Rouhani’s Visit to Iraq: Huge Economic Cooperation at Eastern Gate of Arab World

Wed Mar 13, 2019

TEHRAN (FNA)- The agreements sealed during the visit of Iranian President Hassan Rouhani to Iraq mark the start of the largest economic cooperation project between the two neighboring states in the region.

In the 1990s, when the US decided after Operation Desert Storm and annihilation of 70 percent of Iraq’s Army to re-instate Saddam Hussain rather than conquering Baghdad, there was only one thing revolving in the mind of Washington’s politicians: to prevent the Shiite revolutionary movement, which was gaining momentum after the Intifada (uprisings) in Southern Iraq and becoming an independent powerhouse, from getting strengthened.

Despite the fact that in 1991 the Iraqi army had lost control of all Shiite regions, the scale was tipped in favor of Saddam’s regime when the US-led coalition allowed the dictator to fly his Mil Mi-24 helicopters which led to the largest massacre of the Shiite population in Iraq.

Interestingly, in 2014, when the ISIL terrorists conquered Mosul, one of the biggest cities in Iraq, a parallel course of event was to happen. While the terrorists were approaching the gates of Baghdad and the repetitive calls of the Iraqi government for winning the air support of the US-led coalition had failed, Iran’s strong entry into war to help its Western neighbor turned the whole tide. Now after 5 years, not only nothing has been left of the ISIL in Iraq, but also the position of Shiite-led central government in the Arab country has been cemented more than ever.

From The Fall of the Eastern Gate To The Resistance Front  

Iraq was the Eastern Gate of the Arab World, in the mindset of Saddam Hussain, to resist against Iran’s infiltration. Wafiq al-Samarrai, Director of Iran desk in Iraqi Army’s Intelligence Organization during the 8-year war of the Baathist regime against Iran has thoroughly evaluated and discussed this concept in his book of memoirs, ‘The Ruins of the Eastern Gate’.

Now after the falloff of the ISIL in a few-year-old war, Iraq has become part of an alliance which is called the Resistance Front. A front which is based on not religious motives as claimed in the West’s Shiite Crescent theory, but on a pro-independence essence opposing the Westerners’ interference in the fate of Muslim countries.

Heading Toward $20Billion Trade

President Rouhani’s visit to Iraq is exactly highlighting the same strategic cooperation. Although the Tehran-Baghdad strong ties in security areas have fruited great successes in the past couple of years, it seems that the ties are expected to develop at a serious level to other areas.

Economy is one of the main areas which was placed under the spotlight by the officials of the two countries during the recent visit of President Rouhani to Iraq. Undoubtedly, Iran enjoys a unique status for develop economic cooperation with Iraq.

The two countries share more than 1000 kilometers of borderline fittingly tied with identical ethnic patterns across the borders. For instance, Iran’s Kurdish provinces share borders with the Iraqi region of Kurdistan and accordingly can serve as an economic hub in the region because of the ethnic and lingual commonalities.

Also most of Iran’s Southwestern provinces which share border with Iraq are resided by Arab and Shiite Iranians which again positively contribute to cross-border interactions.

Besides, despite the fact that Iraq’s Western and Northern governorates like al-Anbar and Nineveh are home to bloody battles with the ISIL terrorists, security has been preserved so far in Eastern governorates which share border with Iran.

All these realities as well as the nearly 2 million Iranians who travel to the Iraqi cities of Karbala and Najaf in Arbaeen pilgrimage season have ushered in good trade between Iran and Iraq.

However, a study of economic figures shows that Iran’s share of Iraq’s market, particularly its growth in the past couple of years, still fails to match the two sides’ potentials.

This is exactly one of the very issues which drew much of the attention in the recent visit of President Rouhani to Iraq. Iranian and Iraqi officials held countless meetings and seminars before the Rouhani visit to discuss proper and wide avenues for expanding relations.

The truth is that Iran is competing with serious regional and international rivals in Iraq’s market. Turkey is one of the countries which are seriously marketing and expanding their share of the market in the food products section in Iraq.

Nevertheless it has to be born in mind that Turkey’s presence in Iraq’s market is nothing anew and an outcome of the last years. Rather, Turkey was one of the big suppliers of Iraq’s market during the reign of Saddam Hussain. Yet, the facts stated earlier display that Iran enjoys better capabilities for exporting goods to Iraq.

China and the UAE are among the other competitors in Iraq’s market, specially in the field of consumer durable goods.

Considering the situation, Iranian and Iraqi merchants held numerous meetings on the ways to expand trade between the two countries during President Rouhani’s visit.

Iran’s Ambassador to Baghdad Iraj Masjedi had already said at an economic seminar in Baghdad that the two countries have set a $20 billion objective for the volume of their trade.

This figure may seem a bit out of reach at the first sight, but it is assuredly accessible considering that Iraq is now entering a phase of reconstruction after the war against terrorism and peace has been restored in its cities.

The decision to issue visas for the nationals of the two countries free of charge was another important accomplishment of President Rouhani’s visit to Iraq which can act as a catalyst further facilitating cross-border travels for the nationals of the two sides.

US Worried About Sanctions-Busting

One of the motives behind President Rouhani’s visit to Iraq was the capacities of this Arab country in helping Iran to bypass the US’ unilateral sanctions.

Tehran is going to use Iraq’s help for finding a way around new sanctions to meet its financial needs, as it did in the last round of bans with the help of Turkey.

The fact is that thanks to broad suitcase trade between Iran and Iraq in areas of trade of commodities and foreign currencies exchange, the typical sanctions imposed by the US Treasury Department are unable to cause a sensible disruption in the bilateral channels between the two sides.

The reiterations of US Secretary of State Mike Pompeo warning Iraqi officials about the suitcase trade of hard currency across the border of Iran and Iraq is reflecting the same very concern.

Iran is capable of importing many of its needed goods, which are not easily accessible because of financial and insurance limitations caused by sanctions, immediately through re-exporting them from Iraqi market. Accordingly, Iraq would be playing the same role once played by the UAE.

Many hold that oil rich port of Basra in Southern Iraq which is also the richest city of the country is enjoying the potential to become the second Dubai in the region. Iran can play the same role it played for flourishing Dubai in the 1980s.

The recent visit of the Governor of the Central Bank of Iran (CBI) Abdolnasser Hemmati and the serious memorandum of understanding signed on banking relations between Tehran and Baghdad underlines the importance of Iraq’s banking system for Iran. Besides, Iraq has a broad network of currency relations with the world, through a system of exchange centers, particularly with East European countries, which is of high value for Iran.

One of the objectives of President Rouhani’s visit to Iraq which was not announced publicly was to expand these very kind of relations, and assuredly the officials of the two countries have discussed this issue in their meetings, and certainly the Americans are after stopping these relations at any level.

Iran and Iraq as Pillars of Future Energy Exchange Hub in Region

Expanding cooperation on energy was also among the issues discussed for broadening bilateral cooperation between the two countries in the meetings of President Rouhani in Iraq.

This was the very same demand that made US President Donald Trump to agree with granting exemptions to Iraq to import energy from Iran during the first batch of sanctions against Tehran. However, some US-backed regional countries are after undermining Iran’s position in Iraq.

For example Saudi Arabia is after weakening Iran’s role in this area with exporting electricity to Iraq. The main point is that Rouhani’s visit to Iraq can mark a starting point for broader energy cooperation of the two countries in the region’s energy market.

Iraq has three gas fields and the country will start producing gas by the next five years. Although the early production of gas by Iraq may make the country needless of importing the energy carrier, the growing demand for electricity in the Arab country means Baghdad will continue importing energy from Iran.

In addition, Iraq is bordering Kuwait and Jordan which both are electricity thirsty and Iraq can act as an energy hub in the region to export Iran’s gas to the two countries besides meeting its own needs.

The same scenario is applicable to electricity to let Iraq play a stabilizing role in the region. The path may seem very long but Prescient Rouhani’s visit to Iraq marked a golden start for this long march.

Start of Huge Economic Cooperation in Region

Eleven years ago, when Iran’s ex-President Mahmoud Ahmadinejad traveled to Iraq, the country was still under the US occupation.

And now in era of Rouhani, these are the Iraqi security forces who are providing security in Baghdad with the help of their Iranian partners.

Moving along the same line, we may rightfully expect inaguration of mega projects during the visit of the next Iranian president to Baghdad. This path, despite being long, is the future within the reach of the hands of the two nations.

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