BAGHDAD: Iraq has won an exemption allowing it to buy Iranian electricity despite US sanctions, as the country plagued by chronic power shortages walks a tightrope between rivals Washington and Tehran.
With US measures imposed Monday taking aim at Iran’s banking and energy industries, there were concerns Iraq — which heavily relies on its eastern neighbor for electricity and consumer goods — would be caught in the crossfire.
But Baghdad has managed to secure an exception.
“We granted Iraq a waiver to allow it to continue to pay for its electricity imports from Iran,” Brian Hook, the State Department’s representative on Iran, announced Wednesday.
Iraq would be expected to show the US how it would wean itself off Iranian gas, a well-informed source told AFP.
“The US gave us 45 days to give them a plan on how we will gradually stop using Iranian gas and oil,” the source said.
“We told them it may take us up to four years to either become self-sufficient or find another alternative.”
The exemption came after talks between Iraqi and US officials, including from the White House and Treasury, the source said.
Iraqi government representatives have shuffled between American and Iranian officials for months in a bid to insulate their fragile economy from escalating tensions.
This week, Prime Minister Adel Abdel-Mahdi said Baghdad was in talks with both sides to protect its interests.
“Iraq is not a part of the sanctions regime. It talks to everyone, and does not want to get involved in a conflict that it’s not a part of,” he told reporters Tuesday.
Baghdad has a strong relationship with the US, coordinating on security, politics, and governance.
But its economy is profoundly intertwined with that of Iran.
Gutted by the international embargo of the 1990s and the US-led invasion of 2003, Iraq’s industries produce little.
Instead, its markets are flooded with Iranian goods — from canned food and yoghurt to carpets and cars.
These non-hydrocarbon imports amounted to some $6 billion in 2017, making Iran the second-largest source of imported goods in Iraq.
Perhaps most consequential for Iraq’s 39 million people is their dependency on Iran for electricity.
Chronic cuts, which often leave homes powerless for up to 20 hours a day, were a key driving factor behind weeks of massive protests in Iraq this summer.
To cope with shortages, Baghdad pipes in natural gas from Tehran for its plants and also directly buys 1,300 MW of Iranian-generated electricity.
That reliance is uncomfortable for the US, whose quest to diminish Tehran’s influence prompted it to reimpose sanctions on Iranian financial institutions, shipping lines, energy, and petroleum products on Monday.
Eight countries would be temporarily allowed to import Iranian crude oil.
Iraq’s special exemption appears to have come with a condition that it lay out how it would stop using Iranian electricity, said Nussaibah Younes, a senior adviser for the European Institute of Peace.
“In order to get this exemption, the Iraqis had given some sort of roadmap idea,” Younes told AFP.
One way would be capturing the gas set alight when Iraq extracts oil, which according to the World Bank represents an annual loss of about $2.5 billion — enough to fill the gap in Iraq’s gas-based power generation.
American firms may help fill the vacuum left by Iran.
In January, Iraq signed a memorandum of understanding with US energy company Orion on gas exploits at a southern oil field.
And in October, Iraq signed a memo with the US’s General Electric to revamp the electricity sector, after signing a similar agreement with Germany’s Siemens.
The source told AFP that GE was among several US companies proposed to Baghdad during negotiations with the US.
But Iraq has had to simultaneously reassure Iran, in part by granting it an outlet to circumvent US sanctions.
“The focus for the Iranians is informal sanctions-busting activity in Iraq, including accessing hard currency through Iraqi exchanges and through smuggling operations,” said Younes.
Baghdad, she expected, would likely “turn a blind eye.”
Iraq has simultaneously been granting Iranian officials more time for face-to-face meetings, including its ambassador in Baghdad, Araj Masjadi.
He met with new Finance Minister Fuad Hussein and Electricity Minister Luay Al-Khateeb on Wednesday, pledging close cooperation on the power sector in the future.
For Masjadi, the meetings appeared to be a reminder of Tehran’s entrenched role in Iraq.
“We need Iraq the way Iraq needs us,” said Masjadi.
Iraq gets US sanctions break to keep the lights on
Iraq gets US sanctions break to keep the lights on
- Iraq relies on Iran for electricity and consumer goods
- Baghdad has been hit by repeated power cuts
How mining can transform Saudi Arabia’s economy
- Kingdom’s mineral wealth valued at $2.5tn, positioning mining as a third pillar of the national economy
RIYADH: Saudi Arabia is accelerating its push into mining as part of its economic transformation under Vision 2030, amid the growing importance of critical minerals and rare earths.
The Kingdom’s mineral wealth is valued at $2.5 trillion, positioning mining as a third pillar of the national economy alongside hydrocarbons.
The mining industry could give Saudi Arabia an edge in transition minerals and supply chains by expanding extraction, processing and the logistics needed to move materials to market, according to economists and industry specialists.
Saudi Arabia is home to more than 45 identified minerals, including gold, copper and uranium, according to the Vision 2030 strategy.
Momentum has been supported by measures aimed at making mining easier to invest in and faster to scale, including updated regulations, digital licensing platforms, specialized mining services, and new transport and rail links to mining areas.
Vision 2030 aims to raise mining’s contribution to gross domestic product to SR240 billion ($63 billion) by 2030, create 200,000 direct and indirect jobs, and attract $27 billion in new investment, according to published government targets.
Signs of progress are starting to show in the mining sector in terms of exploration activity, licensing and new discoveries.
“The mining strategy shows it’s working very well, evidenced by the rapid rise in exploration and industrial licenses, and major new mineral discoveries,” Talat Hafiz, an economist and financial analyst, told Arab News.
Saudi Arabia is undertaking the world’s largest geological survey, covering about 700,000 sq. km of the Arabian Shield for $1.5 billion, he said.
The number of mining licenses issued exceeds 2,000, according to official data, and the Kingdom’s mineral wealth is valued at 90 percent higher than it was in 2016 when Vision 2030 was rolled out.
A key milestone highlighted in Vision 2030’s mining strategy was the introduction of a new mining investment law, which reduced the tax rate to 20 percent from 45 percent to spur investment and align the sector with global standards.
The Kingdom’s mining resources position it well to be a critical supplier of raw materials that are integral to energy transition as clean-energy technologies require large volumes of mined materials.
Copper is central to electrification and power networks, while battery supply chains rely on minerals such as nickel and lithium. Phosphate is a key industrial input with wider economic value.
Reliable supplies of metals and minerals used in power grids, batteries and electric vehicles can attract investment and support downstream industry in the Kingdom.
Saudi Arabia’s Jabal Sayid site, northeast of Jeddah, ranks among the world’s top four resources for rare earth elements, Khalid Al-Mudaifer, vice minister of industry and mineral resources for mining affairs, recently told Al Eqtisadiah.
It will help meet Saudi Arabia’s needs for minerals used in magnet manufacturing, EVs and wind energy, while also supporting global supply, including the US market, he said.
Mining can also catalyze investment in the Kingdom, widen supply-chain employment, and boost non-oil exports and private-sector growth, according to economists and policymakers.
Mines, processing plants and the infrastructure around them require large upfront capital spending, creating a pipeline of work across construction, equipment, utilities and logistics.
“When a mining sector scales, the economic footprint extends well beyond extraction,” said Turki Al-Nahari, vice president of global mining at Ecolab, told Arab News. “Growth typically occurs across engineering services, industrial water management, logistics, laboratory testing, equipment reliability, environmental services and digital performance systems.
“That shift creates demand for skilled engineers, technicians, data analysts and operational specialists,” he added.
In 2025, Saudi Arabia’s mining exploration budget increased 600 percent to $146 million from $21 million in 2022.
“This growth is driven by ongoing geological surveys, technological advancements and higher exploitation budgets, all of which signal stability and opportunity, attracting foreign investment,” Manraj Lamba, a mining economics analyst at S&P Global, said in a recent report.
Mining projects are easier to finance when the size and quality of the deposit are clear, costs are competitive, and rules and taxes are stable, Abdullah Al-Harbi, an economist familiar with the industry, told Arab News.
Investors want solid feasibility work, credible timelines and evidence a project can stay profitable through swings in commodity prices, Al-Harbi said.
Saudi Arabia’s pipeline includes 24 exploration-stage projects and 17 more advanced developments, according to S&P Global.
“Its proactive approach to geological surveys and resource assessment has uncovered significant potential across gold, copper, phosphate and bauxite,” Lamba said.
Large projects also tend to generate employment across a wider industrial supply chain, including contractors, maintenance, laboratories, transport and a range of operational services.
To boost employment and support hiring and training, Saudi Arabia has moved to standardize job roles and skills for the mining industry.
HIGHLIGHT
Vision 2030 aims to raise mining’s contribution to gross domestic product to SR240 billion ($63 billion) by 2030, create 200,000 direct and indirect jobs, and attract $27 billion in new investment.
The Kingdom rolled out a framework related to employment and skills in the mining industry in January at the Global Labor Market Conference.
The framework is “a tool which ensures clear definitions of occupations and their required skills,” the Kingdom’s Minister of Industry and Mineral Resources Bandar Al-Khorayef said. It will cover more than 500 job roles, detail the necessary skills, responsibilities and titles, he added.
Exports from the sector are already rising in tandem with investments to develop the industry and create jobs.
Saudi Arabia exported 5.7 million tonnes of phosphate fertilizer in 2024, up about 6 percent from 2023, according to a GASTAT report.
As the energy transition accelerates, Saudi Arabia’s advantage may be strongest beyond extraction alone.
“Saudi Arabia’s most realistic advantage in the accelerating energy transition lies in combining selective mining with strong processing and refining capabilities, supported by its emerging role as a logistics and supply-chain hub,” Hafiz said.
The Kingdom’s position between Africa, Europe, and Asia favors downstream processing and value-added industries, he added.
“Saudi Arabia is prioritizing minerals that are both financeable and strategically aligned with emerging industries such as electric vehicles and clean energy technologies, where markets are clear, and demand is scalable,” Hafiz said.
Aluminum, phosphate, and similar commodities remain a key focus to support local manufacturing, infrastructure development and downstream industries while strengthening export capacity, he said.
“Once construction concludes, the priority shifts to operational stability and performance optimization,” Al-Nahari said.
“Small efficiency gains, applied consistently across large-scale operations, compound materially over time,” influencing cost as well as uptime and competitiveness over the life of a mine, he added.
As the global race toward electrification and decarbonization accelerates, the Kingdom is effectively positioning itself beyond its oil legacy with its strategic commitment to the minerals sector, which will play a critical role in powering the future.
Its investment in exploration, infrastructure, and downstream processing anchor it as a pivotal supplier in the critical minerals and rare earths value chain in the era of energy transition.
