Iran-Iraq Agree Upon New Free Trade Zones

On September 13, the Tehran Times reported that Tehran and Baghdad had agreed upon three new free trade zones between the two countries. Those would be located in Wasit, Maysan, and Sulamaniyah provinces. Iraq is already Iran’s top trade partner. There is already a free trade zone with Basra. Before the war, there were hardly any economic transactions between the two countries. Now trade is at $2.8 billion per year, and Iranian officials hope that it will climb to $4 billion. There is also another $1 billion in illegal goods coming from Iran into Iraq. Iran has a comparative advantage over other countries with its cheap prices that reportedly are even competitive with the Chinese, good road links, and limited restrictions on business between the two countries. Already, Iranian companies have the most contracts with Iraq, and its suppliers dominate the consumer goods’ market, and provide electricity and fuel. Prime Minister Nouri al-Maliki also met with the head of the Iran-Iraq Development Affairs in mid-September to work out more deals on fuel and energy trade.

As reported earlier, since the U.S. invasion, Iran has expanded its economic, political and cultural ties with Iraq. Sometimes this has been to the detriment of Iraq such as Tehran’s support of militant Shiite Special Groups. Other times, it has been essential such as providing much needed power to Iraqi cities. Still others, it has helped Iraq re-establish its Shiite religious credentials by allowing thousands of Iranian pilgrims to travel to holy sites in the country. As one Shiite politician recently told the Los Angeles Times, the Americans will be in Iraq for a relatively short time, while Iran will be there “till the Judgment day.”

For a review of Iran’s influence in Iraq see:

Over of Iran’s Influence In Iraq

SOURCES

Ali, Ahmed and Jamail, Dahr, “Iran Stepping in to Bring Electricity to Iraq,” IPS News, 8/12/08

Al-Jumaili, Hazem, “Iranian goods most popular in Iraq,” Azzaman, 9/7/08

Dhaher, Mohammed, “Iraq to import fuel from Iran,” Azzaman, 8/19/08

Katzman, Kenneth, “Iran’s Activities and Influence in Iraq,” Congressional Research Service, 4/9/08

Parker, Ned, “Iraq’s Nouri Maliki breaking free of U.S.,” Los Angeles Times, 9/16/08

Sinan, Omar, “Iraq-Iran Trade in Gasoline Booms,” Associated Press, 6/11/07

Tehran Times, “Iran, Iraq to create 3 free zones,” 9/13/08

Voices of Iraq, “Iran, Iraq ink customs deal,” 8/6/08