Iran Tracker

Reaction to June 2009 Iranian Presidential Election:

In June 2009, Iraqi President Jalal Talabani offered his congratulations to Iranian President Mahmoud Ahmadinejad on his re-election. In addition to the Iraqi head of state’s remarks, the head of the Supreme Iraqi Islamic Council, Abdul Aziz al-Hakim, commended Iranian Leader Ayatollah Ali Khamenei for holding what Hakin deemed a fair election.[1] 

Nuclear:

During a press conference in May 2006, Iraqi Foreign Minister Hoshyar Zebari stated that though Iraq does not approve of its neighbors possessing weapons of mass destruction, the country does recognize Iran’s right to peaceful nuclear technology.[2] In September 2008, Zebari joined the foreign ministers of the Gulf Cooperation Council (GCC), Egypt, Jordan, and the United States in a joint statement calling for Iran’s assurance that it does not seek nuclear weapons and reiterating the Islamic Republic’s obligation under the Non-Proliferation Treaty to cooperate fully with the International Atomic Energy Agency.[3]            

In January 2010, the Iraqi government approached the IAEA with concerns over Iranian plans to construct a nuclear reactor near the Iran-Iraq border.[4] In a statement, Baghdad announced that it had requested additional information from the agency regarding the facility’s construction, adding that “Iraq will take the necessary diplomatic measures, in cooperation with the IAEA, to suppress the dangers and complications arising from the construction of nuclear installations near the border.”[5]

Economic Relationship:

As geographical neighbors, economic cooperation between Iran and Iraq has been inescapable, even during periods where the governments have been at odds. Since the fall of Saddam Hussein’s Ba’athist government, economic ties have experienced a period of dramatic rejuvenation, with bilateral trade between Iran and Iraq increasing exponentially in recent years, rising from $1.5 billion in 2006 to potentially $8 billion in 2010.[6] According to Mohammed Reza Baghban, the Iranian consul to Basra, the 2010 estimates come as a result of several new trade agreements between the two countries.[7] Virtually all of the recent gains in bilateral trade, however, have been driven by Iranian exports to Iraq. Between 20% and 33% of Iran’s non-oil exports are shipped for Iraq, making its western neighbor the Islamic Republic’s most prominent non-oil export market.[8] Iraqi exports to Iran, on the other hand, totaled only $37 million in 2007.[9] While Iran largely exports construction materials, industrial and medical equipment, and petrochemicals to Iraq, imports from its Arab neighbor generally consist of less refined goods, such as agricultural products, sulfur, and leather products.[10]

Given this trade disparity, it is understandable that the Iraqi market has been highlighted by trade officials as an extremely important target for Iranian non-oil exporters. Speaking in May 2010, Hassan Danaifar, the then-secretary of the Department of Iran-Iraq Economic Development for the office of Iranian president (who in July 2010 became the country’s ambassador to Iraq), noted that Iraq “effectively follow[s] a consumerist lifestyle, having only oil and dates for export, [and] therefore, there are remarkable opportunities for Iranian exporters and producers to offer their products in Iraqi markets." Danaifar added that Iran is heavily invested in its neighbor’s construction sector, exporting some 8,000 tons of cement to Iraq daily. Further demonstrating the depth of Iran’s activity in the sector, Iranian firms have been tasked with several construction projects, including roughly $380 million worth of contracts for constructing schools and a power station in Iraq.[11] Significantly, in February 2009 Iran won a $1.5 billion contract to aid in the reconstruction of the city of Basra, with an Iranian firm agreeing to build some 5,000 houses and three hotels.[12]

According to Ali Heidri, an economic attaché for the Iranian Embassy in Iraq, the expansion of trade ties can be attributed to the fact that “Iran’s products are cheap, [of] good quality and transport costs are low” due to the close proximity of the countries.[13] Although officials in both countries have lauded the dramatic expansion of economic interaction, local producers and some Iraqi politicians have expressed concern that the prevalence of Iranian goods on the market may be hindering the economic recovery of Iraq’s non-oil sectors.[14]

Iranian transportation producers have also been active in the Iraqi market. According to figures cited during an April 2010 interview with Heidari, Iran exports some 40,000 automobiles to Iraq annually. [15]  More recently, in June 2010 Iran’s Oghab Afshan Industrial and Manufacturing Company agreed to produce 300 buses for export to Iraq.[16]

The energy sector has also become a significant avenue for bilateral cooperation. Iran has signed several energy deals with its neighbor, contracting to power a number of Iraqi cities and towns with Iranian electricity.[17] Collaboration has also extended to the development of oil fields located along the countries’ common border. According to the Iraqi Oil Ministry, in September 2009 Iran and Iraq signed a memorandum of understanding agreeing to jointly invest in their commonly-held oil fields.[18] In 2009, energy exports from Iran to Iraq totaled $1 billion, 40% of which consisted of electricity and 30% refined petroleum products.[19]

In January 2010, Iran and Iraq finalized a deal in which Iran agreed to export approximately 19,000 barrels of diesel oil per day to Iraq.[20] The contract, valued between $500 and $600 million, would supply Iraq with Iranian diesel throughout 2010.[21] Later that year, in July 2010, Iranian Deputy Oil Minister Javad Owji announced that Iran and Iraq “have formed a joint working group on gas transfer” that will examine delivery of natural gas to Iraq. Owji, who is also the managing director of the National Iranian Gas Company, added that "we envisage that Iran would be able to supply Iraq with its required gas in the next two years.”[22]

Iran has also expressed interest in utilizing Iraq’s extensive infrastructure to export its domestically produced natural gas to European markets. Iranian Deputy Oil Minister for International Affairs Hossein Noqreh-Kar Shirazi stated in July 2010 that his country was currently investigating the feasibility of an Iran-Iraq-Syria-Mediterranean Sea pipeline.[23]

Although Iran and Iraq have increased energy sector cooperation in recent years, Iraq Oil Report—a publication monitoring Iraqi business and political developments—suggested in July 2010 that recently passed US sanctions targeting Iran’s refined petroleum sector could negatively affect Iraq. The new sanction regime, approved earlier in July, “prohibits any foreign entity from investing more than $20 million in Iran’s energy sector, and bans any sales of gasoline or refinery-related services or equipment to Iran at a value of $1 million per shipment or more than $5 million over a 12-month period.” According to Kenneth Katzman, a specialist for the US Congressional Research Service, “pipelines to or from Iran, gasoline sales to Iran, et cetera, are all now sanctionable.”[24]

Iran has also opened banking institutions in Baghdad—some of which have since been sanctioned by the United States for their support of Iran’s nuclear program—and has established a special taskforce for the development of Iran-Iraq trade.[25] The two states have created several border terminals and added numerous roads to facilitate the transport of tradable items across the border. [26] Furthermore, Iranian officials have proposed creating a joint free trade zone with Iraq to serve as a catalyst for the “development and growth of products and…attract[ing] foreign investments in the industrial sector." Mostafa Matourzadeh, the chief member of parliament of Iran’s Khuzestan province, has claimed that "the existence of a joint free trade zone between Iran and Iraq will facilitate transit of goods.” Iraqi representatives present at the March 8, 2010 meeting reportedly welcomed the Iranian proposal. [27] A month later, in mid-April 2010, the southern Iraqi city of Basra, located only 10 miles from the Iranian border, approved the creation of a free trade zone with its country’s eastern neighbor. According to the proposal, approved by the Basra Investment Commission, a private firm is slated to invest more than $16 million over the next 25 years in the zone.[28]

Province-to-province trade has also become a major aspect of overall economic relations. In July 2009, the two countries signed a memorandum of understanding aiming to remove governmental barriers to trade. During the signing, officials from both sides stressed the importance of trade agreements on the provincial level.[29] That same month, an Iraqi provincial official, Abdul Zahra Kabian of Maysan province (which borders Iran in the south), openly called for Iranian companies to invest in his province, invoking cultural and religious ties between the neighbors and adding that cooperation between Iran’s Khuzestan province and Maysan is critical for both.[30] Iran has also specifically sought to improve trade relations with Iraq’s Kurdistan province, a largely autonomous region in the north of the country. In April 2010, Iran’s Fars News Agency cited reports by Kurdish officials estimating that bilateral trade between the region and Iran could reach $4 billion in 2010.[31] Iran’s ambassador to Iraq, Hassan Kazzemi Qomi, has also stressed the importance of Iraqi Kurdistan in both bilateral trade ties and in the overall reconstruction of the country. Qomi noted in May 2010 that his country “is ready to cooperate in the reconstruction of Iraq, [e]specially the Kurdistan region, and holding different exhibitions to develop economic and trade relations and identifying grounds for investment are means to this aim."[32]

In July 2010, Iranian First Vice President’s Deputy Ali Aqa-Mohammadi met with Iraqi Prime Minister Nouri al-Maliki to discuss the current pace of development of economic ties between the two countries. The sides noted the importance of removing barriers to trade, with Maliki adding that his government is committed to expanding its collaboration with Iran in the fields of electricity and oil production. The Iraqi prime minister further encouraged private Iranian firms to seek greater participation in the country’s economy.[33]

Diplomatic/Military Relationship:

Both Iran and Iraq are Shiite majority countries, though Iraq is governed by a broadly secular government while Iran’s Supreme Leader Ayatollah Khamenei has ultimate authority over Iranian political, religious, and social affairs.[34] Since the fall of Saddam Hussein in 2003, Iran has taken a keen interest in the Iraqi reconstruction effort headed by the United States. Iranian officials have publicly stated that Iran would be happy to replace the US in the reconstruction and have frequently criticized the US’s strategy in Iraq. [35] Iran’s ambassador to Iraq, Hassan Kazemi Qomi, has also claimed that Iran is intent on expanding economic and military ties with its neighbor. [36] Such statements have caused some deal of concern for US and allied forces in the country, as they have on numerous occasions accused Tehran of detrimentally interfering in post-war Iraq. According to Admiral Michael Mullen, the chairman of the US Joint Chiefs of Staff, Iranian weapons have been transmitted to Iraqi insurgents, threatening the security of the new Iraqi government.[37] The United Kingdom also claimed that Iran has been "backing, financing, arming, and supporting terrorism in Iraq."[38] In May 2009, the Iraqi government accused Iran of shelling Kurdish towns on the border between the two countries and summoned the Iranian ambassador to lodge an official complaint.[39] Iran has consistently denied allegations of supporting militias and insurgent groups in Iraq, saying that its own interests would be better served by a stable neighboring country. [40] In June 2009, Iraqi Government Spokesman Ali Dabbaq also dismissed accusations that Iran has played a role in the political and military instability in Iraq, asserting that "[r]elations between Iran and Iraq are friendly and there is no acute or fundamental problem between the two countries."[41]

Despite disagreements, Iran maintains close ties with many Iraqi officials and the two governments increased high-level visits to one another’s capitals in 2009 following Iranian President Mahmoud Ahmadinejad’s first official visit to Iraq in March 2008. [42] Iraqi National Security Advisor Muwaffaq al-Rubay'i traveled to Tehran in July 2009, only ten days after Iraqi Prime Minister Nouri al-Maliki’s visit to the Iranian capital. Rubay’i claimed he was visiting Iran to “strengthen the brotherly relations between the two countries, institutionalize the security agreements with Iran and make some arrangements to carry out the two sides' policies in the region and in international organizations.”[43]

In March 2010, President Ahmadinejad invited Iraqi President Jalal Talabani to attend Tehran’s Iranian New Year celebrations.[44] While in Tehran for the festivities, Talabani met Ahmadinejad, with the Iranian leader noting that “Iran-Iraq relations have been deeply rooted and there have been close ties between the two nations throughout history.” His Iraqi counterpart echoed the remarks, saying that “the Islamic Republic is regarded as a friend and a brother of the Iraqi nation and government.”[45]

Prior to his presidential visit, Talabani met with Ambassador Qomi to discuss bilateral relations and post-election Iraqi politics.[46] During the meeting, Qomi voiced Iran’s support for Iraq’s democratic government and its political platform.[47] Earlier that month, Iran’s Foreign Ministry greeted Iraq’s March 2010 parliamentary elections with apparent enthusiasm, saying in a statement that "the successful and sensational parliamentary election of Iraq, which was held with great presence of all Iraq's political and social groups and strata, indicated once more that against the enemy's conspiracy, this is the will of nations which determine their destiny."[48]

Although positive official statements and rapidly expanding economic cooperation suggest a friendly relationship between the two countries, long simmering border disputes between Iran and Iraq and Iraq-based militant activity against Iran has played a significant role in hindering the advancement of bilateral ties. Disagreements over the exact position of the Iran-Iraq border came to a head in the end of 2009 after Iraq moved to auction development rights to oil fields near the Iranian border. Tehran responded in December 2009 by occupying an Iraqi oil well in Maysan province.[49] Iran disputes Iraqi ownership of the land, claiming that the seized well in fact belongs to the Islamic Republic.[50] The standoff in the area around the Fakka field lasted for three days, ending with the withdrawal of the Iranian forces.[51] Officials in Tehran labeled the incident a misunderstanding, saying, “we think it is a technical and expert issue and the experts of both sides should sit down and look into ... specifying the border areas between the two countries so that such misunderstandings are removed.”[52] Iran and Iraq subsequently agreed to pursue diplomatic negotiations in order to more clearly demarcate the border.[53] In January 2010, Ambassador Qomi claimed that border agreements between the two countries are based on earlier accords which would be used as the starting point in talks to normalize Iran-Iraq border relations.[54] On February 21, 2010, an Iran-Iraq joint committee met in the southern Iranian city of Qasr-e Shirin to launch a workshop group tasked with delineating the border between the two countries.[55]

Further adding to tensions, in June 2010, regional media outlets, including Dubai’s Al Arabiya News Channel, claimed that units of the Iranian military had entered Iraqi Kurdistan in pursuit of Kurdish militant groups. According to reports, the Iranian military began shelling the border region in late May, resulting in the deaths of Iraqi civilians.[56] The Los Angeles Times reported on June 8, 2010 that, following the incursion, a platoon-sized Iranian formation remained positioned on the Iraqi side of the border and had begun constructing a small fortification.[57] Iran vehemently denied the accusations, with Ambassador Qomi telling Iran’s Mehr News Agency that “such claims are meant to undermine the amicable relations between Tehran and Baghdad and to cover up those Arab states' interference in Iraq's internal affairs.” Qomi went on, however, to assert that groups such as the militant “Party for a Free Life in Kurdistan” (commonly referred to as PJAK) have contributed to tensions on the Iran-Iraq border. The ambassador also stressed that "fortunately, there is cooperation and collaboration between Iran and Iraq” in dealing with the group.[58] In July 2010, this assertion appeared to be challenged by General Hossein Zolfaqari, the commander of Iran's Border Guard, who warned that because the “PJAK terrorist group has managed to mobilize some of its forces and equipments to areas within Iraqi Kurdistan… We have (security) issues on our border with the Iraqi Kurdistan region.” Zolfaqari urged Iraq to adopt measures to deal with the group, saying that “the Iraqis should resolve the problems that are created for us on the Iraqi side of the border." The general further noted that Turkey has been successful in suppressing PJAK to the point that Iran experienced “no activity” on the Iran-Turkey border.[59] Only days later, a senior member of the Iranian parliament lent his voice in support of the creation of a counterterrorism treaty among several Middle Eastern and Central Asian states. According to Fatemeh Alia, an agreement between Iran, Iraq, Pakistan, Afghanistan, and Turkey would help ensure that “that state-sponsored-terrorism will be uprooted through cooperation among the intelligence and security forces of these countries."[60]

Further hampering the development of bilateral political ties is the question of war reparations. Ali Larijani, the speaker of Iran’s parliament, has claimed that his country’s government is intent on pursuing payments from Iraq for the damage caused to the country during the 1980-1988 Iran-Iraq war. Larijani stated in late-May 2010 that “the issue of reparations is not an issue that can be forgotten, and we are following up on it.” Although the speaker tempered his comments, suggesting that “the special circumstances Iraq is facing should also be taken into consideration,” other members of parliament noted that Iraq is obligated to pay reparations according to Article 6 of United Nations Resolution 598.[61]

[Click here for more information on Iranian soft power in Iraq.]