US will grant vital Iran sanctions waiver: Iraqi officials

Iraq remains highly dependent on Iranian natural gas to meet electricity demands, especially during the scorching summer months. Above, Iran’s South Pars gas field facilities in Assaluyeh. (AFP)
Short Url
Updated 10 February 2020

US will grant vital Iran sanctions waiver: Iraqi officials

  • The decision comes amid strained US-Iraqi ties following last month’s Washington-directed airstrike in Baghdad
  • Iraq remains highly dependent on Iranian natural gas to meet electricity demands

BAGHDAD: The United States has signaled to Iraq its willingness to extend sanctions waivers enabling the country to continue importing vital Iranian gas and electricity imports, three Iraqi officials said this week, a move that would be a key test of Baghdad-Washington ties.
The decision comes amid strained US-Iraqi ties following last month’s Washington-directed airstrike in Baghdad that killed a high-profile Iranian general and a senior Iraqi militia leader.
A previous waiver, granted in October, is set to expire on Feb. 13. The three officials said the US State Department, which issues such waivers, has conveyed its readiness to extend the waiver for another three months — if Iraq is able to formulate a timeline by the end of the week, detailing a plan to wean itself off Iranian gas dependence.
“The American side has announced to us their readiness,” said one of the officials.
The officials interviewed are all senior members of Iraq’s government, including one who is close to the negotiations with the Americans. They spoke on condition of anonymity because they were not authorized to speak publicly about the matter before it becomes official.
Iraqi officials said the new waiver would be a test of Baghdad-Washington ties after tensions soared following a Jan. 3 US airstrike near the Baghdad airport that killed a top Iranian general, Qassem Soleimani, and senior Iraqi militia leader Abu Mahdi Al-Muhandis. Since then, Iraqi Shiite political leaders have pushed a non-binding resolution through parliament to pressure the government to oust US troops from the country.
Washington has responded to Iraq’s requests to initiate troop withdrawals with blunt refusal, even threatening primary sanctions that could cripple Iraq’s economy. Tensions have cooled in recent weeks, with both sides stepping back from saber-rattling rhetoric. rival Iraqi blocs in parliament have also selected a prime minister-designate, Mohammed Allawi, to replace outgoing Premier Adel Abdul-Mahdi.
Iraq remains highly dependent on Iranian natural gas to meet electricity demands, especially during the scorching summer months when imports account for a third of consumption. Late payments by Baghdad for Iranian power and gas have resulted in interruptions in recent years. In the summer of 2018, that was one factor that lead to destabilizing protests in the southern oil-rich province of Basra.
The US waiver enable Iraq to avoid penalties while paying Iran billions of dollars for energy imports. It has been granted successively since November 2018, when the Trump administration re-imposed sanctions on Iran.
Washington has used the threat of sanctions as leverage to push the Iraqi government to build up domestic power supplies and reduce dependence on Iran. Iraq currently flares vast quantities of gas because it lacks the infrastructure to capture it. It also has two gas fields in Anbar and Diyala provinces but development of those suffered major setbacks after the Daesh group overran the areas in the summer of 2014.
The threat of sanctions had presented Iraqi officials with a difficult choice: end a vital source of electricity or be denied access to US currency. Iraq has billions of dollars in oil revenue at the Federal Reserve Bank in New York. Oil accounts for 90 percent of Iraq’s state revenue.
The Iraqi Cabinet moved toward placating Washington’s conditions to renew the sanctions waiver in late January, by approving six oil contracts awarded by the Oil Ministry in April 2018 that would boost domestic gas supply in over two years, according to a Cabinet statement on Jan. 23.
The contracts were passed, “within the framework of the government’s efforts to enhance self-sufficiency in energy and reduce dependence on imported gas,” the statement said.
Iraq’s caretaker government approved the contracts, which would include fields that could produce over 750 million standard cubic feet of gas per day in 36 months, the statement added.
“We expect to sign soon,” said an industry official from one of the three companies awarded the contracts. The official spoke on condition of anonymity in order not to compromise ongoing talks with the government.


How the FSO Safer is an impending danger to the Red Sea and Yemen

Updated 21 September 2020

How the FSO Safer is an impending danger to the Red Sea and Yemen

  • Houthi refusal of passage to experts to carry out repairs has raised specter of a floating time bomb
  • Saudi Arabia has called for a meeting for Arab environment ministers to discuss ways to avoid a catastrophe

AL-MUKALLA, Yemen: Until the Iran-backed Houthi militia seized Yemen’s western port city of Hodeidah in late 2014, foreign and local experts had been regularly visiting a 45-year-old oil tanker moored in the Red Sea.

It was a practice that ensured that the FSO Safer, abandoned just a few kilometers off Yemen’s coast, did not touch off a disaster by exploding or sinking and spilling oil. But having witnessed the devastation caused by the Aug. 4 blast in Beirut and taken its lessons to heart, the Arab world cannot afford to ignore the imminent danger posed by Houthi stalling tactics.

Expressing concerns about the condition of the vessel, Saudi Arabia has called for a meeting for Arab environment ministers on Monday. According to a statement issued on Sunday by Kamal Hassan, assistant secretary-general and head of the Economic Affairs Sector at the Arab League, the aim of the special session is to discuss ways and mechanisms to activate Resolution No. 582, which was adopted by the Council of Arab Ministers Responsible for Environmental Affairs in Oct. 2019.

The objective is to “find an appropriate solution to avoid an environmental catastrophe due to the failure to maintain the oil ship Safer anchored off the Ras Issa oil port in the Red Sea since 2015.”

When the Houthi militia gained control of Hodeidah, the FSO Safer was carrying 1.1 million barrels of oil, or almost half of its capacity, according to local officials. No sooner had the fighters tightened their grip on the city than technical experts fled the area, realizing that it had become too dangerous for them to stay on.

Over the past two years, the FSO Safer has attracted regional as well as international attention on and off, thanks in part to the regular appearance on social media of photos of rusting pipes and water leaking into the engine rooms, raising the specter of a floating powder keg.

INNUMBER

45 Age of oil tanker FSO Safer

1.1m Barrels of crude oil in tanker

During the same period, Yemeni government officials, environmentalists and foreign diplomats have sounded the alarm over possible outcomes that could both exacerbate the humanitarian crisis in Yemen and take a heavy environmental toll on the Red Sea littoral states.

The UN has suggested sending a team of experts to Hodeidah to assess the damage to the FSO Safer, but the Houthi militia, who want to pocket the proceeds from sale of the oil, have rejected the proposal. The oil in the FSO Safer’s storage tanks was once estimated to be worth $40 million, but its value now may be less than half of that as crude prices have fallen a lot since the onset of the coronavirus pandemic, according to reports.

The internationally recognized government of Yemen has repeatedly accused the Houthi militia of using the decaying tanker as a bargaining chip, citing demands such as the resumption of salaries for public servants in areas under its control, removal of government forces from Hodeidah, and more relaxed inspection of ships bound for the port.

An oil spill would devastate the livelihoods of nearly four million Yemeni people, with fishing stocks taking 25 years to recover. (AFP)

In July, the government requested the UN Security Council to convene an urgent session to discuss the Safer issue amid concern that time was running out. In almost all their meetings with foreign envoys and diplomats, Yemeni officials bring up the matter of the tanker and the attendant risk of an environmental disaster in the Red Sea. For the past several months, Western and Arab diplomats, UN officials, aid organizations and experts too have underscored the urgency of breaking the deadlock in order to avert a human, economic and environmental catastrophe.

In July, the UN described the rusting tanker as a “ticking time bomb,” adding that the tanker’s cargo of oil could cause an environmental disaster four times bigger than the 1989 Exxon Valdez spill off Alaska. Last week, the UN Secretary-General Antonio Guterres added his voice to the growing concern over the deadlock by appealing to the Houthi militia to give UN experts access to the oil tanker.

As for the Trump administration, its views were conveyed via a tweet by the US mission to the UN that said: “The US calls on the Houthis to cease obstruction and interference in aid ops and fuel imports. We urge the Houthis to cease their assault on religious freedom and to permit UN technical teams immediate, unconditional access to the Safer oil tanker.”

In comments to Arab News in June, Michael Aron, the British ambassador to Yemen, said unless the Houthi leadership allowed experts to address the FSO Safer’s problems, the potential damage to the environment is far greater than that caused by the recent spillage of 20,000 tons of fuel in Russia’s Siberia. “The threat to the environment in the Red Sea is enormous, and will impact on all the countries who share this coastline,” he said.

Independent researchers too say the condition of Safer is deeply concerning. In a paper for the Atlantic Council in 2019 entitled “Why the massive floating bomb in the Red Sea needs urgent attention,” energy experts Dr. Ian Ralby, Dr. David Soud and Rohini Ralby said the potential consequences of an oil-tanker disaster in the area include an end to the two-year ceasefire in Hodeidah and an aggravation of Yemen’s humanitarian crisis.

“The risk of explosion increases by the day, and if that were to happen, not only would it damage or sink any ships in the vicinity, but it would create an environmental crisis roughly four and a half times the size of the Exxon Valdez oil spill,” the three scientists said. Other experts have speculated that just a stray bullet from an exchange of fire between rival factions could trigger off an explosion of the FSO Safer’s oil cargo.

Yemeni NGO Holm Akhdar says 126,000 people working in the fishing industry could lose their jobs in the case of a disaster.

“Even worse, given the complexity of this war, an errant bullet or shell from any one of the combatants could trigger a blast as large as Beirut’s August 4th disaster, prompting a historic oil spill,” Dave Harden, managing director of Georgetown Strategy Group, wrote in an op-ed in The Hill last month. He added: “Clean-up efforts would be daunting — given the insecurity of being in a war zone and the additional health risks from COVID-19.”

Similar concerns have been expressed by local government officials and fishermen in Hodeidah. Waleed Al-Qudaimi, deputy governor of Hodeidah, said that any spillage from the FSO Safer would create a humanitarian crisis as severe as the one caused by the Houthi insurgency.

“It (the oil spill) will add an additional burden that will affect Yemen for the next decades, deprive thousands of people of their jobs and destroy marine biodiversity in Yemeni waters,” he said. Al-Qudaimi appealed to the international community to keep up pressure on the militia to allow maintenance work to be carried out.

For a country reeling from a combination of conflict, humanitarian crisis, plunging currency and crumbling economy, repairs to an abandoned oil tanker off its coast might not carry the ring of urgency normally associated with a major disaster.

But now that the world knows what happened when Lebanese officials ignored warnings for years over a cache of highly explosive material stored in a Beirut port warehouse, the importance of resolving the FSO Safer issue cannot be overstated.

 

Twitter: @saeedalBatati