TEHRAN, Iran 

A senior Iranian official said Monday that $10 billion worth of frozen Iranian funds in Iraq will be deposited at the Trade Bank of Iraq (TBI) and used to purchase goods that are exempted from US sanctions. 

Yahya Ale Eshaq, head of the Iran-Iraq Joint Chamber of Commerce, was quoted as saying by Iran’s state media that there are “no obstacles or problems” in financial exchanges between the two neighboring countries, calling the current phase a “strategic opportunity.”

He cited Iraqi officials as saying that the frozen funds will be transferred to the TBI and added that the two sides agreed the money would be used to purchase non-sanctioned commodities such as medicine.

The $10 billion had been owed by the Iraqi government to Iran primarily for imports of natural gas and electricity. Due to US banking sanctions on Tehran, Iraq has not been able to make direct payments.

The development comes a month after the Iranian official announced that Iraq had agreed to release $2.7 billion in gas and electricity debt after receiving a sanctions waiver from the US.

At the time, he said part of these assets would be allocated to Iranian pilgrims in Iraq and another part would be used in the provision of basic commodities, as reported by Iranian media.

Iranian authorities have often said that billions of dollars’ worth of funds are frozen in Iraq, which the Iraqi government has not been able to release due to years of US sanctions.

Despite its large oil and gas reserves, the Arab country remains heavily dependent on Iran for its energy needs, with Tehran providing a third of its gas and electricity supplies.

The non-payment of its energy debts has forced Iran to slash its gas and electricity supplies to Iraq several times in the past few years, leading to frequent outages in the Arab country.

Eshaq said “pursuing national interests” is a priority for the Iranian government led by President Ebrahim Raisi, which includes “benefiting from business opportunities in Iraq,” adding that it “will be possible” for the two sides to increase the volume of trade to $20 billion in the next few years.

Ale Eshaq, who served as Iran’s minister of commerce and trade between 1993 and 1997, said the volume of trade between Iran and Iraq has crossed the $10 billion mark, expressing hope that Iran’s private sector will be able to push it further next fiscal year.

He further said that Iraq, despite having a smaller population than Iran, has twice the oil income but has suffered due to a lack of investments in various fields over the past 40 years, noting that the next 15 years would be the best time for investments in the Arab country.