Republican senators question Biden administration over Iran sanctions waivers for Iraq

Waivers allow Baghdad to circumvent sanctions to pay Tehran for energy

In the three-page letter, the senators accuse the administration of using a 'strategy of appeasement' with Iran. Reuters

More than a dozen Republican senators have questioned a recent decision by President Joe Biden's administration to issue an Iran sanctions waiver for Iraq.

In the three-page letter, Republicans on the Senate Banking Committee accuse the Democratic administration of using a “strategy of appeasement” with Iran, despite the country’s malign activity in the Middle East, including supporting proxy groups that have engaged in attacks on US interests and troops to “deadly effect”.

“The United States should be restricting Iran’s access to currency abroad,” the senators wrote.

“Instead, your administration is expanding it, all while continuing to share limited information on a strategy to restore deterrence in the Middle East with Congress or the American people.”

Last month, the administration renewed a 120-day waiver that allows Iraq to circumvent sanctions to pay Iran for energy.

Iraq relies on Iran for about a third of its energy needs, and Baghdad owes Tehran several billion dollars.

It is unable to pay Iran directly because of US sanctions.

The waivers, which the US has been issuing since 2018, allow Baghdad to pay Tehran via non-Iraqi banks in third countries.

The State Department is adamant that the money that is transferred to non-Iraqi banks can only be used for certain purposes.

The US also brokered a deal in September that allowed for $6 billion in frozen Iranian funds in South Korea to be transferred to Qatar, in exchange for the release of five US citizens held in Iran.

But the senators appear to remain unconvinced of the wisdom of such moves.

“If we want to actually restore deterrence in the region, those funds should be placed further out of Iran’s reach, not closer,” they wrote.

The letter calls on Treasury Secretary Janet Yellen and Secretary of State Antony Blinken to clarify how the waiver is in “the national security interest of the United States”.

Tension between Washington and Tehran, which was already high, has continued to rise amid the Israel-Gaza war.

The Iran-backed Houthis in Yemen have engaged in attacks on commercial shipping in the Red Sea, while other groups in Syria and Iraq have launched numerous strikes on US troops stationed in the region.