U.S. Says Iraqis Are Skirting Sanctions With Help for Iran

Source: NYT

When President Obama announced last month that he was cutting off a little-known Baghdad bank from any dealings with the American banking system, it was a rare public acknowledgment of a delicate problem for an administration hoping for a reliable ally in the country where American troops just fought a war: for months, Iraq has been providing economic assistance to Iran, skirting the sanctions imposed on Tehran because of its nuclear program.

The bank singled out by the United States, the Elaf Islamic Bank, is only part of a network of financial institutions and oil-smuggling operations that, according to current and former American and Iraqi government officials and experts on the Iraqi banking sector, has provided Iran with a crucial flow of dollars at a time when sanctions are squeezing its economy.

The Obama administration is not eager for a public showdown with the government of Prime Minister Nuri Kamal al-Maliki over Iran just eight months after the last American troops withdrew from Baghdad.

Still, the administration has held private talks with Iraqi officials to complain about specific instances of financial and logistical ties between the countries, officials say, although they do not regard all trade between them as illegal or, as in the case of smuggling, as something completely new. In one recent instance, when American officials learned that the Iraqi government was aiding the Iranians by allowing them to use Iraqi airspace to ferry supplies to Syria, Mr. Obama called Mr. Maliki to complain. The Iranian planes flew another route.

Read more: http://www.nytimes.com/2012/08/19/world/middleeast/us-says-iraqis-are-helping-iran-skirt-sanctions.html?pagewanted=all