Neighboring Iraq owes the money to Iran for importing gas and electricity, which has continued despite illegal US sanctions, but Tehran has been unable to obtain its assets frozen in Iraqi banks under US pressure.
“The volume of the blocked Iranian money and assets in Iraq is changing daily, where every day we see some parts of them released and the overall figure increase on the other hand because of the export of goods” by Iran, Yahya Al-e Eshaq said in remarks published Wednesday.
“Currently, the volume of the blocked assets in Iraq is between 6 and 7 billion dollars, but we do not have much worries about their release,” he added.
Iraqi banks have “a useful and acceptable cooperation with the Central Bank of Iran”, Al-e Eshaq explained, adding this cooperation has helped the Islamic Republic circumvent the sanctions and carry out transactions with Iraq.
Iraq has paid some of its debts over the years, but US sanctions and economic troubles in the country have made the transfer of money much slower than Iran expected.
Iran’s Central Bank Governor Abdolnaser Hemmati said in October that Baghdad had agreed to release frozen funds for the purchase of basic commodities.
Al-e Eshaq said Iran partly gets paid in cash, but it mostly receives goods from Iraq to cover the debt.
Iraq imports a wide range of goods from Iran, including food, agricultural products, home appliances, air conditioners and car parts.
It also relies on Iran for natural gas that generates as much as 45 percent of its electricity. Iran transmits another 1,200 megawatts directly, making itself an indispensable energy source for its Arab neighbor.
The US is unhappy with close relationship and trade between Baghdad and Tehran, but it has had to repeatedly extend by 45, 90 or 120 days a sanctions exemption to allow Baghdad to import Iranian energy.
In March, the US government granted a 120-day waiver to allow Iraq to pay for electricity imports from Iran, Louisa Loveluck, the Baghdad bureau chief for the Washington Post, wrote on her Twitter page.
Iraq needs more than 23,000 megawatts of electricity to meet its domestic demand but years of war following the 2003 US invasion have left its power infrastructure in tatters and a deficit of some 7,000 megawatts.
In the past, officials in Baghdad have said there is no easy substitute to imports from Iran because it will take years to adequately build up Iraq’s energy infrastructure.
They have said American demand acknowledges neither Iraq’s energy needs nor the complex relations between Baghdad and Tehran.
Iraqi Prime Minister Mustafa al-Kadhimi, on whom the Americans had counted to pry Iraq away from Iran’s embrace, has said that he wanted “excellent relations” with the Islamic Republic.
Foreign Minister Mohammad Javad Zarif said Tuesday he had held “excellent talks” with Iraqi leaders after paying a two-day visit to the country.
The two countries have called to raise their annual bilateral trade to $20 billion from around $10 billion despite the impact of the US sanctions.
Witch hunt, ‘highway robbery’
Tens of billions of dollars of Iranian assets, mainly from exports of oil and gas, are frozen in foreign banks due to US sanctions on Iran’s banking and energy sectors.
South Korea holds $7 billion in Iran’s funds from oil sales, according to Iranian officials who have warned to take legal action to gain access to the funds.
Iran has also criticized Japan for holding its foreign currency resources estimated around $1.5 billion. Japan was one of the main buyers of Iranian oil before the US imposed unilateral sanctions on Tehran in 2018 under former president Donald Trump.
More than $1.6 billion in Iranian funds are further held by Luxembourg-based Clearstream clearing house, a financial company owned by Deutsche Boerse.
Last April, a top court in Luxembourg officially blocked a long-running request by the US administration to seize the Iranian cash assets as compensation for alleged terror victims of the September 11, 2001 attacks.
Iran’s funds frozen in foreign banks because of the US sanctions have additionally been subject to a witch hunt by the Americans who have used Washington’s animosity toward the Islamic Republic to easily win lawsuits against the country in US courts.
In January, the US government said it had seized $7 million in Iranian assets for “victims of terrorism”. Last October, reports said a US court had ordered Iran to pay more than $1.4 billion in punitive and compensatory damages to the family of a former FBI agent who allegedly disappeared during a visit to an Iranian island in March 2007.
Iran has denounced US seizures of its frozen assets as “highway robbery” and hauled the United States before the International Court of Justice (ICJ) at The Hague.