The Trump administration’s decision to revoke Iraq’s sanctions waiver, which previously allowed the country to import natural gas from Iran to generate up to 40 percent of its electricity, has plunged Iraq into a severe energy crisis. Already struggling with unreliable Iranian supplies, Iraq now faces an even more precarious situation, as it used imports from Iran to generate about 10 gigawatts of power. The move, in line with President Donald Trump’s “maximum pressure” policy against Iran, seeks to coerce Tehran into negotiating a new nuclear agreement while cutting off its financial and logistical support to paramilitary groups like Hamas, Hezbollah, and the Houthis.

Washington allowed the temporary waiver to expire on March 7, warning Baghdad that it must end its reliance on Iran for energy and work towards self-sufficiency. The waiver was initially issued in 2018 after Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA), the 2015 nuclear deal negotiated under former President Barack Obama. However, Trump never supported the JCPOA and sought to impose harsher terms on Iran. His administration’s strategy of economic strangulation has placed Iraq in a difficult position, forcing it to navigate between its historical ties to Iran and its obligations to the US.

While Trump has invited Iranian leaders to negotiate or face “massive destruction,” he is simultaneously pressuring Iraq into a position where it must rapidly diversify its energy sources despite lacking the necessary infrastructure. Iraq, OPEC’s second-largest oil producer, has the 12th-largest natural gas reserves globally but remains incapable of fully utilizing its own resources due to inadequate infrastructure for capturing, processing, and distributing gas. Much of Iraq’s natural gas is associated gas, which is extracted alongside crude oil but often flared instead of being captured and used for energy generation.

Decades of conflict, sanctions, and instability have left Iraq’s energy sector in disrepair. The country’s electricity grid is heavily dependent on gas-fired power plants, primarily in the eastern and central regions, which rely on Iranian natural gas pipelines. This dependency, coupled with inadequate domestic production, makes Iraq particularly vulnerable to disruptions in Iranian gas supplies.

The Iraqi government has acknowledged that the sudden stoppage of Iranian gas imports will create “temporary operational challenges.” However, given the country’s history of governance difficulties since the 2003 US invasion, experts doubt that Baghdad will secure immediate replacements or significantly upgrade its natural gas production in the coming months. The result will likely be prolonged power outages, further exacerbating Iraq’s already fragile economy and social stability.

Beyond energy concerns, Washington’s decision to revoke the waiver is also an attempt to pressure Baghdad into resolving its disputes with the Kurdistan Regional Government (KRG). The US hopes that improved relations between Baghdad and the KRG will allow Iraq to boost international oil supplies via Turkiye, further isolating Iran economically. Additionally, Trump seeks to diminish Iranian influence in Iraq by urging Prime Minister Mohammed Shia Al-Sudani’s government to sever its political and economic ties with Tehran. However, Iran has deeply entrenched itself in Iraq’s political landscape, making such a severance highly difficult.

Iraq’s inability to address its energy challenges is a direct consequence of US and Iranian interference. Corruption, security threats, and an unstable political climate have further impeded progress. Although the US pressures Iraq to cut ties with Iran, it has done little to help the country rebuild its energy infrastructure. In the 20 years since the US invasion, Iraq has received minimal support to develop energy self-sufficiency, leaving it dependent on imports from Iran despite its rich energy resources.

One of the few viable solutions for Iraq is regional energy integration. The Jordan-Iraq electricity project, signed in 2021, aimed to connect Iraq’s electricity grid with Jordan’s, allowing for electricity imports. The high-voltage transmission line was planned to extend from Jordan’s Aqaba to Baghdad via Al-Risha and Rutba. The project, estimated to cost $250 million, has faced delays due to funding shortages and political disputes in Iraq. By 2023, Jordan had completed its portion, but Iraq lagged significantly behind. If fully operational, the Jordan-Iraq electricity link could reduce Iraq’s dependence on Iranian imports and cut energy costs for consumers, potentially saving an estimated $4 billion annually.

Other regional integration efforts could involve linking Iraq’s grid with the Gulf Cooperation Council (GCC), particularly Saudi Arabia. Such a move would reduce Iraq’s vulnerability to both Iranian supply cuts and US sanctions while fostering economic cooperation in the region. However, these projects require significant financial investment, political will, and long-term commitment-three elements that have historically been in short supply in Iraq’s governance.

Iraq’s energy sector is further plagued by inefficiencies, including massive fuel and electricity subsidies that drain fiscal resources while discouraging private sector investment. Corruption remains a major barrier to progress, with Iraq ranking 140th out of 180 countries in the 2024 Corruption Perceptions Index. Security concerns, particularly from ISIS remnants and pro-Iranian militias, create additional risks for energy projects and foreign investors.

Climate change and water shortages are also significant threats to Iraq’s energy stability. The country has long relied on hydroelectric power, but declining water levels in the Tigris and Euphrates Rivers have severely reduced output. Additionally, Iraq has been slow to adopt renewable energy sources, generating less than 3 percent of its electricity from hydropower and less than 1 percent from solar and wind. This is far below the global average of 13 percent in 2023.

Washington’s demands for Iraq to achieve energy independence in a short period are hypocritical, given that the US has played a significant role in Iraq’s energy struggles. If the Trump administration were serious about helping Iraq reduce its dependence on Iran, it would have supported the country’s energy sector years ago. Instead, Iraq remains an oil-rich nation that ironically imports gas and electricity due to a lack of refining capacity and infrastructure.

Rather than simply applying pressure, the US should invest in helping Iraq achieve genuine energy self-sufficiency. The completion of the Jordan-Iraq electricity link should be prioritized, along with other regional grid connections. Iraq must also overhaul its energy policy by investing in renewable sources and reducing reliance on inefficient, outdated gas-fired plants. Without substantial international support, Iraq is unlikely to overcome these challenges anytime soon.

The Trump administration’s decision to revoke Iraq’s sanctions waiver will only deepen the country’s energy crisis without providing viable alternatives. While Washington’s policy aims to weaken Iran, it risks further destabilizing Iraq and worsening the economic and humanitarian conditions faced by ordinary Iraqis. A more balanced approach would involve US support for Iraq’s long-term energy projects while maintaining diplomatic pressure on Iran.

Iraq must navigate a difficult path toward energy independence, but this transition requires substantial planning, investment, and stability-none of which can be achieved overnight. As the country struggles to keep the lights on, its leaders must push for regional energy cooperation and infrastructure modernization while resisting the geopolitical maneuvering that has long kept Iraq in a cycle of dependency and crisis.

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