Iran’s central bank governor says banking barriers between Iran and Iraq have been removed. Abdolnaser Hemmati expects Tehran to access Iranian funds held in Iraq within weeks. The development follows recent financial talks between officials from both countries.
Hemmati said recent discussions in Baghdad created the conditions for releasing the funds. He also said Iraqi Prime Minister Ali al-Zaidi agreed to support Iranian contractors. Baghdad will reportedly issue guarantees backed by Iranian assets held in Iraqi banks.
Iran-Iraq banking ties have faced major restrictions because of US sanctions on Tehran. Iraq deposits payments for Iranian gas and electricity into restricted accounts. These restrictions prevent Iran from freely transferring much of the money through international banking channels.
Iran holds an estimated $10 billion to $11 billion in funds and energy receivables in Iraq. Most of the money comes from Iraqi payments for Iranian gas and electricity supplies. Tehran has sought mechanisms that would allow it to use those funds without violating sanctions restrictions.
Hemmati said Iraqi authorities have issued executive orders to support the new arrangement. The guarantees could allow Iranian contractors to receive payments using funds held in Iraqi banks. This mechanism could provide Tehran with access to part of its restricted financial resources.
The issue also affects Iranian companies operating in Iraq. Contractors have faced difficulties receiving payments and transferring funds through conventional banking channels. The proposed guarantees could therefore provide a new way to settle commercial obligations.
Iran-Iraq banking ties could improve if the new arrangements move into practical implementation. Iraq remains an important economic partner for Iran because of extensive energy and trade links. Tehran supplies significant quantities of gas and electricity to support Iraq’s energy system.
However, the release of Iranian assets still faces another political hurdle. Hemmati said implementation of a separate Iran-US memorandum requires approval from Iran’s leadership. The Iranian government and Supreme National Security Council have maintained that major economic decisions require that approval.
The memorandum aims to facilitate the release of Iranian assets. However, it has not yet resulted in the transfer of funds to Tehran. Iranian officials therefore continue to await a final decision from the country’s leadership.
The situation highlights the complicated financial relationship between Iraq, Iran, and the United States. Baghdad needs Iranian energy supplies, while Washington maintains sanctions that restrict payments to Iranian institutions. Iraqi banks must therefore manage these transactions through carefully controlled financial mechanisms.
Hemmati said the recent Baghdad talks helped establish a framework for accessing the funds. He expects Iran could begin benefiting from the resources within weeks. The timing will depend on the implementation of the agreed arrangements and the required approvals.
Iran-Iraq banking ties remain important for both countries’ economies. Iran wants access to billions of dollars accumulated through energy sales to Iraq. Meanwhile, Iraq needs reliable payment mechanisms to maintain its energy relationship with Tehran.
The proposed arrangement could also support Iranian contractors working on projects in Iraq. Payment guarantees may reduce uncertainty for companies involved in construction and other commercial activities. They could also encourage continued Iranian participation in the Iraqi market.
For Iraq, the challenge involves balancing its economic needs with international financial restrictions. Baghdad must ensure that any payment mechanism complies with applicable sanctions requirements. This makes the implementation of the new banking arrangements particularly important.
If the proposed mechanism succeeds, it could provide a practical channel for settling some outstanding Iranian claims. It could also improve financial cooperation between the two neighboring countries. However, the broader asset-release process still depends on decisions outside Iraq.