March 2, 2008 / 7:07 AM / 10 years ago

FACTBOX: Trade between Iraq and Iran

(Reuters) - Mahmoud Ahmadinejad arrived in Iraq on Sunday for the first visit by an Iranian president since the 1979 Islamic revolution in Tehran. Here are key trade facts about the two neighbors.

* Iraq is Iran’s second-largest non-oil export market. It bought about $1.3 billion worth of goods from Iran in 2006, according to a U.S. Congressional Research Service report in January. Estimates for non-oil trade since 2006 have ranged as high as $2 billion, almost entirely one way from Iran to Iraq.

* Iran said two days before Ahmadinejad’s visit that Tehran is offering a $1 billion loan to Baghdad, a long talked about deal that will cover “basic projects” to be executed by Iranian contractors using Iranians goods and equipment.

* Similar taxation, joint investment and customs deals have been discussed, as well as an oil pipeline between Iran’s Abadan and the southern Iraqi oil hub of Basra. A joint venture bank established by existing Iraqi and Iranian banks and joint companies in cement, car manufacturing, food, textiles, petrochemicals and agriculture could also be discussed during Ahmadinejad’s visit.

* Iraq imports a wide variety of consumer goods and food from Iran, ranging from air conditioners, carpets, building materials and office furniture to fish, spices and melons. Hundreds of trucks pass through border checkpoints every day -- Iranian trucks drive up to border “transloading” points where their goods are unloaded on to empty Iraqi trucks. Fuel trucks are the only Iranian vehicles allowed to cross the border. A free trade zone in southern Iraq has encouraged a boom in Iranian products in Basra, Iraq’s second-largest city, including cooking gas and kerosene.

* Iraq currently produces 2.5 million barrels of oil per day from proven crude oil reserves of 115 billion barrels, reserves surpassed only by Saudi Arabia and Iran. Iran has offered to help Iraq develop untapped fields. The two countries share many oil fields, including Naftshahr, Paidar-e Gharb, Azar and Azadegan.

* Minor skirmishes are infrequently reported in disputes over the shared fields. Iran has also shelled areas in north Iraq as it, like Turkey, targets Kurdish guerrillas who use remote bases from which to launch attacks in their fight for a separate Kurdish homeland.

* Pilgrimages are also big business between the two countries. About 500,000 Shi‘ite pilgrims from Iran visit Iraq each year, many of them to shrines in the southern cities of Kerbala and Najaf. Between 1,500 and 2,000 Iranians are permitted to enter Iraq each day. Iranian authorities have said they hope the number of Iranians visiting Iraq each year can be increased to about three million. About one million Iraqis visit holy sites in Iran every year. Hundreds of Iranian religious scholars are sent to study in Kerbala and Najaf each year.

Compiled by Paul Tait

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