Iran becomes major trading partner with Iraq

updated 3:19 p.m. ET Sept. 14, 2007

SHALAMCHEH, Iran - Trucks line up every day at this border crossing to carry melons, cookies, soft drinks and appliances into Iraq. For truck driver Ala Saeedi, the booming trade is proof his country is helping its war-torn neighbor.

This spot in southwestern Iran, he notes, "was once the scene of chemical attacks by Saddam (Hussein) against Iranian troops. But now it's used for trade. ... Iran is meeting the daily needs of Iraqis."

More than four years after the U.S.-led invasion toppled Saddam, Iran's influence from trade links to political sway has never been greater — a fact bedeviling the United States as President Bush pledges American troops will remain in Iraq in large numbers.

In his speech Thursday night, Bush warned that a U.S. pullout would encourage Iran "in its efforts to gain nuclear weapons and dominate the region."

Washington also has long accused Iran of sending arms and even fighters to help Shiite Muslim militias in Iraq that target U.S. troops, and both British and American commanders have called the fight in parts of Iraq a "proxy war" by Iran.

Iran disputes those allegations, saying it doesn't meddle inside Iraq and isn't trying to acquire atomic weapons.

But Iranian officials do agree they play a strong role in Iraq, much as they do with the trade and aid they provide to Afghanistan on their eastern border, as Tehran seeks to increase its regional influence.

"The Iraqi government and nation are close friends of Iran," Iranian President Mahmoud Ahmadinejad said in an interview this week. "We are natural allies."

Shiite connections
Complicating the U.S. position, Iraq's Shiite-dominated government itself has sought close trade and political ties with Iran, whose people are predominantly Shiite.

Iraq and Iran were hostile to each other throughout Saddam's reign, including fighting a long and destructive war through most of the 1980s. But when Saddam's Sunni regime fell and Iraq's Shiite majority took power, long-standing historical, religious and cultural ties between the Shiites of both countries flourished again.

These days, Iran's influence still is most apparent across Iraq's mostly Shiite south. But it is also felt in Kurdish northern areas and even in Baghdad, where many new reconstruction projects — such as improving Iraq's electricity grid — are financed by Iranian investment.

"Decades of war and U.S. invasion have destroyed almost everything in Iraq. And Iran is well prepared to make good use of this opportunity to flood Iraqi markets with goods and services," said Saeed Leilaz, an economic and political analyst in Iran.

The export of goods to Iraq brings both money and influence, he noted. "Iranian products are sold everywhere in Iraq. This never happened before. Iran is playing a clever game," he said.

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