Russia's Lavrov in Iraq, looks for sanctions relief

Russian Foreign Minister Sergei Lavrov sought relief from US sanctions and to expand energy and trade ties with Iraq in a visit to Baghdad this week. 

During his two-day trip to Baghdad that began Sunday, Lavrov met with top Iraqi officials including President Abdul Latif Rashid, Prime Minister Muhammad Shia al-Sudani, Parliament Speaker Muhammad Halbousi, and his counterpart Fuad Hussein. He also met with the former prime minister and head of the State of Law Coalition, Nuri al-Maliki. The latter controls a majority of seats within the Coordination Framework, the bloc that nominated the current prime minister and formed the government in alliance with Sunni and Kurdish parties. 

According to official statements, the discussion with Iraqi officials focused on three main topics: energy cooperation between the two countries, methods to avoid the US sanctions in Iraq’s dealing with Russian companies, and security cooperation. 

Energy cooperation 

Russia’s economic ties to Iraq are focused on the energy industry, with the main players being Russian oil giants Lukoil and Gazprom. The two have more than $10 billion in investments in the country, yet currently face difficulties in receiving payment due to Western sanctions on Moscow.   

Lukoil runs a large oil project in Qurna, located in the southern province of Basra, with a production capacity up to 800,000 barrels per day. 

Gazprom, together with UAE's Dana Gas, is working in Iraq’s northern gas fields in the Iraqi Kurdistan Region. Baghdad added both companies to its list of legal targets to invalidate the Kurdistan region’s contracts with international oil companies last year, following the federal court’s decision to annul the region’s oil and gas law. 

Lavrov discussed the legal and bureaucratic obstacles facing the two Russian companies in Iraq with Iraqi officials, according to a source in Iraqi foreign ministry who spoke to Al-Monitor on condition of anonymity.

Lavrov also discussed improving trade and economic relations between the two countries, particularly through the Russian-Iraqi Commission on Trade, Economic and Scientific Cooperation, which held its ninth meeting in Moscow last August. 

Russia was a key partner of Iraq during the Saddam Hussein regime, but it lost its economic influence and privilege after 2003. It is looking to expand its economic ties with Iraq, especially while suffering from large-scale sanctions following the Ukraine war. 

During Sudani’s trip to Berlin last month, German Chancellor Olaf Scholz raised the possibility of importing gas from northern Iraq to Germany, in order to replace Russian gas. Also last month, Brett McGurk, the White House coordinator for the Middle East and North Africa, and  Amos Hochstein, the US coordinator for global infrastructure and energy security, visited Iraq to push the project of transferring Kurdish gas to Europe. 

These plans raise serious concerns for Russia as well, as it would cause Moscow to lose its traditional market. Russia is working on expanding its work in Iraq’s gas fields and encouraging Baghdad to use this gas internally — in addition to transferring it to Syria and Turkey, which both maintain good relations with Russia — instead of transferring the gas to Europe. 

The gas fields in northern Iraq were targeted by unknown militias several times last year, when the possibility of transferring the gas to Europe was raised. Iraqi Shiite military factions maintain a good relationship with Russia as strategic allies of Iran. The head of Harakat Hezbollah al-Nujaba, Akram al-Kaabi, visited Moscow in late 2022, meeting with a number of Russian officials. Leaders from other military factions have also been meeting the Russian ambassador to Iraq frequently. This can be seen as an attempt by Russia to expand cooperation and ties with anti-US military factions in Iraq.  

Western sanctions on Russia 

Iraq has been facing serious difficulties in dealing with Russian companies after the Ukraine war, due to large-scale Western sanctions on Russia. Lavrov discussed this issue with Iraqi officials as well, demanding that they find a financial solution for it.  

In Baghdad, Iraqi Foreign Minister Hussein said during a press conference with Lavrov, said cooperation with Moscow is ongoing.

"We will discuss this problem (US sanctions on Russia) with the American side. There are sanctions in place that should not be imposed on the Iraqi side because the cooperation with Russian companies is ongoing and there are active Russian companies in Iraq," Hussein said. 

Lavrov stressed the need to protect legal cover for cooperation. "In light of the current conditions created by the illegal restrictions imposed by the Americans and their [allies], it is very important to protect legal economic relations from illegal pressures from the West," he said.   

Iraq is currently suffering from a critical financial situation due to the rise in the value of the US dollar against the dinar. The government is planning a special delegation led by Hussein to Washington to discuss the possibility of relaxing US regulations on Iraq’s dealings with US dollars, in order to keep the US dollar price down.  

Security cooperation 

Iraq is a member of the so-called 4+1 joint intelligence-sharing cooperative, which also includes Russia, Syria, Iran and Lebanon’s Hezbollah. Iraq plays a crucial role due to its strategic location between Iran and Syria.  

Lavrov and Sudani emphasized the importance of continuing this work and expanding the security cooperation between the members of the coalition. 

According to a statement by the Iraqi prime minister's media office, the two offficials agreed to strengthen information coordination to combat terrorism and extremism.

Iraq also has a great need for Russian military equipment. The Iraqi army uses Russian tanks, Sukhoi airplanes and Russian cannons. Former Iraqi Defense Minister Joma Enad travelled to Moscow in 2021 and 2022 to discuss purchasing military equipment from Russia, in addition to new deals for armor, drones and S400 air defense missile systems. 

Iraq has been trying to replace the Russian military equipment with French and American alternatives, but it still relies on Russia for roughly 30% of its needs.