Exclusive: US calls on Baghdad to negotiate quickly: Iraq’s independence from Iranian influence comes through Kurdistan’s gas

The US State Department considered, on Thursday, that the recent agreements concluded by the Kurdistan Regional Government with American companies to develop natural gas production constitute an important step towards addressing the chronic imbalance in the Iraqi energy sector, calling on Baghdad and Erbil to urgently coordinate to accelerate project implementation and enhance Iraq’s energy independence.

A ministry official told Shafaq News Agency, “The United States believes that Iraq will be more stable and sovereign by achieving energy independence and distancing itself from Iran’s harmful influence.”

He added, “The agreements recently signed by Kurdistan Regional Government Prime Minister Masrour Barzani with American companies to expand natural gas production in Iraqi Kurdistan support this goal,” noting that “these projects, whether in the region or across the rest of the country, are in the interest of all Iraqis, especially in light of the ongoing electricity crisis.”

The US official continued, “We encourage Baghdad and Erbil to work together to begin gas production as soon as possible.”

The Kurdistan Regional Government announced the signing of two agreements with American companies HKN Energy and WesternZagros to develop the Miran and Topkhana-Kurdimir fields in Sulaymaniyah Governorate, with a total value estimated at approximately $110 billion, in one of the largest deals in the region’s energy sector.

The agreements aim to exploit natural gas resources more widely to meet the region’s and Iraq’s electricity needs and reduce reliance on Iranian gas imports.

The move sparked protests from the federal government in Baghdad, with the Iraqi Oil Ministry describing the agreements as “null and void,” noting that natural resource management falls solely within the purview of the federal government.

Investment efforts in Iraq’s energy sector face recurring legal and political challenges, given the absence of a federal law regulating the management of natural resources between the central government and the region.

The energy crisis is one of the most significant challenges facing Iraq, with most of the population suffering from frequent power outages, which worsen during the summer months. Iraq relies heavily on gas imported from Iran, at a time when supplies are affected by political and economic factors, most notably regional tensions and mounting debt issues.

Relations between Baghdad and Kurdistan have recently become strained, particularly after the signing of the gas contract with Washington. The Iraqi Ministry of Finance announced it would halt funding for the salaries of Kurdistan Region employees until May 2025, citing the region’s exceeding its budget share and its failure to deliver oil and non-oil revenues to the federal government.

In contrast, the Kurdistan Regional Government (KRG) considered the decision politically motivated and a violation of the constitution and Federal Court rulings. The KRG asserted that Baghdad had failed to honor its financial commitments despite Erbil’s previous commitments, and that the decision directly impacts more than 1.2 million employees ahead of Eid al-Adha.

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Al-Sudani: Our industry has reached self-sufficiency, and we aim to convert oil exports into derivatives.

Iraqi Prime Minister Mohammed Shia al-Sudani said on Thursday that local industries have reached self-sufficiency, revealing at the same time that the government is targeting the conversion of oil exports into “high-value and high-yield” derivatives.

This came in a speech delivered by Al-Sudani during the celebration of National Industry Day, held by the Iraqi Federation of Industries.

In his speech, Al-Sudani said that Iraqi industrialists have proven their ability to innovate and withstand challenges throughout the various periods that Iraq has gone through, adding, “After 2003, there was an ill-considered openness that flooded the Iraqi market with imports, and industrialists turned into traders and contractors.”

He added, “Our industry has reached self-sufficiency in goods and products, from food industries to pharmaceuticals,” stressing that “no economic reform will be achieved without national industry, and we have given the private sector a role in decision-making and setting priorities.”

Al-Sudani also pointed out that “the government, for the first time, has included sovereign guarantees for private sector projects in the budget law… which has encouraged us to bring in modern technology, equipment, and production lines to develop and provide the product locally.”

He stressed that “priority was given to the construction, food, and pharmaceutical industries,” noting that “the Cabinet is prepared to go beyond decisions to protect local products, and we may even ban the import of a commodity if it is available locally.”

Al-Sudani stated, “We still need to achieve better investment in the petroleum products industry, which will increase their value.”

He continued, “We aim to transform our oil exports into high-value, high-yield derivatives by creating an important petrochemical industry that is in demand for export.”

The Prime Minister concluded his remarks by saying, “We are moving forcefully to modernize the banking sector, increase control over border crossings, and limit the entry of substandard goods.”

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The Kurdistan Regional Government responds to accusations by the Iraqi Ministry of Oil.

The Ministry of Natural Resources in the Kurdistan Region considered, on Thursday, the federal Ministry of Oil’s accusations against the region of oil smuggling as “a blatant attempt to divert attention from widespread smuggling and corruption in other parts of Iraq,” describing the Iraqi Ministry of Finance’s suspension of funding for salaries of public sector employees and workers in the region as a “blatant violation.”

In a lengthy statement, the Ministry of Natural Resources responded to these accusations by saying, “The federal Ministry of Oil issued a political statement that is far removed from objective facts, and through it insists on holding the Kurdistan Region responsible for accumulated failures that are, essentially, the result of (central) policies that did not take into account the foundations of true partnership upon which federal Iraq was built.”

The response statement addressed the Ministry of Oil, saying, “You are the ones who flagrantly and continuously violate the constitution, and have been a stumbling block to the passage of the federal oil and gas law for many years, a law that represents the cornerstone for resolving all oil-related issues. Instead, you persist in clinging to the system of legislation of the former regime, which are outdated, centralized Ba’athist laws, especially the 1976 law, which clearly and explicitly contradicts the principles of the federal system and the articles of the current constitution.”

The Ministry of Resources continued its response, saying, “You did not stop there. You have also cut off the salaries and livelihoods of the region’s citizens, in a blatant violation of their most basic human rights. You are practicing a systematic policy of starvation against them in an effort to implement your discriminatory, unconstitutional plans. This is one of your most egregious violations.”

The statement described the accusations of oil smuggling from the region as “a blatant attempt to divert attention from the widespread smuggling and corruption in other parts of Iraq,” adding, “You are the ones who smuggle oil from the south and commit all forms of corruption in full view of everyone, as attested to by local and international reports that expose the extent of waste and corruption. You are the ones who mix oil and serve the interests of others instead of serving Iraq and its people, with unfortunate policies that have damaged the reputation of Iraqi oil globally.”

The Ministry of Natural Resources noted in its statement that “the Kurdistan Region has fulfilled all its obligations, despite the other party’s failure to fulfill its constitutional responsibilities and duties.”

The statement addressed the Oil Ministry, saying, “Blaming the region for OPEC’s surplus is your fault, because you are selling other people’s oil in the name of Iraqi oil. The region’s constitutional right to produce is double what it is now, but the region, out of concern for the country’s public interest, is not even producing half of this amount due.” It added, “We have delivered to you more than 11 million barrels of oil, and you have not sent a single dinar in return to the Kurdistan Region, in clear violation of agreements and financial obligations.”

The statement continued, “As for what was stated in your last statement, we clarify the following facts in an unambiguous manner:

1- The regional government is not the party responsible for the halt in oil exports. Rather, this came as a result of the lawsuit filed by the Federal Ministry of Oil against the Turkish Ministry of Energy, which resulted in the halt in exports on March 25, 2023, costing the federal government, the region, and companies losses of more than $25 billion.

2- Within a few days, specifically on April 4, 2023, an agreement was reached with the Ministry of Oil to resume the export process. However, the budget law stipulated a specific amount for the cost of production (which is six dollars per barrel), which prompted most producing companies to refrain from production under this specification.

3- Based on the request of the Ministry of Oil, quantities of the region’s oil were delivered to one of the refineries working for the Ministry of Oil, for a period exceeding five months. The total amount delivered amounted to (11,826,218) barrels. Despite this commitment on the part of the region, not a single dinar was paid for this quantity, and as a result, the producing companies refrained from delivering their production to the Ministry of Oil.

4- At the outset of the formation of the current federal government, a joint committee was formed to prepare a draft federal oil and gas law, and several meetings were held for this purpose. However, these efforts have not yet yielded any results, and there is a clear slowness and delay on the part of the federal government in following up on this extremely important issue, which represents the key to a real solution to the outstanding disputes between the two governments.

5- Since the system of government in Iraq is a federal system, and it is the constitutional right of the region to have its own legislation that regulates its affairs, the Ministry of Natural Resources in the Kurdistan Region concluded its contracts with international oil companies based on Oil and Gas Law No. 22 of 2007. If there was a real legal problem in these contracts, then international companies with a prestigious reputation would not have invested billions of dollars in the region without legal basis.

6- Iraq has a constitution. If its provisions were implemented in letter and spirit, far from selectivity and narrow interests in application and interpretation, the general situation in the country, and the oil file in particular, would not have reached this level of complexity and crisis.

7- The Kurdistan Regional Government has fully fulfilled its obligations regarding efforts to resume exports, as it agreed to: sell oil produced in the region through the State Oil Marketing Organization (SOMO), deposit all sales revenues into the state treasury, appoint a consulting company, and open an escrow account in the name of the companies.

8- The oil companies operating in the region are required to do the following: (Adhere to the contracts in terms of the economic model, the commercial terms in the contract, and not to touch the contracts as they have taken their legal course in federal and international courts).

The Ministry of Resources concluded its statement by saying, “The (temporary) agreement to resume oil exports, and the subsequent meetings and gatherings, represent conclusive evidence of the Kurdistan Region’s flexibility and willingness to cooperate, rendering your ministry’s claims that previous talks with the region were futile and baseless.”

Earlier Thursday morning, the Iraqi Ministry of Oil issued a statement stressing the “necessity for the Kurdistan Regional Government to abide by the constitution, Federal Court decisions, and applicable laws, including the general budget law, which obligates the regional government to hand over oil produced from its fields to the federal Ministry of Oil for export and to replenish the public treasury with its revenues.” The statement added that “the ministry had previously sent official letters and delegations to the regional government on a persistent and continuous basis to achieve this, but to no avail.”

She stressed the “need to immediately commence oil deliveries, in accordance with the text of the amended budget law that was enacted in agreement with the regional government, and the need for the regional government not to shirk its obligations.”

According to a statement from the Ministry of Oil, “The continued failure to deliver oil is causing major financial losses to Iraq and is harming Iraq’s international reputation and its oil commitments. The KRG’s failure to abide by the constitution and the law has led to a loss to Iraqi oil exports and the public treasury twice: the first is the failure to receive and export the oil produced in the region and benefit from its revenues, and the second loss is the federal Ministry of Oil being forced to reduce production from the remaining oil fields outside the region in compliance with Iraq’s OPEC quota, which counts production from fields located in the region as part of Iraq’s quota, regardless of the violations indicated.”

The Iraqi Oil Ministry accused Kurdistan of continuing to “smuggle oil from the region outside Iraq,” holding the “regional government fully legally responsible for this,” and that it “reserves the right to continue taking all legal measures in this regard.”

Shafaq.com

A strongly worded statement from the Ministry of Oil to the regional government: Abide by the constitution and the law.

The Federal Ministry of Oil issued a strongly worded statement on Thursday to the Kurdistan Regional Government, demanding that it adhere to the law, the constitution, and agreements regarding oil exports and the transfer of revenues.

The ministry said in a statement, “The Ministry of Oil stresses the necessity for the Kurdistan Regional Government to adhere to the constitution, the decisions of the Federal Court, and the applicable laws, including the general budget law, which obligates the regional government to hand over the oil produced from the fields located within it to the federal Ministry of Oil for the purpose of exporting it and supplying the public treasury with its revenues. The ministry has previously sent official correspondence and delegations to the regional government on an urgent and continuous basis to achieve this, but to no avail.”

The ministry stressed “the need to immediately begin delivering oil, in accordance with the text of the amended budget law, which was enacted in agreement with the regional government, and the need for the regional government not to shirk its obligations.”

The ministry continued, “The continued failure to deliver oil causes major financial losses to Iraq and exposes Iraq’s international reputation and its oil obligations to harm. The regional government’s failure to abide by the constitution and the law has led to the loss of Iraqi oil exports and the public treasury twice: the first by not receiving and exporting oil produced in the region and benefiting from its revenues, and the second loss by forcing the federal Ministry of Oil to reduce production from the remaining oil fields outside the region in compliance with Iraq’s quota in OPEC, which counts the production of fields located in the region as part of Iraq’s quota, regardless of the violations indicated.”

The ministry noted that it is “monitoring information indicating the continued smuggling of oil from the region outside Iraq. The ministry holds the regional government fully legally responsible for this and reserves the right to continue taking all legal measures in this regard.”

Burathanews.com

The Pentagon to Shafaq News: No change in the plan to withdraw from Iraq.

The US Department of Defense (Pentagon) confirmed, in a statement to Shafaq News Agency on Tuesday, that the plan for the withdrawal of US forces from Iraq is still proceeding within the announced framework, denying any changes or delays due to recent political or regional developments.

The Pentagon said in an official response to Shafaq News Agency’s inquiry: “We are on the same path that was reaffirmed in the joint statement below issued in September 2024.”

This response comes amid talks held within the framework of the Joint High Military Committee between Baghdad and Washington, which was formed in 2023 to discuss the future of the US military presence in Iraq and determine the mechanism for transitioning the relationship from a combat framework to bilateral security cooperation, including training and intelligence support.

The current US military presence in Iraq is distributed across several bases, most notably Ain al-Asad in Anbar and Harir in Erbil. The estimated number of troops is approximately 2,500, performing tasks related to combating ISIS remnants and providing logistical support to Iraqi forces, within the framework of the international coalition.

In early 2020, the Iraqi parliament voted on a resolution requiring the government to set a timetable for ending foreign presence. This followed escalating tensions following the assassination of Iranian Quds Force commander Qassem Soleimani and deputy head of the Popular Mobilization Forces (PMF), Abu Mahdi al-Muhandis, near Baghdad airport.

Despite political pressure from Iraqi Shiite political parties, the United States emphasizes that any withdrawal must be carried out in full coordination with Baghdad and ensure that terrorist threats do not return. The United States emphasizes that the issue is still under negotiation through joint official channels.

Shafaq.com

The Iraqi currency: a document that attracts tourists and investors.

Currency has played a significant role in regulating economic and political life in Iraq, with its forms and symbols evolving over the ages, all the way to the modern era. It has become an essential part of the national and international economic structure, and with Baghdad being designated the Arab Capital of Tourism, it represents a means of attracting tourist investors.

The Iraqi currency has undergone many transformations, as historian Dr. Adel Shaker explains in a statement to Al-Sabah: “Commercial transactions in Iraq were based on a commodity exchange system, with commodities such as wheat, sheep, and vegetables being exchanged before they were regulated by written laws. These laws were written in cuneiform script, protected the rights of merchants, and regulated exchange operations.”

He emphasized that over time, currencies evolved and diversified in their forms. Gold and silver coins appeared bearing important slogans, such as “There is no god but God, Muhammad is the Messenger of God” or “Ali is the guardian of God.” They immortalized the names of kings and historical events, especially in regions such as the city of Hatra in northern Iraq, which went through multiple political phases. Its kings placed slogans expressing their beliefs and deities, such as the sun god.

The system was initially disorganized, until laws intervened to regulate these processes. Priests controlled the temple and regulated religious, social, and political life. They wrote down laws on cuneiform tablets, which are now part of museums and illustrate ancient trade operations.

Shaker explained that the beginnings of the use of currency in Iraq date back to the First World War, when Iraq was part of the Indian monetary region, and the Indian rupee was used as legal tender during that period until the year 1932. In the year 1931, the Iraqi Currency Committee was established pursuant to Law No. (44) of 1931, then it was abolished and the National Bank of Iraq was established pursuant to Laws No. (42, 43) of the year (1947) to undertake the issuance of currency.

Pointing out that the Iraqi currency went through several stages, namely the royal edition bearing the image of King Faisal, which continued until 1958, the edition bearing the republican emblem until 1978, and the international edition called (the Swiss edition), which was printed by the British company Delao and the Soviet Exportless until 1990. As a result of the economic blockade that Iraq went through, the Central Bank of Iraq printed banknotes at the Al-Nahrain Printing House, which did not meet security specifications and were made of plain paper. In early 2003, the Central Bank withdrew all local and international banknotes called the Swiss edition, and introduced the new series of Iraqi dinars, consisting of seven denominations, which were printed with high security specifications, and continued to be developed.

Alsabaah.iq

The Minister of Finance discusses with the World Bank developing the private sector and encouraging investment.

Finance Minister Taif Sami and the World Bank’s representative to Iraq discussed enhancing cooperation to support development projects, grow the private sector, and encourage investment on Sunday.

The ministry said in a statement received by Al-Maalouma that “Minister of Finance Taif Sami Mohammed received the World Bank representative to Iraq and his accompanying delegation to discuss plans to enhance cooperation to support development projects by leveraging the technical and financial support provided by the bank in implementing strategic projects to stimulate economic growth, particularly in the areas of infrastructure and human development.”

The statement added, “The two parties discussed developing the private sector and encouraging investment as the primary driver of sustainable economic growth, in addition to the need to support financial reforms to achieve stability and growth.”

The statement explained that “the bank’s representative expressed his commitment to continuing to support Iraq in achieving its development goals and enhancing its ability to confront economic and development challenges.”

Almaalomah.me

Sudanese orders on selling prices after dollar stabilization

On Monday, Iraqi Prime Minister Mohammed Shia al-Sudani directed the departments responsible for combating economic crime to pursue and hold accountable those who manipulate prices, particularly food and medicine vendors, bakeries, and ovens, given the “stability of the dollar exchange rate against the Iraqi dinar.”

According to the directive, which Shafaq News Agency has seen, it included: “Given the stability of the exchange rate (dollar) against the Iraqi dinar, it has been observed that some companies, traders and weak-willed individuals are exploiting prices or keeping them as they were without taking into account the stability in the markets, especially food and medicine owners, bakeries and ovens, due to their failure to adjust the selling prices of the materials that citizens need on a daily basis, as there is no clear oversight role by the economic departments to follow up on these cases.”

The directive also stated that, “After the Prime Minister reviewed the above content, he ordered the departments responsible for combating economic crime to monitor and hold accountable those who manipulate prices, take the necessary legal action against them, and coordinate with the Ministries of Commerce, Agriculture, and Health to ensure the stability of the price ratio of items that affect citizens’ lives on a regular basis.”

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A “black” trick and banking loophole generate millions of dollars for Iraqi factions.

A US report revealed that Iranian-backed Iraqi militias have been exploiting a loophole in the Iraqi banking system, namely Visa and MasterCard, to withdraw dollars from Iraq. Transactions have rapidly increased to $1.5 billion per month.

A report by the American newspaper “The Wall Street Journal,” translated by Shafaq News Agency, explained that loopholes and weak oversight have allowed the militias to benefit from manipulating the credit card system. It added that the small market that appeared for Visa and Mastercard in early 2023 has suddenly transformed into a financial transfer operation worth $1.5 billion per month. American and Iraqi officials say that behind it stand Iranian-backed militias exploiting American payment systems to circumvent sanctions and reap huge profits.

Noting that “a new loophole has replaced the old one,” the report explained that after the US Treasury and the Federal Reserve Bank of New York halted fraudulent international bank transfers conducted by Iraqi banks in late 2022, Iraqi militias quickly shifted to using another mechanism, namely Visa and Mastercard credit and prepaid cards.

The report noted that the card system emerged with the dismantling of the previous system of bank transfers, which lacked anti-money laundering controls. This flawed system was introduced by the United States after the Iraq War and allowed militias and Iran access to billions of dollars. It added that the sudden shift to bank cards occurred almost immediately after the shutdown of that tap.

The report stated that by mid-2023, cross-border transactions using Iraqi cards had increased by nearly 3,000%, indicating that a significant portion of this volume was related to the exploitation of the gap between the official exchange rate and its high black market rate.

The report explained that the militias and their partners load the cards in Iraq, then use them to withdraw dollars from neighboring countries. They then return the cash to Iraq and exchange it for dinars at a profit that has sometimes reached 21%.

The report quoted officials as saying that the profits were substantial, with cardholders linked to the militias generating an estimated $450 million in profits in 2023 alone from this fraud. They added that Visa and Mastercard, which charge fees on international transactions, together generated approximately $120 million from these practices.

According to the report, despite repeated warnings from the US Treasury Department since mid-2023, Visa and Mastercard delayed taking action for several months. It added that after Treasury officials revealed that individuals linked to militias were flooding ATMs in Dubai with their Iraqi bank cards, the two companies postponed major action until March 2024.

In addition, the report noted that the militias have expanded their operations by using fictitious transactions with foreign merchants, point-of-sale devices that operate via VPNs, and smuggling networks to transfer money.

According to the report, some merchants accepted fake purchases in exchange for cash, a portion of which was returned to the seller, while others helped launder these transactions through jewelry stores and shops in free trade zones in the UAE and Turkey.

Additionally, the report stated that Iraqi government-backed cards were also used, as Qi cards, designated for paying the salaries of government employees and militia members, were a key part of the fraud scheme. Militias seized the cards of ordinary fighters, and the names of fictitious employees were inserted onto payrolls to obtain more cards, which were then used in this transaction cycle.

Under mounting pressure, Mastercard and Visa finally implemented sweeping measures in early 2024, according to the Wall Street Journal. Mastercard cancelled more than 100,000 cards and removed 4,000 UAE merchants from its network. Visa followed suit, identifying 70,000 suspected fraudulent cards and temporarily banning thousands of foreign sellers.

The US report indicated that Iraqi regulatory authorities imposed a monthly maximum of $300 million on cross-border transactions, and a maximum limit of $5,000 per cardholder.

In addition, the report noted that the Central Bank of Iraq hired a New York-based financial crimes firm to monitor the system and required all card issuers to operate through banks with correspondent relationships with the United States, while many Iraqi card issuers were excluded from the Visa and Mastercard networks.

The US report noted that the Treasury Department blacklisted three card companies suspected of having ties to militias, including a company affiliated with the Imam Abbas Shrine in Karbala, a major destination for Iranian pilgrims.

He considered this case to reveal significant weaknesses in global payment systems, particularly in fragile or poorly regulated markets. He noted that Iraq’s economy remains heavily reliant on cash transactions, while oversight is weak. The transition to digital payments occurred without adequate safeguards, allowing armed groups subject to US sanctions to exploit Western infrastructure to circumvent restrictions.

He concluded that despite Visa and Mastercard’s assertions of their rapid response and strong cooperation with authorities, US and Iraqi officials believe the companies’ delay allowed the fraud to expand and reach billions of dollars.

The Wall Street Journal report concluded by noting that while the United States seeks to preserve the global integrity of the dollar and strengthen the implementation of sanctions, the Iraqi payment system and the companies operating within it have become a stark warning of what can happen when financial innovations bypass oversight.

Shafaq.com

With over $70 billion, Baghdad offers dozens of investment opportunities to Tehran.

Iraqi Ambassador to Tehran Nasser Abdul Mohsen Abdullah revealed on Monday that Iraq offers dozens of investment opportunities to Iranian companies in vital sectors, including renewable energy, oil and gas, heavy industries, free zones, and industrial complexes.

Iran Front Page reported, in a report translated by Shafaq News Agency, that “the head of the Iranian Chamber of Commerce, Samad Hassan Zadeh, called during his meeting with the Iraqi ambassador to expand the volume of Iranian investments in Iraq,” explaining that “Baghdad seeks to strengthen the economic partnership between the two countries and push the wheel of bilateral trade towards higher levels through wide-ranging investment facilities.”

The Iraqi ambassador indicated, according to the newspaper, that “his country is offering 27 investment opportunities in the field of renewable energy distributed across 14 governorates, in addition to two major projects in the oil and gas sectors, along with 22 opportunities in heavy and medium industries, nine investment opportunities in industrial zones and free trade zones, and 10 opportunities in the agricultural sector, most of which are concentrated in the governorates near the Iranian border, in addition to 10 opportunities in the healthcare sector and 25 opportunities in the housing sector.”

He added that “investment prospects in Iraqi free zones and industrial complexes alone could exceed $70 billion,” adding that “expanding Iranian participation would contribute to achieving a trade balance between the two countries.”

For his part, the head of the Iranian Chamber of Commerce stressed “the importance of removing obstacles facing Iranian investors, most notably bank guarantees and legal procedures,” asserting that “joint production projects are a priority for Tehran at this stage.”

The Iranian official also called for “providing a transparent legal environment that preserves investors’ rights and encourages increased engagement in the Iraqi market.”

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