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The American Spark
Iran Is Growing Player In Iraq Economy
By Cliff Montgomery - Mar. 20th, 2007
As the Bush Administration attempts to stop Iran from "meddling in Iraq"--an ironic charge from this White
House to say the least--Iranian cars fill remaining Iraqi showrooms and Iranian tomatoes ripen on the
windowsills of Iraqi kitchens.
Some cities in Iraq, including Basra--the southern oil center--buy or hope to buy electricity from Iran. The Iraqi
government already relies on Iranian companies for gasoline from Turkmenistan to alleviate severe shortages.
Iraqi officials are even reviewing an Iranian application to open a branch of one of its banks in Baghdad. Iran
has further offered to lend Iraq $1 billion of much-needed funds.
As Iraq and Iran constitute the largest Shiite-majority countries in the world, it's perhaps inevitable that they
would become closely integrated. Iranian goods now fill Iraqi markets and Iraqi cities rely on Iran for even basic
Sunni strongman Saddam Hussein maintained a tight control over cross-border commerce; trade has
exploded since the American-led invasion of 2003, however.
But like most globalized economies, much of the money is heading in one direction. Iraqi industries have been
ravaged by the economic sanctions of the 1990s and the growing civil war. Post-war realities have lagged so
far behind the expectations of ordinary Iraqis that cheap goods from Iran and neighboring countries usually
provide their only comforts these days.
“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 for finance, told the New York Times in a recent interview.
“If you take oil away, there’s a lot of imbalance in this,” he added.
Iraqi leaders from the ruling Shiite bloc say political and economic ties with Iran--a neighboring country also
governed by Shiite Persians--can only strengthen. 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 as driving factors.
“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 lawmaker who advises Prime Minister Nuri
Kamal al-Maliki, himself a religious Shiite with close ties to Iran.
But of course, this is another attempt by those in the Middle East to refuse responsibility for their own actions.
The main reason for this trade is evident: Iranians are of their own kind, they speak the language of Iraqi
Shiites, belong to the same ethnic group and think the same way. The obvious mistakes of the U.S. and others
serve only to strengthen those ties.
The C.I.A. World Factbook places Iraq’s total imports in 2006 at $20.8 billion. Statistics from the American
Embassy’s economic section reveal that Syria accounted for 22 percent of Iraq’s imports in 2005, and Turkey
21 percent. Iran's exports would likely fall in that range, say officials.
Iraqi foreign minister Hoshyar Zebari, who is a Kurd, told the Times that provincial governments have been
making their own commercial deals with Iranian companies, but that he's recently ordered 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,” said Zebari.
In Iraq's southern Shiite religious heartland, Iraqis have profited handsomely from the country's new economic
ties with Iran. This is especially true in the holy cities of Najaf and Karbala, where shrines draw Iranian pilgrims
by the thousands every month.
The Iraqi headquarters of revered Shiite clerics like Grand Ayatollah Ali al-Sistani reap enormous dues from
Iranian satellite offices. Such money boosts the local economy.
Border cities in post-war Iraq also have turned to Iran to help alleviate their now chronic electricity shortages.
When construction on transmission wires is finished this summer, Basra--the country’s second-largest city--will
soon have the capacity to draw 250 megawatts of power from Iran at 5.2 cents per kilowatt-hour, said Karim
Wahid, Iraq's electricity minister.
Iranian goods now flow through Iraq. White Peugeot sedans which began rolling out of Iranian factories in
2005 are sold everywhere in war-torn Iraq.
Books published in Iran now fill Iraqi bookshops. The books are cheap because the Iranian government
subsidizes printing costs by up to 60 percent, according to Safaa Dawood Salman, the owner of a cramped
bookshop on Baghdad’s famous Mutanabi Street.
“The books are cheaper than before,” 29-year-old Shayma Said told the Times as she handed Salman a
10,000-dinar note--about $8--for a hardcover Iranian-printed book on the teachings of the Prophet Muhammad.
“I want to buy the three other books in this collection when I save up enough money,” she added.