Press TV - Iran and Iraq have set up a new mechanism to settle debts owed by the Arab country over imports of electricity and natural gas from Iran, a major Iranian businessman says.

Yahya Al Es�haq, who chairs the Iran-Iraq Joint Chamber of Commerce, said on Monday that the Iraqi government had agreed to pay for shipments of non-sanctioned goods ordered by Iran from other countries to clear its debt arrears to Tehran.

Al Es�haq told the semi-official ILNA news agency that Iraq owes Iran some $3-4 billion on arrears for imports of electricity and natural gas. The money has been effectively trapped in an account in the Trade Bank of Iraq (TBI) because of the US sanctions on Iran.

The businessman said an agreement was reached during a visit last week by the Central Bank of Iran Governor Abdolnasser Hemmati to Baghdad to set up a new mechanism to clear the debt.

Under the mechanism, which is based on previous agreements between Iran and Iraq, the TBI would pay on behalf of the CBI for Iranian shipments of non-sanctioned goods ordered from other countries.
�Iraq would pay the exchange needed for the goods purchased by Iran and the good would arrive into the country from the seller�s point of origin without any intervention by Iraq,� said Al Es�haq.
�Unfortunately, we are not able to import sanctioned good into Iran through this mechanism,� he adde.
Al Es�haq said that the new mechanism would allow Iraq to settle �only a part� of Iranian energy dues.

Iraq relies on energy imports from Iran for a bulk of its electricity needs. The country has secured rounds of waivers from US sanctions to be able to import electricity and natural gas to run its power plants.

Iranian authorities said earlier this month that Baghdad had reimbursed some $400 million from its debt arrears on energy imports.

However, Tehran seems to be keen to use part of the trapped funds in Iraq for imports as it seeks to keep the flow of basic goods into the country despite the American sanctions.