Iran, Iraq bury the hatchet to reopen trade

Baghdad, Nov 22 | Updated: Nov 23 2005, 05:42am hrs
Once a bitter enemy, Iran is emerging as a trade lifeline for Iraq as Baghdad seeks to rebuild an economy shattered by years of sanctions, neglect and corruption under Saddam Hussein and since his overthrow. As Iraq picks up the pieces, it is becoming as a key market for its neighbours, especially Iran which it fought from 1980-88.

Many Iraqi business people say it is easier to get goods like vegetables from Iran, than from areas within Iraq itself, where insurgents sometimes target truck drivers.

We import fruits and vegetables from Iran because we feel relieved about the safety of the roads our trucks are moving on, Iraqi trader Ali Shahatha said. Helping to thaw and improve relations with Iran is new Iraqi Prime Minister Ibrahim Jaafari, an Islamist Shiite who has close ties to Shiite Iran, where he once lived in exile. Iranian commerce ministry estimates say trade with Iraq could reach $1 billion in the year to March 2006 in everything from fruit and vegetables to refrigerators and building materials. Goods worth $650 million were exported to Iraq in the first 10 months of 2005, official figures show.

Trade ties are much simpler now that Saddam, a Sunni Arab aggressively at odds with his Persian neighbours, has gone. Under Saddam, Iraqs economy was battered by three wars and 12 years of United Nations sanctions. In August, Iran reopened a trade office in Baghdad for the first time since the Iran-Iraq war, a conflict that took hundreds of thousands of lives and ended in stalemate.

Iran has long wanted to cooperate with Iraq a fellow member of the Organisation of the Petroleum Exporting Countries (Opec) by swapping crude oil and possibly developing joint border oil fields. Oil aside, Iran has established a $1 billion line of credit to get exports flowing into Iraq and also has a deal to export about 200,000 tonnes of flour to the US-backed country.

Baghdads Chamber of Commerce says other Iranian exports to Iraq now mostly include consumer goods like food, home appliances, air conditioning systems, refrigerators and detergents, as well as construction materials.

Details about the trade are sketchy but much of it is conducted through six customs posts along the Iraq-Iran border.