The White House extended Iraq's waiver by 90 days, exempting it from sanctions to buy energy from Iran, despite Washington’s hefty economic embargo on Tehran.
US sanctions on Iran — which took effect in November — seek to reduce Tehran’s influence in the region but are also threatening to cut Iraq off from its neighbouring gas and electricity supplier.
"While this waiver is intended to help Iraq mitigate energy shortages, we continue to discuss our Iran-related sanctions with our partners in Iraq," a State Department official told The National on Tuesday evening.
Washington has expressed caution to ensure that Baghdad’s reliance on Iranian gas and energy is not interrupted. But is also encouraging Iraq to break its dependence on Iran and develop its own gas and power sectors.
Supporting Iraq’s capacities and diversifying imports “will strengthen Iraq’s economy and development as well as encourage a united, democratic and prosperous Iraq free from malign Iranian influence,” the US official said.
The decision to grant Baghdad the waiver comes in to immediate effect as a previous 90-day exemption issued in December was set to expire on March 19.
In December the US Energy Secretary Rick Perry visited Iraq with a trade delegation from the Chamber of Commerce to promote investment in Iraq’s energy sector.
Chronic blackouts last summer triggered mass protests and unrest across southern Iraq as residents took to the streets to demand better public services and employment opportunities.
As summer nears, Iraq's power sector is expected to fail again, prompting renewed protests.
Since the fall of former dictator Saddam Hussein Iraq has built solid relations with Iran despite Washington’s repeated warnings.
Iraq imports food and other goods from Iran, and the two have kept close political ties.
Trade between the two countries is expected to reach $8.5 billion this year.
Iranian President Hassan Rouhani completed a three-day visit to Iraq last week that resulted in boosting Tehran's influence in the country.
The two signed a number of deals in the trade, tourism and energy sectors.
Tehran's Foreign Minister, Mohammad Javad Zarif, thanked Baghdad for "refusing the unjust and illegal sanctions imposed on the Iranian people".
