The chairman of Iran-Iraq chamber of commerce has said the central banks of the two countries are engaged in negotiations to set up credit arrangements for trade in their national currencies.

U.S. sanctions on Iran have virtually cut off the country’s banking relations with the rest of the world, especially in U.S. dollars. Iraq is one of Iran’s major trading partners, but is reluctant to violate the sanctions

However, Yahya Ale Es’haq insisted in an interview with Tasnim news agency, “We don’t have a problem in exports to Iraq” and the new banking arrangement “is to facilitate transactions”.

He added that currently business transactions between Iraq and Iranian merchants take place via currency exchange bureaus and a couple of banks.

The head of the chamber of commerce said that since the beginning of the Iranian new year on March 21, exports to Iraq totaled $8 billion.

The United States has been engaged with Iraq on the sanctions issue, issuing a waiver to Baghdad for 45 days to continue importing Iranian natural gas, which is vital for Iraq’s electricity generation. The grace period is soon coming to an end.

Last week, U.S. Secretary of Energy Rick Perry visited Baghdad with a large business delegation and held talks on sanctions with Iraqi officials.