In a recent move, the Biden administration has extended a sanctions waiver for Iraq, allowing the country to continue purchasing electricity from Iran and giving Iran limited access to the proceeds for buying humanitarian goods. This decision, signed by Secretary of State Antony Blinken, has raised concerns among Iran hawks on Capitol Hill who believe it rewards Iran despite its support for destabilizing proxy groups in the Middle East. Currently, there are approximately $10 billion in Iraqi payments for Iranian electricity being held in escrow accounts, and this waiver will ensure that Iraq can maintain its energy imports without fear of violating US sanctions on Iran.

Additionally, the provision from the previous 120-day waiver will remain intact, allowing portions of the electricity proceeds to be transferred to accounts in Oman and then converted into widely traded currencies for Iran to purchase non-sanctioned products. US officials have defended the waiver extension, stating that it is necessary to prevent Iraq from being cut off from a critical source of energy. They also emphasize that a thorough vetting process is in place to ensure that the money can only be used for essential items such as food, medicine, medical equipment, and agricultural goods.

Secretary Blinken's recent visit to Baghdad further reinforced the importance of maintaining Iraq's energy imports. This extension is reminiscent of a similar waiver signed earlier this year, which released around $6 billion held by South Korea for Iranian oil imports and restricted the funds for the purchase of humanitarian supplies. However, critics argue that these waivers can inadvertently free up domestic revenue for Iran, allowing it to fund proxy groups like Hamas, Hezbollah, and the Houthis. In a separate development, Afghanistan has requested that Pakistan release thousands of containers of imports that have been stuck at Karachi port.

Pakistan claims to have lost millions of dollars in taxes due to duty-free goods being sent to Afghanistan and then smuggled back across the border. Afghan authorities allege that Pakistan has halted over 3,000 Afghanistan-bound containers at the port, demanding more tax and duty payments, leading to significant financial losses for traders. This trade dispute adds to the growing tensions between Kabul and Islamabad since the Taliban regained power in Afghanistan in August 2021.

Pakistan recently ordered hundreds of thousands of illegal Afghan migrants to return home or face deportation, with officials claiming that over 300,000 Afghan nationals have voluntarily left since November 1. However, the Taliban authorities in Afghanistan insist that most of the returnees have been forcibly repatriated. To expedite the repatriation process, Pakistan has opened five new border crossing points. The influx of returnees has put a strain on Afghan authorities who are struggling to accommodate the large number of individuals, including those who have never been to the country before.

In an effort to address potential security concerns, Balochistan province information minister Jan Achakzai has revealed that at least 50,000 identity cards held by Afghans, suspected to be fake, have been blocked, with an additional 250,000 fake ID cards under investigation. The trade row and deportation of Afghan migrants exacerbate the already complex situation between the two neighboring countries, with Pakistan citing welfare and security concerns for its actions. Pakistan has blamed militants operating from Afghanistan for a surge in attacks in its territory. As the situation unfolds, both Afghanistan and Pakistan will need to find diplomatic solutions to mitigate the fallout from these issues.