Exclusive: US, Iran plan ‘oil for goods’ deal to ease sanctions

US Secretary of State Mike Pompeo visited Iraq in May amid increasing tensions between Washington and Tehran. (AP)
Updated 07 June 2019

Exclusive: US, Iran plan ‘oil for goods’ deal to ease sanctions

  • Alleged deal to be similar to UN oil-for-food program, US sources deny

BAGHDAD: Iranian and US officials may have reached an initial agreement to smooth the US-imposed sanctions on Iran by allowing Iran to sell hundreds of thousands barrel of oil per day in exchange for certain goods, Iraqi sources told Arab News. 

The unconfirmed deal suggests that export and import operations will be through Iraq, officials in Baghdad familiar with the talks say. 

Iran has been suffering a “suffocated” conditions since US withdraw from the nuclear deal and imposed economic sanctions on Iran. The tension between the two sides is at peak as US threaten to militarily respond if Iran targeted any of the US interests in the Middle East.

The alleged deal which may have been reached between the US and Iranian officials, would have been made in Baghdad in cooperation with the Iraqi side, however several US government sources that Arab News spoke to have denied that such a deal exists between Iran and the US. 

However, according to one senior Iraqi official familiar with what he described as ‘ongoing talks’, the deal could be considered “a good-will gesture offered by the Americans to calm the escalation between the two countries, but it is still in its preliminary stages. 

“The involved parties have agreed on the general lines which state allowing Iran to export a specific amount of oil and getting specific goods in return.
“Iraq will be the transit area for both importing the goods and exporting the oil,” he added. 

Iran has been controlling dozens armed factions operating in Iraq, Syria, Lebanon and Yemen. The activities of these groups have been representing a serious threat to the US and its’ allies in the region.

US-imposed economic sanctions on Iran aim to halt its nuclear program and prevent it from funding and equipping these factions.

“The main goal that the Americans are looking to achieve it is preventing the Iranians from getting any cash money,” a second Iraqi official familiar with the talks told Arab News in condition of anonymity.

“The deal will allow the Americans to monitor and control everything, the amount of the exported Iranian crude oil, the kinds of the imported goods and being sure that no cash will be paid back.
“This will paralyze the Iranians and force them to abandon the armed factions they fund and will keep them busy dealing with the internal Iranian situation,”.

The “initial” deal which has been concluded by Bijan Zanganeh, the Iranian Minister of Oil who was in un announced visit to Iraq lasted for few days, has not became final yet as the three sides have not agreed on the details including the amount of oil, the kind of goods and the key buyer of the Iranian oil, Iraqi officials told Arab News.
The suggested amount of oil which supposed to allow Iran to export a certain amount of barrels per day but “this point still under discussions” two officials at least told Arab News. Also the key buyer in this deal “still one of the disagreement points between the Iranians and Americans”.

“Iranians have suggested one of the European countries as a key buyer but the Americans have refused,” one of the sources who is familiar with the talks told Arab News.

“The confirmed thing so far in this deal is, that Iraq will be the transit area for the exchange operations (import and export), so US can closely monitor the commitment of the Iranians,”.

Oil for goods

The alleged agreement, which is still in its early stages of negotiations, is inspired by the oil-for-food program implemented in Iraq in 1995 by a Security Council resolution to ease the impact of the economic embargo imposed on Iraq following the invasion of Kuwait in the early 1990s. The oil-for-food program allowed Iraq to export a quantity of its oil in return for securing the humanitarian needs of the Iraqi people under the supervision of the United Nations.

“The targeted shape of the suggested deal is almost a copy of the oil – for – food program which used to apply in Iraq in 1990s, but Iraq will replace the UN as the supervisor of procurement and receipt and disbursement of funds received,” a prominent Shiite leader and a member of the Oil and Power parliamentary committee familiar with the talks told Arab News.
“The proposal is to open a bank account in the Iraqi Central Bank in favor of Iran to deposit the money obtained from the sale of Iranian oil and then Iraq to pay bills of Iranian purchases later using this money.

“This mechanism will enable the Americans to follow the dollar closely and monitor Iran's disbursements,”.

Iraq has been importing 1100 MW of electricity per day from Iran since years, in addition to 28 million cubic meters of gas oil which secure another 4,000 MW.

Iran stopped supplying Iraq with electricity and gas oil last summer because of the inability of Iraq to pay its dues as a result of US financial sanctions imposed on Iran. The resulted serious shortage of electricity led to the outbreak of angry and violent demonstrations in the Shiite-dominated provinces in southern Iraq. At least 17 people including a number of security forces were killed and many government and party offices, including the Iranian consulate were burned.

A prominent Shiite leader familiar with the deal told Arab News that the negotiations started less than a month ago in Baghdad and the deal included maintaining all the contracts that Iran was signed before imposing the sanctions with European, Chines and Asian  companies to supply medical substances and spare  parts fo the oil and industry and Iraq will financially cover these contracts from the deposit money in the suggested bank account
To bypass US sanctions and ensure they are not breached, the Iraqi government last year has opened a bank account at the Central Bank of Iraq on behalf of Iran to deposit the money owed by Iraq and then use it to pay Iranian purchase bills to other countries, Iraqi officials said.
“The proposed opening of the bank account, the receipt of the sold oil money and the payment of the invoices of Iran’s purchases, among the points agreed upon,” another member of the oil and power parliamentary committee, said.

54 injured as Lebanese security forces and Hezbollah supporters clash in central Beirut

Updated 31 min 51 sec ago

54 injured as Lebanese security forces and Hezbollah supporters clash in central Beirut

  • Attackers threw stones and firecrackers at security forces, who responded by firing tear gas and rubber bullets
  • The Internal Security Forces said at least 20 police were wounded, some of them badly

BEIRUT: Security forces fired tear gas and rubber bullets at Lebanese protesters in central Beirut on Saturday in clashes that went on into the night and wounded dozens of people.

Among the badly injured were policeman after Hezbollah and Amal Movement supporters clashed with anti-government protesters, less than 32 hours before a key parliamentary meeting to nominate a new Lebanese leader.

Attackers threw stones and firecrackers at security forces, who responded by firing tear gas and rubber bullets.

State news agency NNA said the tear gas made several people faint. The Lebanese Civil Defense said it treated 54 people for injuries, taking more than half to hospital.

The Internal Security Forces said at least 20 police were wounded.

Riot police took more than 90 minutes to contain the attackers in areas surrounding Riad El-Solh and Martyrs squares, forcing them to retreat to the Khandak El-Ghamik and Zqaq El-Blat neighborhoods, where Hezbollah and the Amal Movement have strong support.

Clashes have become more frequent in recent weeks, with supporters of Hezbollah and Amal attacking protest camps in several cities amid counter-demonstrations.

The renewed attacks on protesters came a day after Hezbollah leader Hassan Nasrallah claimed that both the militant group and Amal “are exercising control over their supporters and that attackers do not belong to them.”

Khandak El-Ghamik residents told reporters that the attackers are not from the area.

“We do not know who they are,” one resident said.

The counter-protests have taken place in the capital and other Lebanese cities in recent weeks, prompting the leader of Hezbollah on Friday to urge his supporters — and those of Amal — to stay calm.

Following the violence, a local sheikh went to the minaret of a neighborhood mosque and called on the attackers to “go back to their homes.”

Abu Ali, an elder of the region, said that the attackers came from areas outside Beirut and infiltrated Khandak El-Ghamik before launching attacks on protesters in Riad El-Solh and Martyrs squares.

Activist Mahmoud Fakih told Arab News: “The attackers were chanting slogans showing their political affiliations. These attacks are repeated after every speech by Nasrallah. They want to spread fear in our ranks.”

The attacks coincided with plans by protesters to stage a sit-in in Nejmeh Square, near the Parliament. Activists said they wanted “to rescue the Parliament from corrupt authority.”

Security forces blocked the square to prevent protesters getting close to Parliament.

Hundreds of people had been marching in the capital as part of a historic wave of protests that has swept Lebanon since Oct. 17, furious at a ruling elite that steered the country toward its worst economic crisis in decades.

Since the protests pushed Saad Al-Hariri to resign as prime minister, talks between the main parties have been deadlocked for weeks over forming a new cabinet.

Lebanon urgently needs a new government to pull it out of the crisis. Foreign donors say they will only help after the country gets a cabinet that can enact reforms.

The unrest erupted in October from a build-up of anger at the rising cost of living, new tax plans and the record of sectarian leaders dominating the country since its 1975-90 civil war. Protesters accuse the political class of milking the state for their own benefit through networks of patronage.

Lebanon’s economic crisis, long in the making, has now come to a head: Pressure has piled on the pegged Lebanese pound. A hard currency crunch has left many importers unable to bring in goods, and banks have restricted dollar withdrawals. 

(With Reuters)