REASON: Why Head of Iran Central Bank visited Iraq?
by Hassan Mahmoudi
The experience of the last November uprising showed how the whole of Iran could explode again with any spark
The helplessness and bankruptcy of the Iranian regime in resolving various social and economic crises resulted from incompetence, corruption, and theft by the Iranian governing body has reached an unprecedented level. Now the Iranian regime is at the point of suffocation and sudden death.
In response to this situation, the regime is resorting to maximum repression and oppression to crackdown protesters to prevent any kind of insurgency and uprising, and on the other hand, it is looking for a way to bypass sanctions, which has seriously affected its financial resources, just to provide the necessary means for repressive forces. In line with this policy, the chairman of the Central Bank of Iran headed a banking and commercial delegation to Baghdad for a humiliating trip. The trip comes as daily rockets fire into the residential or green zone, the flow of weapons, financing of terrorists, and torture by Iranian-linked militant groups in Iraq continue.
According to ILNA news agency; “Abdul Nasser Hemmati, the chairman of the Central Bank of Iran, traveled to Baghdad on October 12 for the second time in the last four months with the aim of expanding banking cooperation in the field of trade relations and talks with top-ranking Iraqi officials.” The purpose of Hemmati’s visit is to find a way to bypass international banking sanctions imposed by The United States on Iranian banks, through Iraq, as well as to release blocked Iranian money in Iraq.
Hemmati is scheduled to meet with heads of central and commercial banks of Iraq, as well as the Iraqi Minister of Finance and Prime Minister.
Iran’s annual exports to Iraq amount to $ 12 billion, of which $ 4 billion is for electricity and gas exports. Iran monthly exports more than $ 200 million worth of gas to Iraq. But despite many efforts in recent months, it has not yet been able to collect its $ 2 billion claims.
During his first visit to Iraq on June 17, Hemmati met with the chairman of the Central Bank of Iraq and also with the Iraqi prime minister and reached an agreement on a joint mechanism to speed up the supply of needed goods, but it seems that last year’s agreement due to problems and complexities caused by sanctions on Iran, it has not been possible for Iran to receive its money.
It should be noted that during last month, the chairman of the Central Bank and the CEO of the Commercial Bank of Iraq were replaced. Under the agreement to sell gas and electricity, Iraq undertook to pay Iran for gas in euros and electricity in dollars. But with the start of a new round of US sanctions, Iraqis have announced that they will not be able to pay in dollars, and now there is the talk of paying off these debts by selling essential goods to Iran.
Iran’s exports to Iraq are currently one of Iran’s main sources of receiving foreign currency. Hossein Salimi, President of the Iranian Chamber of Commerce, says: “Our foreign currency needs is $150 billion, while our total exports are about $ 40 billion, and this currency also enters the country with a delay of several months, thus causing the market to lack the required foreign currency.”
It should be noted that Iran’s exports to other neighboring countries have also decreased significantly. For example, IRNA quoted Hamid Zadboom, head of Trade Development Organization of Iran, as saying; “in the first five months of this year, Iran’s exports to Turkey were $ 513 million, compared to $ 2.47 billion in the same period last year. This difference of $ 2 billion was due to non-export of natural gas to this country.”
Regime Morning Star (State-run Newspaper) wrote: Zarif’s recent trip to China to receive part of the money China owes to Iran was fruitless, and he returned with an empty hand. Hemmati also did not manage to get any of Iran’s credit from Iraq, because the Iraqis could not pay Iran due to the US threat and pressure on Baghdad.
Of course, one of the reasons for this is that Iran is not a member of SWIFT and has closed all loopholes due to the non-acceptance of the provisions related to the ITF bills. So even though Hemmati went to Iraq for the second time, Iraqis who receive electricity and gas from Iran have not yet been able to pay their debts to Iran in dollars and euros for fear of US sanctions.
These days, the price of the dollar in Iran has exceeded 32,000 tomans. One of the many reasons for the dollar’s rise is the lack of foreign currency resources to provide foreign funds needed for buying the main needed goods.
During the visit of Iraqi Prime Minister Mustafa al-Kazemi to Iran, Hassan Rouhani called for an increase in trade between the two countries, which could not be unrelated to Iran’s economic situation, which is in a state of disarray. High inflation rate and unemployment may lead to widespread protests and riots of the hungry and dissatisfied.
The experience of the last November uprising showed how the whole of Iran could explode again with any spark, and this time it will definitely be much more intense than last year because people no longer have anything to lose. According to news agencies, more than 60 million Iranians currently live below the poverty line.
Hassan Mahmoudi is a Europe-based social analyst, researcher, independent observer, and commentator of Middle Eastern and Iranian Politics. He tweets under @hassan_mahmou1.