Alwaght- Whereas the US in recent months tried to hamper Iranian-Iraqi business ties with new financial policies, the two countries are moving to a trade relations increase based on their past economic agreements.
As a continuation to bilateral economic ties, Iran’s Minister of Economy Ehsan Khandozi visited Baghdad heading a high-ranking delegation for the fifth Joint Economic Commission’s meeting and also for discussing expanding economic and trade relations with Iraqi officials.
The first session of bilateral talks was held on Monday with the presence of the officials of the two countries, and the two parties discussed the increase in the level of relations in various fields. The meeting ended on Tuesday and Khandoozi signed with his Iraqi counterpart Athir Salman Dawoud the minutes of the meeting.
Ali Fekri, head of Iran’s Investment, Economic and Technical Assistance Organization, Hojatullah Abdulmaleki, secretary of the High Council of Free Commercial-Industrial and Special Economic Zones and a group of senior managers of the ministry of economy were also part of Iran’s delegation. Also, the deputy ministers of oil, road and urban development, the secretary of the economic commission of the government and a number of senior managers of the ministry of economy also accompanied the minister to Iraq.
Achievements of economic summit
The bilateral negotiations were described as “positive”, and in the day one, an MoU on transportation, trade, power, water, energy, and banking and financial interactions was signed.
In a press conference with the minister of trade of Iraq, Khandozi commented on the goals of this meeting, saying: “The capacity of interaction between Iran and Iraq is far beyond the numbers recorded in the joint trade document of the two countries. The two countries have a serious will to realize their common dreams, and the Joint Economic Commission of the two countries is one of the most important tools to realize the will of the two governments of Iran and Iraq to remove obstacles to the expansion of economic relations.”
“We hope that with the resolution of the problems, we will see greater trade volume between the two countries in the new year,” Khandozi further said. Referring to the pragmatic approach in the meetings of the joint commissions. He further said: “In the five committees under the commission, agreements have been reached, which we hope the basis for their implementation be provided.”
The Iraqi trade minister thanked Iranian delegation, saying: “We hope that at the end of the fifth round of the summit, maximum attention will be paid to the implementation of the agreements.”
Mohammadreza Pour-Ebrahimi, head of the economic commission of the Iranian parliament, said in this meeting that the Iranian parliament voiced its “firm support” to implementing the goals defined in the Joint Economic Commission of Iran and Iraq, and “we are ready to remove the legal obstacles in the banking sector.”
The minister of economy in a phone conversation with Islamic Republic of Iran News Network (IRINN) pointed to the details of the joint meeting. He said that the two sides reached understandings regarding the removal of investment obstacles for Iranian companies in power, industry, and mining sectors, joint water projects, the transit capacities of Iran and Iraq, solving the chronic problem of the Shalamcheh-Basra railway, and constructing three joint industrial parks in the border regions of the two countries.
Referring to his talks with the Iraqi Prime Minister Mohammed Shia al-Sudani, Khandozi said: “During my meeting with the Iraqi prime minister, he emphasized on quick implementation of the agreements and we hope that we go beyond the 20 percent we targeted in last year’s trade for the new year.... Although some third parties and hostile sides do not want our economic relations to go beyond the current levels, very good investment opportunities exist in the Iranian technical and engineering sectors and knowledge enterprises. There are high capacities to activate the Iraqi infrastructure, projects, and markets by the Iranian companies. We do our best to remove the obstacles in the commission enactments.”
Also, Ahmad Jamali, the economic deputy director of the Iran’s High Council of Free Zones, announced the agreements and understandings for the establishment of a joint free trade zone between Iran and Iraq. According to Jamali, the two sides agreed to open their representation offices in each other’s free zones and designate a zone as a joint one in the coming months.
Mohammad Kazem Al Sadegh, Iran’s ambassador to Iraq, said that there was a serious will between the two countries to launch the Shalamcheh-Basra railway, and this issue was emphasized during the visit of Iraqi PM to Tehran in November.
Positive effects of the summit on trade boost
Iran-Iraq Joint Economic Commission was launched in 2018 and the fourth summit was held in January 2021. Officials suggest that these meetings have left positive influence on expansion of trade relationship between the two countries, and the economic data show a cooperation boost between them. After China, Iraq is Iran’s second largest trade partner and is the largest importer of Iranian goods, and due to its traditional banking structure and lack of connection to the US-dominated international banking system, SWIFT, it has helped Iran a lot in circumvention of Western sanctions in recent years.
According to figures, the volume of trade between Iran and Iraq from April 2022 to January 2023 was $9 billion, and during this period, Iran’s exports to Iraq increased by 23 percent to over $8.9 billion and imports from Iraq decreased by 84 percent to $146 million. The volume of trade between the two countries has been targeted at $20 billion, and due to the increase in bilateral exchanges, touching this figure in the coming years is not beyond reach.
Holding joint economic summits comes as the administration of President Seyyed Ibrahim Raisi put high on its agenda boosting cooperation with the neighbors, and Iraq is one of the countries with which it is highly significant to improve trade. Although, due to the US sanctions, the Iraqi government is facing a serious problem making foreign currency transfers to Iran, part of these foreign currency sources are transferred to Tehran through various ways, and for this reason, the US has tried in recent months to cut off Iranian access to its assets in Iraq, a move that drew a sharp reaction from the Baghdad authorities. Despite all the American obstructions, Iraqi government is trying to pay Iran’s debts to avoid interruptions to bilateral trade.
In this connection, some sources reported in recent days that $500 million of Iranian assets in Iraq will be released soon, and if the currency transfers to Iran are facilitated, this issue will help in increasing exports to the western neighbor. According to unofficial statistics, Iran has between $10 and $20 billion foreign currency reserves blocked in Iraq, and if released, they can propel a major progress in the Iranian economy.
Moreover, the two countries are keenly following expansion of trade relationship, with the Iraqi side voicing its will for improvement of ties at all levels. Last month, Iraqi Foreign Minister Fuad Hussein announced that his country had received the US green light to continue power and gas imports from Iran. A large part of Iraq’s power and gas needs are met by Iran, and since Iraqis desperately need these energy sources, they can buy more power and gas from Iran if the US obstacles are removed.
As one of the important West Asian countries, Iraq can be one of the Iranian non-oil export markets, and if the Shalamcheh-Basra railway goes operational, the process of transferring goods will be done easily and in the shortest possible time and at a lower cost, and both countries are trying to finalize the project as soon as possible.
In addition to trade, Iraq has upgraded its relations with Iran politically over the past two years. The country hosted five rounds of Iranian-Saudi dialogue for mending ties. The Iraqi efforts were completed by China, and Riyadh and Tehran signed a détente agreement in Beijing on Friday.
0ver the past year that major changes occurred on the world’s geopolitical and economic stages, regional countries were motivated to shore up their trade and economic ties. Iraq and Iran, too, are pushing to strengthen their bilateral cooperation under their “pivot to the East policy” in this tough world atmosphere.
