The nuclear programme of Iran

The "special purpose vehicle" (SPV) would allow Iraq to pay for imported Iranian energy in Iraqi dinars, which Iran could use to exclusively buy humanitarian goods, three senior Iraqi officials said.

The workaround would allow Baghdad to keep the lights on and avoid shortage-driven protests without triggering US sanctions, as it treads an increasingly precarious tightrope between its two main allies Tehran and Washington.

One senior government official told AFP it was the product of months of talks between Iraqi, Iranian and US officials.

"The Iraqi government will continue to pay Iran for gas by depositing money into a special bank account inside Iraq, in Iraqi dinars," the official said.

"Iran will not be able to withdraw the money, but will be able to use it to purchase goods from outside Iraq."

Iraq has an outstanding bill of around $2 billion for previous gas and electricity purchases, according to Iranian Oil Minister Bijan Zangeneh.

A US official told AFP that Washington was aware of the mechanism's creation.

The US embassy in Baghdad declined to comment, while Iran's embassy did not respond to an AFP request.

Two additional high-level Iraqi officials confirmed Baghdad was establishing such an account with US knowledge, but could not say whether payments into the account had begun.

"How else is Iraq supposed to pay what it owes Iran? We have no other choice," the second official said.

- 'Iran's ATM' -

To offset its notorious power shortages, Iraq imports around 1,400 MW of electricity and 28 million cubic meters (988 million cubic feet) of gas for power stations from neighbouring Iran, which together make up about a third of Iraq's power supply.

That reliance has angered the US, which slapped tough sanctions on Iran last year but has granted Iraq several temporary waivers to keep purchasing Iranian power until October.

The US insists Iraq wean itself off Iranian energy, but Baghdad has said that could take up to four years, during which it would need to keep purchasing at least Iranian gas.

To do so, the central banks of Iran and Iraq agreed in February to create a payment method that steers clear of US sanctions, Iran's state news agency IRNA said, without providing additional details.

That would mean not dealing in US dollars and purchasing only "humanitarian goods" allowed by the US — like food and medicine.

"We would become Iran's ATM," another Iraqi official told AFP.

According to two of the senior Iraqi officials, Baghdad’s SPV would likely be set up at the Trade Bank of Iraq.

The TBI has handled most of the Iraqi government's international transactions since its establishment in the aftermath of the US-led invasion in 2003.

A senior TBI source told AFP the bank had been involved in the negotiations but the account had not yet been created.

"The US Treasury has confidence in the TBI's processes. We are in discussions to reach an agreement, which would be fully within US exemptions," the source said.

- 'Like a ledger' -

It would effectively be a "loophole" around sanctions, said Ahmed Tabaqchali, senior fellow at the Sulaymaniyah-based Institute of Regional and International Studies.

"It's like a ledger. You record the money paid, and Iran has that much credit in Iraq," Tabaqchali told AFP.

The system would work much like INSTEX, a mechanism recently activated by Britain, Germany and France to trade legitimately with Iran without falling foul of US sanctions.

Still, the system is fraught with political, financial and practical complexities.

Iraq's economy relies almost exclusively on oil revenues, paid in dollars, which leaves Baghdad extremely vulnerable to any punitive measures the US could take in response to a violation.

It also remains unclear what exactly Iran could purchase from Iraq as trade is heavily tilted in the other direction.

"Credit would develop in Iran's favour but how would it actually cash it?" said Tabaqchali.

Importing goods from outside Iraq would require a third party willing to take the political and financial risk of such a transaction, he told AFP.

And, ultimately, much of Iraq's transactions with Iran are cash purchases of commercial goods — something US authorities implementing sanctions are unable to monitor.

"Cash is untraceable," said Tabaqchali.

GIBRALTAR (AP) — An Iranian supertanker hauling $130 million worth of light crude oil that the U.S. suspects to be tied to a sanctioned organization lifted its anchor and begun moving away from Gibraltar late on Sunday.

The trail left by GPS data on Marinetraffic.com, a vessel tracking service, showed the Iran-flagged Adrian Darya 1, previously known as Grace 1, moving shortly before midnight. The tanker slowly went south before steering eastwards toward a narrow stretch of international waters separating Morocco and the southern tip of the Iberian Peninsula.

Iran's ambassador to Britain, Hamid Baeidinejad, confirmed in a post on Twitter that the oil tanker was headed to international waters. Questions to the embassy about where it was going were not immediately returned.

The vessel had been detained for a month in the British overseas territory for allegedly attempting to breach European Union sanctions on Syria. Gibraltar authorities rejected an eleventh-hour attempt by the United States' to reseize the oil tanker on Sunday, arguing that EU regulations are less strict than U.S. sanctions on Iran.

The tanker's release comes amid a growing confrontation between Iran and the West after President Donald Trump pulled Washington out of Tehran's nuclear deal with world powers over a year ago.

Shortly after the tanker's detention in early July near Gibraltar — a British overseas territory — Iran seized the British-flagged oil tanker Stena Impero, which remains held by the Islamic republic. Analysts had said the Iranian ship's release by Gibraltar could mean that the Stena Impero goes free.

Gibraltar's government said Sunday it was allowing the Iranian tanker's release because, "The EU sanctions regime against Iran - which is applicable in Gibraltar - is much narrower than that applicable in the US."

In a last-ditch effort to stop the release, the U.S. unsealed a warrant Friday to seize the vessel and its cargo of 2.1 million barrels of light crude oil, citing violations of U.S. sanctions as well as money laundering and terrorism statutes.

U.S. officials told reporters that the oil aboard the ship was worth some $130 million and that it was destined for a designated terror organization.

The unsealed court documents argued that Iran's Islamic Revolutionary Guard Corps are the ship's true owners through a network of front companies.

Authorities in Gibraltar said Sunday that, unlike in the U.S., the Iran's Revolutionary Guard is not designated a terrorist organization under EU, U.K. or Gibraltar law.

The Iranian ship was detained while sailing under a Panamanian flag with the name Grace 1. As of Sunday, it had been renamed the Adrian Darya 1 and had hoisted an Iranian flag. Workers were seen painting the new name on the side of the ship Saturday.

Iran has not disclosed the Adrian Darya 1's intended destination and has denied it was ever headed for Syria.

The chief minister of Gibraltar, Fabian Picardo, said he had been assured in writing by the Iranian government that the tanker wouldn't unload its cargo in Syria.

The Astralship shipping agency in Gibraltar, which has been hired to handle paperwork and arrange logistics for the Adrian Darya 1, had told The Associated Press that a new crew of Indian and Ukrainian nationals had been expected to replace the sailors on board.

Iran's President Hassan Rouhani says the country will begin developing new centrifuges to speed up uranium enrichment.

Rouhani revealed the plan at a news conference on Wednesday.

He said Iran will push for the research and development of all kinds of new centrifuges, starting on Friday.

The move aimed at countering US sanctions would be a further departure from the country's commitment to the 2015 nuclear deal.

Iran maintains that the US sanctions have prevented the country from getting economic benefits promised in the nuclear deal.

Rouhani also stressed that the research and development will be carried out for peaceful purposes under the supervision of the International Atomic Energy Agency.

The development of new centrifuges would step up enrichment activities, but Rouhani didn't refer to any levels of enrichment Iran might seek.

A spokesman for the Atomic Energy Organization of Iran warned on Tuesday that if his country wants, it can increase the level of uranium enrichment by 20 percent within two days.

Iran has been urging Britain, France and Germany, which are members of the nuclear deal, to pressure Washington to help ease the sanctions.

Observers say that while taking a new step, Iran is apparently seeking to allow room for negotiation with the European powers in order to get specific economic support.

A senior Iranian official has opposed Japan's plan to dispatch Self-Defense Forces to the Middle East to help ensure the safe navigation of commercial vessels.

Iran's Deputy Foreign Minister Abbas Araghchi gave NHK an exclusive interview on Tuesday during his visit to Japan as a special envoy for Iranian President Hassan Rouhani.

Araghchi said Tehran is waiting for Japan's final decision, but it doesn't believe that the presence of any foreign forces in the region would help boost stability, security or peace.

The diplomat noted that he had conveyed Iran's stance to Japanese Prime Minister Shinzo Abe in a meeting.

Araghchi said US policies are the root cause of escalating tensions in the Middle East. He criticized the US for imposing "maximum pressure" on Iran and withdrawing from the 2015 nuclear agreement.

Araghchi also said that if Iran cannot benefit from the nuclear deal, the country will certainly take the next step, including the rejection of the International Atomic Energy Agency's inspections.

Iran's top nuclear scientist was reportedly killed Friday in an apparent assassination that the country's foreign minister linked to Israel.

Israeli Prime Minister Benjamin Netanyahu's office has not responded to CNN's request for comment.

Mohsen Fakhrizadeh was head of the research center of new technology in the elite Revolutionary Guards. He was considered one of the masterminds of Iran's controversial nuclear program.

Iranian state media said the killing appeared to be an assassination. Photographs from the scene showed a car with its windshield blown in, and the road strewn with glass and blood.

Iranian Foreign Minister Zarif called the death "cowardice — with serious indications of Israeli role."

"Terrorists murdered an eminent Iranian scientist today," he said in a tweet. "This cowardice—with serious indications of Israeli role—shows desperate warmongering of perpetrators Iran calls on int'l community—and especially EU—to end their shameful double standards & condemn this act of state terror."

US President Donald Trump retweeted prominent Israeli journalist Yossi Melman, who wrote: "Fakhrizadeh-Mahabadi assassinated in Damavand, east of Tehran according to reports in Iran. He was head of Iran's secret military program and wanted for many years by Mossad. His death is a major psychological and professional blow for Iran."

The Chief of Staff of the Iranian Armed Forces, Major General Mohammad Bagheri warned of "severe revenge" against "the killers" of Fakhrizadeh, state-news agency IRNA reported.

"The assassination of this capable and worthy manager, although it was a bitter and heavy blow to the country's defense complex, but the enemies know that the path started by the martyr Fakhrizadeh will never be stopped," Bagheri said, according to IRNA.

The Trump administration said it is closely monitoring the apparent assassination. The death "would be a big deal," a US official told CNN.

Trita Parsi, the co-founder and executive vice president of the Quincy Institute for Responsible Statecraft, said it was not clear who was behind the apparent assassination, but that "there are not that many candidates."

"At the end of the day the only countries that actually have the intent, the motivation and the capacity — and the capacity is really important — really reduces the number of candidates to no more than Israel and potentially the United States," he told CNN's Becky Anderson.

In April 2018, Netanyahu mentioned Fakhrizadeh by name when he unveiled a nuclear archive he said Mossad agents had taken from Tehran. He called him the head of a secret nuclear project called Project Amad. "Remember that name, Fakhrizadeh," Netanyahu told reporters.

Iran began to withdraw from its commitments to the 2015 landmark nuclear deal in 2019, a year after US President Donald Trump pulled out of the agreement and unleashed crippling sanctions on the country.

In the last month, the International Atomic Energy Agency documented several new breaches of the agreement. Earlier this week, Iran said it had begun injecting Uranium Hexafluoride gas into centrifuges at its Natanz facility.