Iraq and Lebanon on Saturday reached a deal that would allow Lebanon to sell Iraqi fuel to companies in exchange for Lebanese goods and services.
Iraq’s Prime Minister’s office said in a statement that one million barrels of fuel oil would be given to Lebanon in exchange for its services, according to The Associated Press. It’s unclear what products Lebanon would be offering Iraq, though the wire service noted, citing local media, that Lebanon’s agriculture consultancy and health services could benefit Iraq.
Lebanon would essentially act as a broker between Iraq and potential customers. Lebanon’s power plants cannot use the Iraqi fuel, but the companies that Lebanon sells to would be able to offer reusable fuel that the country could have in return, the AP noted.
Lebanese Energy Minister Raymond Ghajjar estimated that the deal was worth between $300 million and $400 million, Reuters reported.
“The Iraqi state agreed to open an account in Lebanon’s Central Bank in exchange for this fuel. This account is managed by the Iraqi Finance Ministry through which it buys services inside Lebanon... in Lebanese pounds,” Ghajjar said, according to the AP.
“We hope other Arab countries follow suit and give us this opportunity because it is really a golden opportunity for us,” he added.
Lebanon is facing a shortage of fuel, medicine and other critical supplies as it struggles amid an economic meltdown that has plagued the country since 2019, which have been compounded by years of corruption, according to the AP.
Power shutdowns have lasted hours in a day, and many depend on diesel-fueled private generators, which Reuters notes are few in quantity.
Supermarkets are concerned that their items will spoil and could undermine their food safety amid the power outages, while hospitals have had to limit their electricity usage, AP noted.
In a World Bank report in June, the international organization estimated that the country’s economic crisis was likely to be one of the world’s worst in over 150 years, the AP reported.
The country is also facing increasing political instability as Lebanese prime minister-designate stepped down earlier this month after he and the Lebanese president failed to reach an agreement over the formulation of a new government, which has been stalled since October 2020.