US must help Iraq ends its reliance on Iranian energy

The Trump administration’s decision on Saturday to revoke Iraq’s sanctions waiver, which allowed it to import natural gas from Iran to generate up to 40 percent of its electricity, has plunged the country into a dire energy crisis. Unreliable Iranian supplies this winter have already left the Iraqis in a precarious situation, as Iraq used imports of electricity and natural gas from Iran to generate about 10 gigawatts of power.

The US’ move is said to align with President Donald Trump’s “maximum pressure” policy on Iran, which aims to force Tehran to negotiate a new deal regarding its nuclear program. This policy stems from the long-standing animosity between the US and Iran, which has escalated under the Trump administration. Additionally, Trump hopes to pressure Tehran to give up its support for paramilitary groups such as Hamas, Hezbollah and the Houthis.

Washington allowed the temporary waiver to expire on March 7 after warning Baghdad to end its energy dependence on Iran and become more self-reliant.

Trump issued the waiver in 2018 after withdrawing from the 2015 Joint Comprehensive Plan of Action nuclear agreement, which ensured that Tehran’s nuclear activities remained peaceful. Trump never favored that deal — possibly because it was negotiated by his predecessor, Barack Obama — and vowed to negotiate a better one. However, he did not achieve this in his first term.

While Trump is now inviting Tehran’s leaders to negotiate — or face massive destruction — he is placing tremendous pressure on Baghdad. Although Iraq is OPEC’s second-largest oil producer and its natural gas reserves are believed to be the 12th-largest globally, it lacks the infrastructure to utilize that gas for electricity generation. The country needs adequate facilities to capture, process and distribute its own gas. Energy experts say that much of Iraq’s gas is so-called associated gas that comes from oil production but is often flared (burned off) rather than captured.

The two Gulf wars have left Iraq with a chronic energy shortage and a myriad of challenges, hindering plans to rebuild and upgrade its electric grid. Decades of conflict and sanctions have severely damaged Iraq’s energy infrastructure. Nonetheless, it hopes to generate 28 GW of electricity this summer, although many experts believe this is a tall order.

While Trump is now inviting Tehran’s leaders to negotiate — or face massive destruction — he is placing tremendous pressure on Baghdad

Osama Al-Sharif

Another issue is that Iraq’s electricity grid heavily relies on gas-fired power plants, particularly in the eastern and central regions. Iranian gas pipelines feed directly into these areas, presenting logistical and financial challenges as Iraq seeks alternatives while upgrading its production.

The sudden stoppage of Iranian natural gas supplies, which have been unreliable due to Tehran’s own energy problems, will pose “temporary operational challenges,” according to the Baghdad government. However, judging by the country’s track record since the collapse of the Saddam Hussein regime in 2003, it is unlikely to secure immediate replacements or upgrade its natural gas production in the coming months. This could lead to prolonged power outages, further exacerbating the country’s energy crisis.

Washington wants to pressure the Baghdad government to resolve its differences with Iraqi Kurdistan, which would enable the latter to export oil via Turkiye. The aim is to boost the international supply of crude oil and choke off Iranian oil production.

Additionally, Trump seeks to force Prime Minister Mohammed Shia Al-Sudani’s government to sever all ties with Iran in a bid to reduce Tehran’s influence in Iraqi affairs. This has been a constant challenge for past governments due to Iraq’s sectarian nature and Tehran’s support for pro-Iran Iraqi militias.

Baghdad’s failure to address its pervasive energy challenges largely stems from US and Iranian interference in the country’s affairs. Key factors hindering any projects to upgrade Iraq’s energy infrastructure include terrorism, sectarian conflicts, corruption, a failure to pursue regional energy integration (with Jordan and the Gulf Cooperation Council), lack of funding and political instability.

For instance, one such regional project, the Jordan-Iraq electricity project, aimed to sell excess electricity from Jordan to Iraq by connecting the two countries’ grids. The agreement, signed in 2021, was to build a high-voltage transmission line stretching 1,000 km from Jordan’s Aqaba, via the Al-Risha power station, to Iraq’s Rutba and Baghdad. But the $250 million project has faced delays due to funding shortages and political wrangling, primarily among Iraqi politicians. As of 2023, the line was reportedly only 30 percent complete, with Jordan finalizing its portion while Iraq lagged.

Baghdad’s failure to address its pervasive energy challenges largely stems from US and Iranian interference in the country’s affairs

Osama Al-Sharif

The successful completion of the Jordan-Iraq electricity project could significantly reduce Iraq’s vulnerability to Iranian supply cuts and US sanctions. This could potentially save ordinary Iraqis — who currently rely on private generators — an estimated $4 billion annually, offering a ray of hope in these challenging times.

Other factors disadvantage Iraq as well, including political instability both regionally and internally, rampant corruption — Iraq ranked 140th out of 180 countries in the 2024 Corruption Perceptions Index — security challenges, a technical brain drain, water shortages that have been undermining its hydroelectric capacity for years, and heavy dependence on oil revenues that leave the economy vulnerable to price volatility. Fuel and electricity subsidies also consume significant fiscal resources, discouraging efficiency and private investment.

Iraq has done little to exploit renewable energy sources, generating less than 3 percent of its electricity from hydropower and less than 1 percent from solar and wind. Its share of wind and solar energy is far below the global average, which was 13 percent in 2023.

It is hypocritical for Washington to place such strain on Baghdad, asking it to ensure energy independence in a short time after having done so little to help the oil-rich country rebuild its infrastructure in the 20 years since the US initiated an unprovoked and unlawful war against it.

Instead, America should have intervened years ago to help Iraq rebuild and upgrade its electricity grid, oil refining capacity and natural gas production. It is ludicrous for a country like Iraq, rich in oil and natural gas reserves, to have to import gas and electricity from Iran.

Trump is attempting to pressure Iran to come to the negotiating table by undermining an ally like Iraq without offering alternatives. However, effective options have always existed, such as the Jordan electricity link, which is already under construction but is now facing funding shortages. Similar regional grid connections could occur with GCC countries like Saudi Arabia.

The Trump administration must urgently review its decision not to renew the waiver and support that with actual initiatives. It is crucial that the US, along with other international players, steps in to help Iraq end its reliance on Iran. A national energy overhaul is needed to address the multilayered challenges that have weakened the country for more than two decades.

- Osama Al-Sharif is a journalist and political commentator based in Amman. X: @plato010