Iran is keen on maintaining its hard-gained position in trade with Iraq, its western neighbour. The two are eager to reach 20 billion dollars in their annual trade volume. “Iran private sector fully endorses the government plans to develop strategic ties with regional and Islamic countries and Iraq holds a special place in this regard,” said Gholam Hossein Shafei, Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) President addressing a joint business forum attended by Iraqi Prime Minister Adil Abdul-Mahdi.
“Last year's trade figures show bilateral trade stood at $6.5bn,” Shafei added, saying there is good potential to increase the trade. Tehran-Baghdad annual bilateral trade now stands at 12 billion dollars with energy exports comprising only four billion dollars.
The two states are looking to increase their trade to 20 billion dollars in the next few years. Iranian First Vice President Eshaq Jahangiri said Iran is keen on reaching this target in the next two years. “Our strategy to develop economic and political cooperation with Iraq is to hit the target of $20 billion trade in 2021 (1400, according to the Persian calendar), he said on Sunday.
Non-oil exports make up the bulk of Iran’s non-oil exports to Iraq worth eight billion dollars. “Iran private sector is ready to help Iraq in reconstructing infrastructure, developing food industry, tourism and joint production,” Shafei said at the meeting.
One of the huge obstacles was that both countries required visas for the other nation’s citizens. However, the two have agreed not to charge Iranians and Iraqis for visas. Shafei believes that ease of travel between the two states “paves way for smoother trade”.
However, there are issues on the way of Iran-Iraq bilateral commerce: US sanctions that have caused huge impediment in Iran’s international banking relations and lack of insurance for international cargoes.
Recently, the two central banks have worked out a way for non-dollar trade relations. However, the channel has now been limited to the transfer of Iraqi dinars for Baghdad’s outstanding debts for importing Iranian gas and electricity. “These are the obstacles that remain to be worked out,” according to the ICCIMA president.
He believes that a Free Trade Agreement (FTA) is a good solution and mechanism so the two neighbouring states hit their $20bn target. President of the Iranian private sector national assembly urged also that joint industrial parks, free zones, border markets and customs administrations be created on their long border. He had previously also called for an FTA between Iran and Iraq.
Watch: ICCIMA President urges FTA between Iran, Iraq
Iranian knowledge, Iraqi infrastructure
The war has left its devastating footprints on Iraq and now with the ISIS terrorist group theoretically destroyed there, Baghdad needs to stand on its knees again. The Iranian construction firms are now actively taking part in reconstructing Iraq’s demolished infrastructure such as power plants, roads, housing, …
Iranian Energy Minister Reza Ardakanian says Iranian private sector firms will reconstruct Iraqi power industry for the next three years. Tehran is also selling electricity to the country to offset shortages and meet growing internal demand. “Iran exported electricity to Iraq worth $6bn during last 15 years,” according to the Iranian minister. Baghdad also purchases Iranian gas to feed its energy-hungry power plants.
Several Iranian companies are also building power stations in various parts of the country, such as the capital and the city of Najaf.
From Persian Gulf to the Mediterranean; from Iraq to Central Asia
As the war winds down in the Arab country, Iran moves faster towards building a land and rail corridor that can link it to Syria, Lebanon and Jordan. “We will connect Persian Gulf to the Mediterranean through Iraq,” Jahangiri said.
Iran always thought of exporting its goods to Syria by land, avoiding huge costs of maritime shipping. In their recent visit to Syria, the Iranian private sector delegation floated the idea of a trilateral transport company between Iran, Iraq and Syria to facilitate such trade.
At the same time, Iraqis can export their goods to Central Asia and the Commonwealth of Independent States (CIS) through Iran. Should a recent joint agreement on establishing a border rail road that connects Iraq’s Basra to the Iranian Shalamcheh, the Iraqi exported goods can then be transported to Russia and Azerbaijan on lorries and freight trains that run on Qazvin-Rasht railways that has been inaugurated lately.
Closer partners without "fear"
“A recent visit by Iranian President Hassan Rouhani to Iraq was historic and removed any fear in taking further bilateral actions and developing ties,” Iraqi Prime Minister Adil Abdul-Mahdi told the forum, referring to Rouhani’s March visit to the neighbouring country that led to the signing of several agreements and Memoranda of Understanding (MoU).
“Iran-Iraq cooperation means regional success but there are some who don't want this,” he warned. But he went on to say reassure that the two countries can resolve their outstanding trade problems “given enthusiasm among economic operators”.