ERBIL, Kurdistan Region – Iraqi and Iranian leaders on Monday signed a number of agreements in a range of fields, including oil and transportation. Iranian President Hassan Rouhani is in Baghdad on a three-day visit to shore up ties while the United States continues to pressure Iraq to distance itself from its neighbour.
The deals were inked after talks on Monday covering oil, trade, health, transportation – establishing a railway between Iraq’s port city of Basra and the Shalamja border crossing, building industrial cities along their shared border, and easing visas for business and investment.
“We know the difficulties the Islamic Republic is going through, and Iran knows the difficulties Iraq is experiencing. We are cooperating and thoroughly understanding these situations and how we can help each other,” said Iraqi Prime Minister Adil Abdul-Mahdi in a joint press conference with Rouhani on Monday evening.
The two countries will do their best to bolster security and establish peace, Abdul-Mahdi added.
They signed a total of 22 agreements on Monday, according to IRNA.
Iran, currently bowed under the weight of US sanctions, wants to bolster trade with Iraq and increase its current trade volume from $12 billion to $20 billion. However, without banking sectors connected to each other, that is difficult.
“In terms of banking matters, which is one of the important issues between the two countries, we emphasized the quicker execution of the agreements that were done between the two central banks, as well as the commercial banks that can bank with each other and we have agreed to take the required steps,” said Rouhani in the joint presser.
The two central banks signed a deal in February to facilitate Iranian exporters using Iraqi banks.
This could get Iraq into trouble, warned Fazil Nabi, a former undersecretary in Iraq’s Ministry of Finance. The US carefully watches banking transactions and could sanction Iraq for banking transactions with Iran, he explained.
The US is also pushing Iraq to wean itself off of Iranian imports of electricity and gas, something Iraq says it can’t do. Baghdad has already inked deals with Tehran to keep buying Iranian electricity.
Rouhani said they have “very good relations” when it comes to energy and can expand even further.
“Iran exports the required electricity to Iraq as well as gas and we have announced that we are eager to export more electricity. We can extend these agreements. In regards to oil matters, we are able to provide required facilities towards agreements between the two countries,” he said.
They are ready to offer their “power” and “services” in rebuilding Iraq and they wish to develop security ties in countering terrorism, Rouhani added.
Brian Hook, US special representative for Iran and senior policy adviser to US Secretary of State Mike Pompeo, questioned Rouhani’s visit and Iran’s intentions in Iraq
“President Rouhani coming to Iraq is not in the interest of the Iraqi people,” Hook told Iraq’s Al-Hurra TV.
“I think what Iran would ultimately like to see happen is Iraq turn into a province of Iran so that they can create a military highway across the northern Middle East that the Iran Revolutionary Guard Corps can use to ferry missiles and weapons,” Hook asserted.
Washington gave Baghdad a waiver from sanctions to give it time to find an alternative electricity source. That waiver is about to expire and the US has not issued an extension.
Abdul-Mahdi has given directions to finalize a deal with the American company General Electric to help Iraq develop, rebuild, and bolster its electricity grid.
But Iraq says it would need years to wean itself off its dependence on Iranian electricity imports. This dependency will be evident when the summer heat returns. Electricity shortages were one of the factors that sparked deadly protests last summer.