[A-List] Economies of Iraq, Iran, Syria, and Turkey Intertwined
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Sat Apr 7 14:51:24 MDT 2007
Crippled, Iraq leans on longtime enemy Iran for trade
By Edward Wong
Tuesday, March 13, 2007
NAJAF, Iraq: While the Bush administration works to stop Iran from
meddling in Iraq, Iranian air conditioners fill Iraqi appliance
stores, Iranian tomatoes ripen on the window sills of kitchens here
and white Iranian-made Peugeots sit in Iraqi driveways.
Some Iraqi cities, including the oil- producing enclave of Basra, buy
electricity from Iran. The Iraqi government is relying on Iranian
companies to bring gasoline from Turkmenistan to alleviate a severe
shortage. Iraqi officials are reviewing an application by Iran to open
a branch of an Iranian national bank in Baghdad, and Iran has offered
Iraq $1 billion in soft loans.
The economies of Iraq and Iran, the largest Shiite countries in the
world, are becoming closely intertwined, with Iranian goods flooding
Iraqi markets and Iraqi cities looking to Iran for basic services.
After the two countries fought a bitter war from 1980 to 1988, Saddam
Hussein maintained tight control over cross-border trade, but commerce
has exploded since the American invasion. Much of the money is heading
in one direction, though: Iraq is becoming dependent on imports from
Iran and elsewhere because industries here have been gutted by the
economic sanctions of the 1990s and the current turmoil.
"What is happening in Iraq at the moment is a lot of trade, but it's
almost all one-way trade," Barham Salih, the Iraqi deputy prime
minister of finance, said of Iraq's economic ties with Iran and other
neighbors. "If you take oil away, there's a lot of imbalance in this."
Iraqi leaders from the ruling Shiite bloc say that political and
economic ties with Iran, which is governed by Shiite Persians, will
inevitably strengthen. As driving factors they cite the hostility of
Sunni Arab nations to a Shiite-run Iraq and the ambivalence of the
White House toward the devout Shiite parties here.
"If the Shiites do not feel protected, if they feel what they've
achieved can't be maintained, much of the leadership will have to work
with Iran," said Sami al-Askari, a Shiite legislator who advises Prime
Minister Nuri Kamal al- Maliki, himself a religious Shiite with close
ties to Iran. "The Arabs and the Americans are saying Iran is bad, but
it's the only recourse."
According to one commonly cited statistic, trade between Iraq and Iran
has grown by 30 percent a year since the American invasion in 2003.
But American officials here say there are no accurate numbers because
Iran refuses to release figures.
Statistics from the U.S. Embassy's economic section show that Syria
accounted for 22 percent of Iraqi imports in 2005 and Turkey 21
percent. Iran, which has the longest border with Iraq of any
neighboring country, would likely fall in that range, officials said.
The CIA World Factbook estimates Iraq's total imports in 2006 at $20.8
Iran has divulged a few trade numbers. Tehran told the regional
government of the Kurdish north that trade with Iraqi Kurdistan
amounted to more than $1 billion in 2006, said Hassan Baqi, president
of the chamber of commerce in the Kurdish city of Sulaimaniya.
Hoshyar Zebari, the Iraqi foreign minister and a Kurd, said provincial
governments have been making their own commercial deals with Iranian
interests, but that lately he has started ordering them to go through
the Foreign Ministry.
"We have a number of agreements with Iran on energy, on trade, on oil,
on visitors — that is pilgrims, which is very important to them," he
said. "And this is building and really on the border provinces they've
been very helpful. It's a whole network.
"Soon we're going to have a conference of all the border provinces and
Iran to discuss economic ties and our interest," he added.
Here in the Shiite religious heartland of the south, Iraqis have
profited handsomely off the new economic ties with Iran, most notably
in the holy cities of Najaf and Karbala, whose shrines draw Iranian
pilgrims by the thousands each month. The headquarters here of revered
Shiite clerics like Grand Ayatollah Ali al- Sistani also collect
enormous dues from their satellite offices in Iran. That money ends up
in the local economy.
The Iranian government gives the Najaf government $20 million a year
to build and improve tourist facilities for pilgrims, said Asaad Abu
Galal, the governor of Najaf and a member of the Supreme Council for
the Islamic Revolution in Iraq, an influential Iraqi political party
founded in Iran. Karbala gets roughly $3 million a year, Abu Galal
said. In addition, each Iranian pilgrim spends up to $1,000 on hotels,
food and souvenirs.
Provincial tourism officials estimate that at least 22,000 Iranian
pilgrims visit Najaf each month and at least 10,000 travel to Karbala.
Most come on package tours.
"We must increase the number of pilgrims," Abu Galal said.
The close ties with Iran in the south have drawn scrutiny from the
American government, Iraqi officials say. Najaf province had come
close to contracting an Iranian company to build an airport, but the
deal was scuttled at the last minute by the Transportation Ministry in
Baghdad, said Shiite officials with the Supreme Council. They suspect
the Americans of putting pressure on the ministry; the Najaf
government is still trying to find a contractor.
"The Americans don't want to bring Iranians to Najaf," Abu Galal said.
"The Americans want to control the sky."
A senior American official in Baghdad declined to comment specifically
on the Najaf airport project, but said the Americans do look carefully
at major business exchanges with Iran.
"We pay a lot of attention," he said. "We don't want people working
for the intelligence services to get contracts for projects here in
Tensions between the United States and Iran have risen tremendously in
recent months. The White House says Iran has ambitions to develop
nuclear weapons and has been urging the United Nations to impose harsh
sanctions. It has also accused Iranian groups of exporting deadly
explosives to Shiite militias here.
But the senior American official said the growth in trade between Iraq
and Iran was generally a positive thing.
"I wouldn't link the rise in trade with Iran with Iranian political
influence," he said. "As long as this is normal economic activity that
doesn't have security implications, it's a good step."
Cities near the Iranian border have turned to Iran to help alleviate
Iraq's chronic electricity shortage.
Iranian goods have proliferated throughout Iraq. White Peugeot sedans
that began rolling out of Iranian factories in 2005 are sold
everywhere in Iraq — Iranian companies offer attractive financing
packages to Iraqi sellers. In the far south, Basra imports $45 million
of goods from Iran each year, from carpets to construction materials
to fish and spices, said Muhammad al-Waeli, the governor of Basra.
Each day, 100 to 150 commercial trucks drive from Iran to Iraq at the
nearby Shalamcha border crossing.
In the rugged north, Kurdish officials say trade has boomed. "I think
2006 was the biggest year," Baqi said. "But at the same time, export
to Iran from Kurdistan is zero. Agriculture and industry in Kurdistan
are messed up."
In central Baghdad, piles of Iranian air conditioners with brand names
like Sona, Jayan and Aysan Khazar sit next to Chinese television sets
on sidewalks outside appliance stores. The blue-and-white air
conditioners use a water-cooling technology and can run on generator
power, making them popular with electricity-starved Iraqis.
Damien Cave, Alissa J. Rubin and Wisam A. Habeeb contributed reporting
from Baghdad, and Yerevan Adham from Halabja.
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