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The Trump administration intervened to quash a $15 billion deal for Siemens Corp. to develop power stations in Iraq, instead persuading Baghdad to sign an agreement with General Electric Co., two administration officials said.
Iraq signed a memorandum of understanding with Boston-based GE on Monday, after senior US officials warned Iraqi Prime Minister Haider al-Abadi that the future of the US-Iraq relationship would be at risk if his government accepted the deal with Siemens, according to the officials, who asked not to be identified discussing private deliberations. The Financial Times reported the US move earlier Thursday.
The Iraqi agreement would be a much-needed win for GE’s beleaguered power equipment business, which has been at the center of the company’s problems amid slumping demand for gas turbines. Just a few weeks ago, GE ousted CEO John Flannery after only 14 months on the job, replacing him with Larry Culp, longtime head of the industrial conglomerate Danaher Corp. GE also said it would take a $23 billion charge related to its power business unit.
The Trump administration’s push supports American efforts to curb Iranian influence in Iraq and the region in the months since President Trump backed out of a 2015 nuclear deal and prepares to re-impose sanctions on Iran next month. The US officials said they want to wean Iraq of its dependence on Iranian natural gas and suspect Iran had spurred Iraqi leaders to pursue the Siemens deal as a way of undercutting ties with the US.
‘‘This is part of very strong campaign of engagement in Iraqi government formation and a very targeted effort to support the Iraqi government and minimize Iranian influence,’’ said Garrett Marquis, a National Security Council spokesman. ‘‘It’s part of our overall effort to evict the Iranians rather than to invite them in.’’
Alongside the GE deal, the United States signed a broader memorandum of understanding with Iraq on Sunday to build out its energy sector and make the country energy-independent, the officials said. That aims to solve what has long been a source of frustration for Washington: Iraq relies on Iran to import natural gas because it doesn’t have the infrastructure to capture its own ample reserves, 60 percent of which are flared off.
According to the US Institute of Peace, Iran supplies Iraq with about 12 million cubic meters of natural gas a day and accounts for one-fifth of its power generation.
The two deals follow a flurry activity by both Germany and the Trump administration on behalf of their companies.
The US government learned in early September that Iraq was wrapping up talks with Munich-based Siemens over a contract to revamp the country’s entire power sector and swap out infrastructure that had been built by GE. Siemens chief executive Joe Kaeser had met with Abadi in late September to discuss the plan to install 11 gigawatts of power generation capacity over four years and create thousands of jobs.
US officials said they suspect Kaeser was in Iraq to sign the deal but managed to stall the Abadi government. Senior American officials warned Iraq against signing the agreement, then threatened to escalate the dispute unless Iraq relented.
GE declined to comment. Iraq’s government didn’t immediately respond to a request for comment sent via its embassy in Washington. Officials at the German Embassy in Washington didn’t immediately respond to an e-mail sent after normal business hours.
‘‘We still believe we have put the most beneficial and comprehensive plan for the Iraqi people on the table, extending far beyond power infrastructure,’’ Siemens spokesman Philipp Encz said Thursday by phone. ‘‘We remain committed to our Iraqi road map and supporting the Iraqi people and repowering the country.’’
Around the time of Kaeser’s visit last month, Siemens’s success seemed a sure thing. The company said then in a statement it had received positive feedback from the Iraqi government and was looking forward to entering into an official agreement.
Instead, under the deal, GE will expand Iraq’s power-generation capacity by 2 to 3 gigawatts by next summer if work begins soon. As part of the broader memorandum of understanding, US companies will help Iraq build out power generation and transmission lines, and upgrade its existing capacity, according to the officials.
The US officials said they hope to have the agreement finalized before Nov. 5, when US sanctions on Iran go back into effect. The administration is also pressing Iraq to complete the deal for the two electricity projects in the south, and has made clear to Iraqi officials that some of its actions — possibly including imports of natural gas from Iran — could face sanctions if it doesn’t come to terms with the United States, according to the officials.
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