Iran, Iraq agree to speed up payment settlements on basic goods

Heads of the central banks of Iran and Iraq have agreed to introduce schemes that could accelerate settlement of payments related to the supply of basic goods to Iran.

A Wednesday report on the website of the Central Bank of Iran (CBI) said that new agreements had been reached between two neighboring countries on how they could speed up payments related to the trade.

The report quoted CBI Governor Abdolnasser Hemmati, who is in the Iraqi capital Baghdad for an official visit, as saying that Iran and Iraq had built on the a deal signed last year to secure payments between the two despite a series of American sanctions that target financial transactions involving Iran.

“Based on previous agreement … it had been expected that we use the resources we have in Iraq for purchase of non-sanction and basic goods,” said Hemmati, adding, “We reached some good agreements during this trip too.”

The report said Hemmati and his Iraqi counterpart Ali Mohsen Al-Alaq had agreed to implement the terms of the agreement reached last year to accelerate the payments.

A later report on the CBI website said Iraqi Prime Minister Mustafa Al-Kadhimi had also ensured Hemmati during a Wednesday meeting that he had personally pursued the case of payments owed to Iran.

The new agreement comes despite growing American pressure on Iraq to stop settling payments related to imports from Iran.

Iran is a main supplier of energy to Iraq as it provides the Arab country with a bulk of electricity needs as well as the natural gas consumed in power plants in Iraq.

Iran’s Energy Minister Reza Ardakanian said during a visit to Iraq earlier this month that the Iraqis had settled nearly $400 million worth of due payments related to Iranian energy imports.

Iran has on several occasions decided to use the money it is owed in Iraq to buy basic goods to help with the smooth flow of those goods into Iran at the time of US sanctions.