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How Does Israel Fit Into Iraq's Electricity Shortage?

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq, December 21, 2015.
A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq, December 21, 2015.Credit: Essam Al Sudani / Reuters
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

The changing seasons don’t really affect the shortage of electricity in Iraq. In the summer, air conditioners suck the power lines to their last drop of electricity, at which point the flow stops, sometimes for hours and often for days at a time.

Winter is supposed to bring some relief, but the routine scarcity doesn’t really go away. Heating is usually done with kerosene or gas heaters, but hospitals and public buildings rely almost entirely on air conditioners, which unfortunately depend on electricity.

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Computers that become irreversibly stuck, food gone bad in refrigerators that aren't running and blazing summer temperatures that can reach 50 degrees Celsius were among the major causes that drove thousands of demonstrators to the streets over the last year. Violent clashes between a furious public and militias or security forces have toppled governments, but even the present government, led by Mustafa al-Kadhimi, is incapable of solving this chronic problem.

Iraq, an oil-rich country holding one of the largest reserves in the world, is obliged to import oil and gas from Iran on account of its purchase of $2.7 billion for unpaid gas. Iraq’s coffers are empty despite the fact that it exports 3.8 million barrels of oil a day. The deficit has paralyzed public services and suspended salary payments, and the government is searching for any help it can get.

Iraq's President Barham Salih, speaks in a pre-recorded message during the U.N. General Assembly's special session to discuss the response to COVID-19, UN headquarters, New York, December 3,2020.Credit: UNTV via AP

The plot thickens

Iraq’s electric power is not just a local matter that reflects the failures of its government. Electricity has burgeoned into a diplomatic and strategic issue, fueling competition between Iran on one hand and the United States and its Arab allies on the other, and later between the United States and China as well.

The United States’ wish to sever ties between Iran and the world through the use of economic sanctions has encountered a high Iraqi hurdle, since without Iranian-suppled electricity, Iraq cannot function. As a result, the United States has had to repeatedly grant Iraq exemptions from these sanctions for the purpose of importing electricity and gas, while encouraging Iraq to find alternative sources that would release it from its dependence on Iran.

Also involved in this struggle is Saudi Arabia, which plans to invest hundreds of millions of dollars in developing Iraq’s electricity network. Egypt has also signed a deal to supply Iraq with electricity through Jordanian power lines, which are connected to Egypt’s. Jordan signed a similar deal with Iraq in September for supplying it with electricity in exchange for oil. However, the implementation of these plans could take up to two or three years, at best, and experience shows that the implementation of such projects in Iraq can take much longer than planned.

For example, it will be necessary to erect high-voltage power lines from Jordan to Iraq, the first 300 kilometers (186 miles) of which will be in Jordan itself. The oil pipeline from Iraq to Jordan will span 700 kilometers, carrying one million barrels of oil a day. Work on this project has not begun yet.

In order to carry out the project with Egypt, hundreds of kilometers of power lines will need to be replaced, to enable transmitting the extra power. Estimates put the cost of this project at $2.7 billion. Incidentally, the power supplied by Jordan will be partly generated by gas supplied to Jordan by Israel, making Israel a partner in the regional power grid even without it being mentioned or recognized as such by Iraq.

A handout picture provided by the Iranian Presidency on December 16, 2020, shows President Hassan Rouhani chairing a cabinet meeting in the capital Tehran. Credit: AFP Photo / HO/ Iranian Presidency

No free lunches

Iran, for its part, is not treading water. It exports electricity not just to Iraq, but also to Pakistan, Armenia and Azerbaijan. It is trying to block Iraq’s ties with other Arab countries, or at least to maintain Iran’s role as the main provider.

Last June, two weeks after the visit of a senior-level Iraqi delegation in Saudi Arabia to discuss economic cooperation and investment in Iraq’s power grid, Iran signed a two-year deal with Iraq for supplying it with electricity. This deal made it clear to the U.S. that its intention to wean Iraq off Iran’s teat is not going to materialize, at least not in the next two years.

But even when the construction of power grids linking Iraq to other Arab countries is completed and Iraqi oil starts flowing in exchange for electricity – as the U.S. desires – there are concerns that Iran will use this new pipeline as an effective way to circumvent sanctions. Iran will be able to deliver oil to Iraq along existing pipelines, and Iraq will be able to send Iranian oil to other countries, passing it off as Iraqi oil. All the while, however, Iraq has to contend with heavy Iranian pressure. Iran is demanding that Iraq repay its debts, threatening to cut the amount of gas it exports to Iraq, limiting it to three million cubic meters a day instead of the current five million. Such a cut is tantamount to a loss of at least seven megawatts a day, which will impact tens of thousands more Iraqi families.

Last Tuesday, an Iranian economic delegation came to Baghdad in order to discuss the debt and to examine Iraq’s request to postpone or restructure the loan. Iran, which doesn’t give out free gifts, will ask for a diplomatic or political trade-off. This could entail a demand to ease up Iraqi pressure on pro-Iranian militias, which are suspected of firing on U.S. targets in Iraq, a demand to accelerate the withdrawal of U.S. forces from Iraq, or a demand to grant Iran some say on the amount of electricity Iraq purchases from Arab states, in order to ensure its own supremacy in providing energy and to guarantee the safety of the oil pipeline Iran plans to build from Iran to Syria, which will pass through Iraq.

All these diplomatic and political considerations and calculations are being made before the policy of U.S. President-elect Joe Biden towards Iran becomes clear. The major axis around which Arab states and international corporations will revolve is the future of the nuclear accord with Iran and the nature of the negotiations Biden will hold with Iran. The key issue will be the removal of all or at least some of the sanctions on Iran, in exchange for Iran’s returning to levels of nuclear-related activity as agreed upon in the accords signed in 2015. Gulf States and, mainly, Saudi Arabia, will no longer have any interest in investing in Iraq, and they will have to compete with Iran from a less advantageous position.

In order to examine the regional implications of Iranian-U.S. relations, it will probably be necessary to wait for the presidential election in Iran, scheduled for June 18. Until then, the conservative leadership will continue to foster its anti-U.S. stance, which includes the conditioning of any negotiations with the United States on the removal of U.S. and international sanctions on Iran, as stipulated in the nuclear accord. Two and a half weeks before that date, an election for Iraq’s parliament is also scheduled to take place. The results will show whether Iraq is to be led by pro-Iranian figures, or if the fury at Iran is translated into significant political power that will determine the future direction of this country.

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