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Iraq's FM: We are in touch with the US, Iran to reduce tensions

In an exclusive interview with Al-Monitor, Fuad Hussein discusses US-Iraq economic relations, regional economic integration and sanctions on Russia and Iran. 
US Secretary of State Antony Blinken and Iraqi Foreign Minister Fuad Hussein speak to the media prior to a meeting, in the Treaty Room of the US State Department in Washington, DC, on February 9, 2023. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)

WASHINGTON — "It’s no secret that I am in touch with both Iranian and American officials,” said Iraqi Deputy Prime Minister and Foreign Minister Fuad Hussein, in an exclusive interview with Al-Monitor in Washington on Sunday.

“Both sides trust us, and that’s a good thing,” said Hussein. “It’s in Iraq’s interest that there be less tension between Washington and Tehran."

Hussein is in Washington as head of an Iraqi delegation to the United States, which includes acting Central Bank Gov. Ali al-Allaq, for the first-ever economic focused Higher Coordinating Committee of the US-Iraq Strategic Framework Agreement.

Iran, not surprisingly, is also on the agenda.

Iranian Foreign Minister Hossein Amir-Abdollahian called his Iraqi counterpart on Friday, prior to the Iraqi foreign minister’s meeting the next day with US Special Envoy for Iran Robert Malley. 

In their meeting, Hussein and Malley discussed the call from Amir-Abdollahian and the stalled talks on the Joint Comprehensive Plan of Action, or Iran nuclear deal.

“I will continue these contacts,” said Hussein. “The US is an important ally, and Iran is an important neighbor, with whom we share many common interests, including a border, religion, culture, economics and trade.”

“I hope both sides will start talking to each other again, but that’s their decision,” he continued.

Hussein also discussed with US officials the complications Iraq faces in navigating US and Western sanctions on Iran and Russia. He met with Russian Foreign Minister Sergey Lavrov in Baghdad last week before coming to Washington. Lavrov appealed to Hussein for some type of workaround on sanctions so that Russian companies can be paid. Gazprom and Lukoil have about $10 billion worth of investments in Iraq.

The Iraqi foreign minister stressed that the resolution of these issues is a work in progress, and will be done in coordination with Washington.  

“US and Western sanctions on Russia — and on Iran — are not just an issue for Iraq,” said Hussein.

“The sanctions affect transactions with banks and countries all over the world. Iraq expects to repay its debts to Iran and Russia — that goes without saying. It’s a fact they have money in Iraq. But we will not take any actions that will hurt Iraq and Iraqi banks. We have explained to Russian and Iranian officials that we need to find an alternative approach in cooperation with the Americans.”

Hussein, who previously served as minister of finance, was upbeat about the economic emphasis of the visit.

“This is the first visit where the primary focus has been economics, development and integration,” he said.

During a White House meeting in early February, US President Joe Biden and Jordan's King Abdullah II called Iraqi Prime Minister Mohammed Shia al-Sudani to discuss Iraq's economic initiatives and Jordan’s support for Iraq through joint infrastructure projects. 

The Iraqi foreign minister has so far met with Secretary of State Antony Blinken, Deputy Secretary of the Treasury Wally Adeyemo, and many other US officials and business leaders.  

Hussein said that discussions during the visit have included Iraq’s need to reduce flared gas emissions and diversify electricity sources.

“There’s a lot of understanding here in Washington about the need for investment in flare gas capture, and not just because of the climate and health benefits of controlling these emissions,” said Hussein.

“There is a strategic dimension as well," he continued. “Gas can and should be a source of income for Iraq. We need this excess gas to fuel our power stations, which currently depend on Iranian gas. We need to be independent in our gas production, and gas can supplement our role as a major oil producer.”

“With regard to oil, we are already integrated,” said Hussein, noting Iraq’s key role in the OPEC+ cartel.

Iraq is pressing ahead to diversify its sources of electricity, including with Jordan, Saudi Arabia and the Gulf, but progress has been slower than Iraq would like.

“I am not happy that implementation is taking so long; we signed these agreements with the Gulf about three years ago,” said Hussein. “The principle is agreed. Our technical people are still working on the price.”

Hussein acknowledged that Iraq's negotiations with Total over a potentially game changing $27 billion energy deal were also discussed in Washington.

“It’s a fact that the talks in Paris with TotalEnergies didn’t reach an agreement, but the door is still open for further negotiations. This came up in my meetings here in Washington,” Hussein noted.

Hussein is optimistic that the Iraqi currency crisis that sparked this visit looks to be subsiding, following the Central Bank's recent currency revaluation and following his meetings here with Treasury officials.

“There is already a system in place between the Central Bank of Iraq [CBI] and the US Treasury, but it is new; Iraqi parties are becoming more familiar with the mechanism,” he said.

“Iraq also benefits from substantial currency reserves and relatively high oil prices,” he said. “There are also positive results to the CBI’s recent shifts in monetary policy. So gradually, I think, this crisis is subsiding.”

US officials and Iraqi observers are also tracking how tensions between the two leading Kurdish political parties — the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK) — may be complicating relations with Baghdad and the Kurdistan Regional Government as negotiations continue over the budget and a new oil and gas law.

Hanging over all this is whether a federal court ruling that the Kurdistan Region’s oil and gas law is unconstitutional will be implemented, although some sources in Baghdad say that there may be discussion of a new law regarding the federal court, picking up on a previous initiative during the government of Iraqi Prime Minister Adel Abdul Mahdi.

“Both Kurdish parties are part of the current government, including discussions among the key figures in the Coordination Framework — the political coalition — so there are talks, and the relationship between Baghdad and Erbil is good,” said Hussein.

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