Iranian Influence In Iraq Update I

According to the Mathaba News Agency the Iran-Iraq Chamber of Commerce believes that trade between the two countries will total approximately $4 billion by the end of 2008.

Trade between the two has skyrocketed since the 2003 U.S. invasion. In 2004 it stood at $800 million, and by 2007 it was at $2.8 billion. Trade has increased due to a $1 billion credit deal singed between the two countries in 2005, a free trade zone between southern Iraq and Iran, as well as the formation of a joint Iran-Iraq Chamber of Commerce. In southern cities such as Basra, many businesses have signs in Persian and Iranian money is even accepted in many cities there. When Iranian President Ahmadinejad visited Iraq in March 2008 the two governments signed a series of agreements, many of which were aimed at deepening the economic ties between the two.

After the U.S. invasion in 2003 there was a huge increase in demand amongst Iraqis who had lived for years under United Nations sanctions. Iraqi companies however were not able to keep up as they had been weakened by those same sanctions and the fighting. The flood of Iranian goods is so high that many Iraqi businesses have been forced to close because there are no tariffs to protect domestic producers. Much of the trade goes through the Iranian Revolutionary Guards who control the border.

SOURCES

Alsumaria, “Militias and neighbors loot Iraqi South Oil,” 2/9/08

Al Bawaba, “Iran, Iraq sign new trade deal; Iranian exports expected to hit US$1 billion per year,” 7/18/05

Beehner, Lionel, Bruno, Greg, “Iran’s Involvement in Iraq,” Council on Foreign Relations, 3/3/08

Mehr News, “Iran, Iraq sign seven pacts,” 3/3/08

Press TV, “Iran-Iraq 2007 trade $1.5b,” 5/7/08

Reuters, “Ahmadinejad to oversee series of Iran-Iraq deals,” 3/3/08

Roug, Louise and Daragahi, Borzou, “Iraq Edges Closer to Iran, With or Without the US,” Los Angeles Times, 1/16/07

Wong, Edward, “Iran Is Playing a Growing Role in Iraq Economy,” New York Times, 3/17/07