IE 11 is not supported. For an optimal experience visit our site on another browser.

Iran becomes major trading partner with Iraq

Trucks line up every day at this border crossing to carry Iranian melons, cookies, soft drinks and appliances into Iraq. For truck driver Ala Saeedi, the booming trade is proof his country is helping its war-torn neighbor.
/ Source: The Associated Press

Trucks line up every day at this border crossing to carry melons, cookies, soft drinks and appliances into Iraq. For truck driver Ala Saeedi, the booming trade is proof his country is helping its war-torn neighbor.

This spot in southwestern Iran, he notes, "was once the scene of chemical attacks by Saddam (Hussein) against Iranian troops. But now it's used for trade. ... Iran is meeting the daily needs of Iraqis."

More than four years after the U.S.-led invasion toppled Saddam, Iran's influence from trade links to political sway has never been greater — a fact bedeviling the United States as President Bush pledges American troops will remain in Iraq in large numbers.

In his speech Thursday night, Bush warned that a U.S. pullout would encourage Iran "in its efforts to gain nuclear weapons and dominate the region."

Washington also has long accused Iran of sending arms and even fighters to help Shiite Muslim militias in Iraq that target U.S. troops, and both British and American commanders have called the fight in parts of Iraq a "proxy war" by Iran.

Iran disputes those allegations, saying it doesn't meddle inside Iraq and isn't trying to acquire atomic weapons.

But Iranian officials do agree they play a strong role in Iraq, much as they do with the trade and aid they provide to Afghanistan on their eastern border, as Tehran seeks to increase its regional influence.

"The Iraqi government and nation are close friends of Iran," Iranian President Mahmoud Ahmadinejad said in an interview this week. "We are natural allies."

Shiite connections
Complicating the U.S. position, Iraq's Shiite-dominated government itself has sought close trade and political ties with Iran, whose people are predominantly Shiite.

Iraq and Iran were hostile to each other throughout Saddam's reign, including fighting a long and destructive war through most of the 1980s. But when Saddam's Sunni regime fell and Iraq's Shiite majority took power, long-standing historical, religious and cultural ties between the Shiites of both countries flourished again.

These days, Iran's influence still is most apparent across Iraq's mostly Shiite south. But it is also felt in Kurdish northern areas and even in Baghdad, where many new reconstruction projects — such as improving Iraq's electricity grid — are financed by Iranian investment.

"Decades of war and U.S. invasion have destroyed almost everything in Iraq. And Iran is well prepared to make good use of this opportunity to flood Iraqi markets with goods and services," said Saeed Leilaz, an economic and political analyst in Iran.

The export of goods to Iraq brings both money and influence, he noted. "Iranian products are sold everywhere in Iraq. This never happened before. Iran is playing a clever game," he said.

Iran's ambassador to Baghdad, Hasan Kazemi Qomi, said last month that Iran-Iraq trade in 2006 totaled $2 billion — 97 percent of that going from Iran into Iraq. Hossein Tizmaghz, an Iranian Commerce Ministry official, said he hopes trade will soar to $10 billion in five years.

Shalamcheh is one of three major crossings along the 620-mile border.

In the 1980s, it was a dusty battlefield where Iranians and Iraqis exchanged bullets and mortar shells and where Saddam's regime used chemical weapons. Today, its export terminal bustles with trucks as well as Iranian families traveling to Iraq's holy cities for pilgrimage.

The border situation is more complicated in Iraq's Kurdish north. The inflow of goods, including cheap gasoline, booms, but the atmosphere is tense.

Iran has periodically fired artillery across the border in recent weeks at bases used by ethnic militants staging attacks in Iran's Kurdish region. An Iranian envoy warned last weekend that if the Iraqis could not stop the Kurdish raids, Tehran might respond militarily.

There are also tensions in Iraq's south, where there has been fighting between Shiite groups and political parties, some of which have closer links to Iran. But the traffic in commerce and pilgrims remains high.

Each month, more than 40,000 Iranians visit southern Iraq's important Shiite spots such as the holy cities of Najaf and Karbala, buying religious souvenirs and pumping money into the economy by staying in hotels.

Influence large in Basra
Many pass through the south's biggest city, Basra, just over 30 miles from the border. It is has many Iranian cultural and religious centers, and its shops are full of high-quality and cheap Iranian food, kitchen appliances and construction materials.

"The Iranian influence is very large," said Ali Abdul Aziz, a retired Sunni teacher in Basra.

Iran has said it wants to build an airport in Najaf and promises to help renovate important shrines. It also has begun work on a railroad between Iranian port of Khorramshar and Basra, connecting Iran's rail system to Iraq's.

Tehran also has signed a $150 million contract to build a 300-megawatt power plant in Baghdad. Another project, a 400-megawatt electricity transmission line from the Iranian frontier city of Abadan to the Iraqi town of Alharasa is expected to go into operation in a few months.

Iran also is conducting feasibility studies on building two pipelines to carry oil and derivatives from Basra to Abadan.

"Enmity is over," Iranian businessman Bahram Mehrparvar said as he filled out paperwork at the Shalamcheh export terminal for the bricks and cement he exports to Iraq. "Business and trade has replaced bullets and mortars."