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Iran iraq bury past reopen trade Original Source Link: (May no longer be active)
http://today.reuters.com/news/newsArticle.aspx?type=worldNews&storyID=2005-11-22T124001Z_01_EIC245507_RTRUKOC_0_US-TRADE-IRAQ-IRAN.xmlhttp://today.reuters.com/news/newsArticle.aspx?type=worldNews&storyID=2005-11-22T124001Z_01_EIC245507_RTRUKOC_0_US-TRADE-IRAQ-IRAN.xml
Iran and Iraq bury past to reopen trade
Tue Nov 22, 2005 7:40 AM ET
By Ahmed Rasheed
BAGHDAD (Reuters) - 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 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 some parts of 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 Shi'ite who has close ties to Shi'ite 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, Iraq's economy was battered by three wars and 12 years of United Nations sanctions.
DOORS OPENING SLOWLY
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 Organization 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 U.S.-backed country.
Baghdad's 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.
Mohammad al-Jadir, an Iraqi customs official at the Zurbatia checkpoint east of Baghdad, said more than $80 million worth of non-oil goods moved through his checkpoint in 2004.
He said goods valued at $18 million went through Zurbatia in September and October this year alone, a rise of 20 percent on the same period last year.
Iraqi customs officials estimate $700 million of industrial goods were imported from Iran in the year to March 2005.
Iraqi merchants say they prefer importing commodities from Iran because it is safer than moving goods from Syria and Jordan through western provinces like Anbar, a focal point of the bloody Sunni Arab-led insurgency.
SAFETY FIRST
Iraq and Iran are also beginning to rebuild trade along southern sea routes. This will become easier after the rebuilding of Iraq's battered port at Umm Qasr is complete.
Iran has already begun exporting cement and iron beams through Umm Qasr. In the past two months about 9,000 tonnes of Iranian goods also came through Basra's port, officials say.
Iraqi customs officials say plans are underway to open a third port near Basra to facilitate trade with Iran.
Yet while Iraq has transport agreements with Jordan, Syria, Kuwait and Turkey, there is no such pact yet with Iran. An agreement is in the pipeline despite lingering Iranian fears about security in Iraq.
Many Iranian traders prefer to invest in more stable Kurdistan, the mountainous northern region of Iraq which has enjoyed de facto autonomy since 1991, when U.S. and British planes enforced a no-fly zone after the first Gulf War.
"Security is the biggest problem in parts of Iraq other than Kurdistan for Iranian companies who are eager to invest," Hedayatollah Rezaee, director of international affairs for Iran's Chamber of Commerce, told Reuters.
"In addition to that, there are customs problems, visa problems and transport problems," he said.
Mansour Sarmast, a member of the Society of Iranian Companies in Iraq, said around 100 Iranian companies are registered in Kurdistan with tenders worth some $400 million.
Sarmast said Kurdistan could be used as a new gateway for Iraq, noting that Kurds control customs in their own territory.
The thaw in relations does not just extend to trade -- religious tourism between Iran and Iraq is also picking up.
Iraq's Shi'ite-led government has signed an agreement to allow Iranian pilgrims to visit the holy city of Najaf, which houses the tomb of Imam Ali, one of the holiest figures in Shi'ite Islam, and other religious sites in nearby Kerbala.
Earlier this month, an Iraqi Airways plane touched down in Tehran, the first passenger flight between the two countries in 25 years.
"Despite bitter memories of the eight-year, Iraqi-imposed war ... now that a popular government has taken over in Iraq, trade cooperation ... will expand," Ebrahim Tehrani, deputy secretary-general of Iran's business chamber, told his Iraqi counterpart during a recent meeting.
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