq was Iran’s second-biggest trade partner after China in the year ending March 2019, the destination for around $9 billion worth of goods, according to Iranian customs data. Imports from Iraq accounted for just $58 million.