Iraq proposes oil barter scheme to pay for weapons

The Oil Ministry says countries could pay for oil with weapons as Iraq’s need for arms surges due to an ongoing deadly war with Islamic State militants.

Paying for oil with weapons and arms is the latest move by the government to save hard cash and meet a massive budget deficit caused by plummeting oil prices.

“Since Iraq is facing a financial crisis, there are proposals from various parties on the necessity of paying for weapons with oil,” said Oil Ministry’s spokesperson Isam Jihad.

Jihad did not say whether the government has signed arms deals to be directly covered by oil, but added that the ministry has drawn plans that will quickly make such a move feasible if the authorities decide to barter oil for weapons.

Oil exports are almost Iraq’s sole hard cash earner and the mainstay of its economy.

The head of the parliamentary Commission on Defense and Security Hakim al-Zamili commended the government for and the Oil Ministry to resort to barter to supply the armed forces with weapons.

“With oil prices falling and deficit widening it is necessary to barter oil for weapons purchases from other countries,” Zamili said.

Zamili said the drop in hard cash earnings was so severe that the government may fail to pay its civil servants and army personnel.

Lack of hard cash could adversely impact “the military operations against Da’esh,” he said. Da’esh is the Arabic name for Islamic State.

Iraq pays billions of dollars to cover for weapons, the need for which has surged since Islamic State militants invaded northern and western parts of Iraq, occupying major towns.

“We need to revise and reconsider our arms deals because they have been based on false priorities,” Zamili said. He did not elaborate