BLOWBACK: The US Government’s Hopes In Iraq Have Ended With The Oil-For-Gas Deal With Iran
Ever since the US officially ended its ‘combat mission’ in Iraq on 31 December 2021, it has been looking for a way back into the huge but still relatively untapped oil and gas regions of the country, as analysed in depth in my new book on the new global oil market order. Iraq knows this perfectly well and has sought since then to exploit this need for money from the US whilst having no intention of allowing it to return in any meaningful way.
Many analysts trace this reluctance back to the US’s invasion of Iraq in 2003 or to its continued military presence there until 2011, but although neither of these factors helped the US’s ambitions in Iraq, neither of them put the final nail in their coffin either. This came with its unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) – or colloquially, ‘the nuclear deal’ – with Iran in May 2018. Iran has wielded enormous power over Iraq for a very long time indeed through its various political, economic, and military proxies and the death knell of the deal with Iraq meant the same for any ambitions the US had in Iraq. The game plays from Iraq and the US around this starting position were seen again last week but, as in the end of Macbeth’s fleeting moment of glory, these threats and counter-threats are full of sound and fury, signifying nothing: the game is already over, and the US lost.
This is less of a slap in the face for Washington than a baseball bat in the crotch, as the US has for years been giving Iraq tens of billions of dollars to help with its finances on the specific condition that the country reduces its imports of gas and electricity from Iran eventually to zero.
To encourage Iraq towards this end, the US government has granted waivers to it to continue to import gas and electricity from Iran to manage this transition away from dependence on its neighbour. Accompanying these waivers have been massive injections of US funding into Iraq, usually following a visit to Washington in August or September each year by whoever was Iraq prime minister at the time to ask for money to bailout the Iraq budget.
The principal reason why the Iraq budget needs bailing out every year is because of the industrial-scale corruption that lies at the heart of its oil sector administration.
Up until now, the most shocking betrayal of the US governments’s optimistic trust in Iraq in this context came from the ultra-smooth Mustafa al-Kadhimi. He had danced the usual dance with the US so well that in May 2020 Washington gave him even more money than before and the longest waiver ever given – 120 days – to keep importing gas and electricity from Iran, on the standard condition that Iraq stopped doing it soon. However, once the money had been banked and al-Kadhimi was safely back on home territory, Iraq signed a two-year contract – the longest period ever – with Iran to keep importing gas and electricity from it.
