The Iranian President Mahmoud Ahmadinejad’s visit to Iraq last month was a mixture of business and politics. Widely described as historic, this visit was the first by an Iranian leader in 29 years, and it was meant to further cementing bilateral relations between the one-time warring countries

THANKS to this visit, Iran, as many observers opine, has gained a footing in the Iraqi economy, as Tehran has shrewdly filled a vacuum long ignored by Arab states since the fall of Saddam Hussein’s regime in 2003. Many also argue that Ahmadinejad dared stay overnight in the occupied Iraqi capital bore testimony to the fact that Iran’s military is heavily present in Iraq.

Ahmadinejad made political capital too of his two-day visit. It was an opportunity to indirectly lash out at the United States, calling upon it to take its occupation forces home. “Foreigners were the cause of Iraq’s ruin and had evoked only hatred from Iraqis,” said Ahmadinejad before concluding his visit. The Iranian leader was keen to avoid mentioning the United States by name, although there was no doubt about the target of his criticism. “We believe the forces that came from overseas and traveled thousands of kilometers to reach here must leave the region and must let the people of this country rule themselves,” he added. He went on lashing out at the governments that sent troops inside Iraq, saying that “if they claim they want to spend their money developing the people of these countries, they’d be better off spending the money on their own countries,” he said. “Their only achievements are that… no one likes them,” he added.
Business, also, was at the crux of the Iranian President’s visit. Emphasis on the business nature of the visit was highlighted by the fact that most of the Iranians in Ahmadinejad’s entourage were experts in the fields of economy and energy, rather than security. Before this visit, Iraq has been Iran’s largest export market, since the former imported an estimated $1.3 billion in goods from Iran in 2006, according to U.S. figures. Estimates for non-oil trade since 2006 have ranged as high as $2 billion, some 97 percent of which is one way from Iran to Iraq. In addition, Iran expects trade between the two neighboring countries to soar to $10 billion over the next five years.

Cooperation in the oil sector has effectively started at the end of last year when Iraqi prime minister signed in Tehran an agreement to lay a pipeline taking Iraqi oil to Iranian refineries in Abadan. This was a bid to link southern Iraq’s oil to the Iranian oil fields and installations on the eastern bank of the Shatt Al-Arb opposite Basra.
The Americans, who control and defend the southern oil fields, then let the agreement be signed, although they are in competition against Iran in Central Asia and Turkey. Apparently, the Bush administration was then willing to include southern Iraq and its oil fields in the overall package of Iraq understandings with Tehran.
During Ahmadinejad’s visit, two agreements on electricity supply were also signed: one is a 400-megawatt electricity line running from the Iranian port city of Abadan to the Iraqi town of Alharasa, which is expected to become operational this year and the second is on a transmission line that will run from the Iranian Kurdish city of Marivan to Panjwin in Iraqi Kurdistan. Tehran has already signed a $150 million contract last year to build a 300-megawatt power plant in Baghdad, and it supplies power to Khanaqin, in Iraq’s Diyala Governorate.

The visit, in fact, was aimed at furthering energy security issues, as Iran’s Deputy Energy Minister Mohammad Ahmadian said that Iran intends to link its power networks to Iraq through nine border points.
Of more importance was the issue of smuggling Iraqi oil to Iran, which caused Iraq to lose hundreds of millions of dollars a year, according to Iraqi officials. The head of Iraq’s Supreme Audit Board said last October that at least 15,000 barrels of crude oil are smuggled everyday from Iraq’s southern fields to Iran and the Persian Gulf states. In fact, some analysts argue that the figure could be significantly higher. In January 2007, however, U.S.-based petroleum expert Jerry Kiser argued that up to 300,000 barrels per day are smuggled from Al-Basrah to Iran through smuggling routes established by Saddam Hussein when Iraq was under UN sanctions in the 1990s.

The visit has further thawed relations between the two countries. Iraqi Prime Minister Nouri al-Maliki and President Jalal Talabani could now have a more direct contact with Tehran for dialogue on Shiite trouble spots. Iraqi officials are seeking Iranian help in keeping a lid on Shiite factions clashing for control in the oil-rich south.