Iraq won't be left hanging amid Washington's sanctions on Iran, which supplies almost half of its electricity, experts familiar with U.S. policy say.
The President Donald Trump administration in November granted Iraq a 45-day waiver to continue its energy purchases — and at the risk of setting off more instability in the country, the U.S. is now expected to continue allowing transactions with Iran under yet-to-be-decided conditions.
But the sanctions provide a new urgency to accomplish something Baghdad and Washington have been pursuing for some time: reducing the war-weary country's economic reliance on Tehran.
"I think that the U.S. is going to try to find a workaround for Iraq," Richard Nephew, who served as the State Department's lead sanctions expert for negotiations with Iran from 2013 to 2014, told CNBC. "The U.S. government knows that Iraq is a key country in the competition starting between the United States and Iran."
And after billions spent on years of war and occupation, Washington has a real interest in Iraq's success, he added, "not least of which is as a bulwark against Iran." A determination will be made to extend Iraq's waiver, a state department official told CNBC, though a decision has yet to be reached.