• The U.S. is considering a humanitarian sanctions waiver to restore some Iran-Iraq air links, particularly the Najaf route, but no decision has been announced.
  • Iraq halted Iranian flights at Baghdad, Najaf, Erbil, and Sulaimaniyah after U.S. warnings of secondary sanctions on airports and service providers.
  • Even if a waiver is granted, industry participants may remain reluctant due to dollar-clearing exposure, leaving the route's reopening uncertain.

Fragile Prospects

Baghdad is in direct talks with Washington for a sanctions exemption that would allow limited passenger flights between Iran and Iraq, especially to the holy city of Najaf, according to a person with direct knowledge of the matter. The waiver, if approved, would be framed around humanitarian needs—medical treatment, education, religious travel, and civilian connectivity—but as of September 28, no agreement had been formally confirmed.

The discussions follow a U.S. warning that airports and service providers supporting Iranian airlines could face secondary sanctions, including exclusion from the dollar-based financial system. The warning, reported by Reuters, covers fueling, landing services, and ticket sales. In response, Iraq initially suspended Iranian flights at Baghdad, Najaf, Erbil, and Sulaimaniyah. Najaf’s suspension took effect on September 25, eliminating an alternative route that Iraqi officials had reportedly considered when Baghdad flights were halted.

On September 28, Iraq’s ambassador to Iran said Najaf could reopen within 24 hours. But Iran’s aviation authority countered that it had received no official Iraqi documentation and advised passengers to verify flight status before purchasing tickets—a conflicting signal that underscores the uncertainty.

Compliance Overhang

The central obstacle is not political will but financial plumbing. Extraterritorial sanctions risk means even non-U.S. firms can be deterred if their business relies on dollar clearing, U.S.-linked suppliers, insurance, banking, or access to American markets. That makes a political decision to reopen a route insufficient if ground handlers, insurers, or fuel vendors remain unwilling to participate.

One account says foreign ground-service firms pulled back voluntarily, producing a de facto suspension. Without their participation, flights cannot operate regardless of any waiver.

Iraqi airports and service firms are already forgoing passenger, handling, retail, and landing-fee revenue. Travelers have been pushed toward overland journeys of at least 12 hours. Regional aviation has also fragmented: the UAE, Oman, Georgia, and Azerbaijan have restricted or suspended Iranian connections, according to current reporting.

The impact extends beyond airlines. More than 1,000 Iraqi and Kurdistan Region residents were reportedly stranded in Tehran, including people who were ill or recovering from surgery. Iraq’s ambassador cited roughly 100,000 Iraqi students at Iranian institutions, hundreds of thousands of Iraqis living in Iran, and thousands of daily border crossings—evidence that air restrictions affect broader civilian networks.

Balancing Act

Iraq is balancing two essential but competing relationships. It depends on ties with the United States and the Western financial system, while Iran is a neighboring Shia-majority country with deep economic, religious, political, and social links to Iraq. Iraqi officials characterize the waiver effort as a way to reduce regional escalation and preserve civilian connectivity.

The wider context is the ongoing U.S.–Iran conflict. The U.S. action came seven months into the war and was intended to constrain Iranian aviation via secondary sanctions on foreign entities enabling operations, Reuters reported.

Najaf is politically sensitive because it hosts the Shrine of Imam Ali and is among the most important Shia pilgrimage destinations. Its air link with Iran carries significance beyond ordinary commercial aviation, connecting pilgrims, clerical networks, students, families, and medical travelers. Demonstrators in Baghdad, organized by Iran-aligned Iraqi militias, have protested the suspension. Scholars and students associated with Najaf’s Hawza seminary also held a vigil and called on Baghdad to protect Iraqi sovereignty in decision-making.

The debate inside Iraq is likely to remain polarized: some see the U.S. measures as undue pressure on Iraq’s sovereignty and civilians; others view Iraqi compliance as necessary to avoid financial and diplomatic consequences.

Narrow Arrangement Likely

The most plausible short-term outcome is a narrow, conditional arrangement—if Washington agrees—rather than a broad restoration of Iranian regional air service. It could focus on specific Iraqi airports or categories of passenger travel, such as medical, educational, and pilgrimage journeys. But implementation would still require participation by ground handlers, fuel providers, insurers, and payment intermediaries.

A U.S. waiver alone may not promptly normalize operations. Service providers could remain cautious until the legal scope is explicit and they receive compliance assurances, because their perceived dollar-system exposure is the core deterrent.

If the sanctions regime persists, Iran may become increasingly dependent on land routes, limited alternative air corridors, and politically aligned partners. Iraq will face continued pressure to balance economic sovereignty, domestic Shia constituencies, bilateral relations with Iran, and the practical necessity of maintaining access to the U.S.-centered financial system.

The Iraqi case is a test of whether humanitarian, religious, and civilian-travel carve-outs can coexist with a broader strategy designed to isolate Iranian aviation. The UAE, Oman, Georgia, and Azerbaijan disruptions suggest the effects may continue to propagate across regional air networks unless Washington issues clear, workable exemptions.

Correction: An earlier version misstated the date of Najaf's suspension. It took effect on September 25, not September 24.