WASHINGTON, March 8 (Reuters) – The U.S. government has revoked Iraq’s waiver to pay Iran for electricity imports, tightening economic pressure on Tehran as part of President Donald Trump’s “maximum pressure” policy, a State Department spokesperson announced on Saturday.
With the waiver expiring, the decision reinforces efforts to prevent Iran from gaining financial relief, the spokesperson stated. The pressure campaign is designed to curb Iran’s nuclear ambitions, restrict its ballistic missile program, and cut its support for militant groups.
After returning to office in January, Trump reinstated his hardline approach toward Iran, reversing the previous administration’s stance. During his first term, he withdrew the U.S. from the Iran nuclear deal, a multinational agreement aimed at preventing Iran from developing nuclear weapons.
The U.S. aims to isolate Iran economically, particularly by targeting its oil revenues to hinder nuclear development. Iran, however, insists that its nuclear program is for peaceful purposes.
For Iraq, losing the waiver creates immediate operational hurdles, said Farhad Alaaeldin, foreign affairs adviser to Prime Minister Mohammed Shia al-Sudani. “The government is actively exploring alternatives to ensure electricity supply remains stable,” Alaaeldin told Reuters. “Investing in domestic production, enhancing grid efficiency, and integrating new technologies are key priorities.”
U.S. sanctions restrict financial transactions with Iran and penalize entities that engage in trade with Tehran. “President Trump has made it clear that Iran must abandon its pursuit of nuclear weapons or face continued pressure,” said National Security spokesperson James Hewitt. “We hope Iran prioritizes regional stability and its people’s interests over its current policies.”
Increasing Pressure on Iraq
When Trump reinstated sanctions on Iran’s energy sector in 2018, some countries, including Iraq, received temporary waivers to maintain energy access. Both the Trump and Biden administrations periodically extended Iraq’s waiver while encouraging Baghdad to reduce reliance on Iranian electricity.
The State Department renewed that stance on Saturday, urging Iraq to transition away from Iranian energy sources. “Iran is an unreliable energy provider,” the spokesperson said.
Additionally, the U.S. has leveraged Iraq’s energy policies to push for resumed Kurdish crude oil exports via Turkey, sources told Reuters. This move aims to stabilize global oil markets while constraining Iran’s ability to generate revenue from its energy sector.
However, negotiations between Iraq’s central government and the semi-autonomous Kurdish region remain complex and unresolved.
“Iraq’s energy shift creates opportunities for American companies,” the State Department spokesperson added. “U.S. firms excel in optimizing power plants, improving grid infrastructure, and developing electricity connections with reliable partners.”
The spokesperson also downplayed Iran’s role in Iraq’s electricity supply, noting that in 2023, Iranian electricity accounted for only 4% of Iraq’s total consumption.