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Iran's Pilgrims, Oil Swap Arrangement Under Pressure In Iraq As More Sanctions Loom

Kirkuk oil fields in Iraq. File photo

While nearly two million Iranians are visiting Iraq to mark the Arbaeen, the anniversary of the 40th day after the martyrdom of Imam Hussain, the 3rd Shiite Imam, reports coming from Iraq say the pilgrims are facing problems cashing in their money orders issued in Iran.

At the same time, oil shipments from Kirkuk in Iraq to Iran are reportedly limited to less than 30,000 barrels per day and are likely to stop all together by next week as a result of the implementation of a new round of US sanctions next week, according to Reuters.

Pictures on social media show Iranians squatting in front of holes in the wall of a dilapidated building waiting to get Iraqi dinars. Many are said to have been left without money.

Bank Melli Iran that has issued the money orders says Iraqi officials have shut down proper cashiers set up at airports and hotels to hand out cash to Iranian pilgrims "for security reasons" and sent the staff to the makeshift places in derelict buildings with holes in the walls that apparently protects bank staffs from possible attacks.

The pictures, however, show no security measures around these locations. The statement by Bank Melli Iran says sitting next to the holes undermine the dignity of Iranian pilgrims.

A tweet by an Iranian TV newsreader described the situation as "a disgrace" and a sign of lack of proper planning.

Iranian analysts have described the massive pilgrimage as a "manoeuver that reflects the Islamic Republic's power."

Every pilgrim is allowed to purchase up to 100,000 Iraqi dinars ($85) at the subsidized rate of 96 rials per dinar against money orders paid for by Iranian currency rial before they left for Iraq.

Meanwhile, President Hassan Rouhani in mid-October approved a 35% discount in the rate of exchange for the Arbaeen pilgrims, in addition to the subsidized fixed sum, reported Iran's leading economic daily Donya-ye Eqtesad.

At the same time, Reuters reported that shipment of oil from Kirkuk to Iranian refineries will be stopped next week as the second round of US sanctions against Iran starts on November 4. Currently the shipment is limited to less than 30,000 barrels per day carried by tanker trucks to feed refineries in Iran.

The shipments are probably part of the oil swap scheme between Tehran and Baghdad based on which Iraq feeds Iranian refineries in northwest Iran and Iran gives back the same amount of crude oil to Iraq in its southern ports by the Persian Gulf.

Iraq's new Prime Minister Adel Abdulmahdi said last week that Baghdad would prioritize Iraq's own interests as far as US sanctions against Iran are concerned. However, he made it clear that "Iraq does not support the sanctions, but will abide by its terms."

Meanwhile, speaking in Tehran on Saturday, Rouhani said that the United States was isolated among its traditional allies in its confrontation with Iran, and that even Europe was siding with Tehran against the re-imposition of U.S. sanctions, Reuters reported.

"It does not happen often that the U.S. makes a decision and its traditional allies abandon it," Rouhani told parliament in a speech carried live on state TV, in a session to discuss a cabinet reshuffle following the impeachment and resignation of four of his cabinet's minister, adding, "A year ago, no one would have believed ... that Europe would stand with Iran and against America."

These remarks are perhaps tailored more for Rouhani’s domestic audience, than reflecting reality on the ground. Europe has all but stopped oil purchases from Iran and European companies have left the country. A special mechanism proposed by Europe to allow Iran to trade with EU will not be operational until next year.

A source close to the Iraqi government has said that Iraq is under pressure by the United States to stop oil exports to Iran.

In another development which marks Iran's isolation, no Iranian official was invited to take part in a meeting about Syria in Istanbul, Turkey on Saturday October 27 attended by officials from the United States, Turkey, Russia, France and Germany.

US Secretary of Defense James Matisse has said at another meeting in Bahrain on Saturday said that the main reason Bashar al-Assad has remained in power in Syria, was Iran's support for Damascus and Russia's repeated vetoes against resolutions at the UN Security Council.

In the same meeting, Saudi Arabia’s foreign minister Adel al-Jubeir said Riyadh was combating Iran's vision of "darkness" in the Middle East.