DUBAI — The Trump administration is granting Iraq a renewed 90-day waiver exempting it from U.S. sanctions on Iran, a senior State Department official told CNBC on Tuesday.
The waiver, last issued in December and which expired on the morning of March 19, will allow Iraq to continue buying electricity from its neighbor even as the White House pledges a maximum pressure campaign against Tehran.
"While this waiver is intended to help Iraq mitigate energy shortages, we continue to discuss our Iran-related sanctions with our partners in Iraq," the official said on condition of anonymity to discuss sensitive topics.
Despite being OPEC's second-largest producer of oil, Iraq is dependent on Iranian natural gas plants for up to 45 percent of its electricity.
Without continued sanctions exemptions, Iraq could lose around a third of its power overnight, energy analysts say. Already burdened by failing infrastructure, pockets of ISIS activity and poor public service provision, the scenario makes Iraq a "ticking time bomb," according to Michael Stephens, a regional expert at the Royal United Services Institute in London.
Last summer, Iraq failed to pay its electricity bill to Iran on time. This prompted Tehran to cut the power off and triggered widespread protests in the country's south, particularly in poverty-stricken Basra, where government buildings and the consulates of Iran and the U.S. were attacked.
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