Iran becomes major trading partner with Iraq

Iran's ambassador to Baghdad, Hasan Kazemi Qomi, said last month that Iran-Iraq trade in 2006 totaled $2 billion — 97 percent of that going from Iran into Iraq. Hossein Tizmaghz, an Iranian Commerce Ministry official, said he hopes trade will soar to $10 billion in five years.

Shalamcheh is one of three major crossings along the 620-mile border.

In the 1980s, it was a dusty battlefield where Iranians and Iraqis exchanged bullets and mortar shells and where Saddam's regime used chemical weapons. Today, its export terminal bustles with trucks as well as Iranian families traveling to Iraq's holy cities for pilgrimage.

The border situation is more complicated in Iraq's Kurdish north. The inflow of goods, including cheap gasoline, booms, but the atmosphere is tense.

Iran has periodically fired artillery across the border in recent weeks at bases used by ethnic militants staging attacks in Iran's Kurdish region. An Iranian envoy warned last weekend that if the Iraqis could not stop the Kurdish raids, Tehran might respond militarily.

There are also tensions in Iraq's south, where there has been fighting between Shiite groups and political parties, some of which have closer links to Iran. But the traffic in commerce and pilgrims remains high.

Each month, more than 40,000 Iranians visit southern Iraq's important Shiite spots such as the holy cities of Najaf and Karbala, buying religious souvenirs and pumping money into the economy by staying in hotels.

Influence large in Basra
Many pass through the south's biggest city, Basra, just over 30 miles from the border. It is has many Iranian cultural and religious centers, and its shops are full of high-quality and cheap Iranian food, kitchen appliances and construction materials.

"The Iranian influence is very large," said Ali Abdul Aziz, a retired Sunni teacher in Basra.

Iran has said it wants to build an airport in Najaf and promises to help renovate important shrines. It also has begun work on a railroad between Iranian port of Khorramshar and Basra, connecting Iran's rail system to Iraq's.

Tehran also has signed a $150 million contract to build a 300-megawatt power plant in Baghdad. Another project, a 400-megawatt electricity transmission line from the Iranian frontier city of Abadan to the Iraqi town of Alharasa is expected to go into operation in a few months.

Iran also is conducting feasibility studies on building two pipelines to carry oil and derivatives from Basra to Abadan.

"Enmity is over," Iranian businessman Bahram Mehrparvar said as he filled out paperwork at the Shalamcheh export terminal for the bricks and cement he exports to Iraq. "Business and trade has replaced bullets and mortars."

More from msnbc.com Reid's plan for getting a health bill passed Joblessness spurs surge in disability claims Cosmic Log: ‘Ardi’ is science’s top 2009 breakthrough Rudolph, the dog, teaches kids lesson Air ambulances leave some with sky-high bills  Gift of giving takes on a whole new meaning Al-Qaida leader’s wife calls women to join jihad Send your holiday pictures to troops

MORE FROM MIDEAST & N. AFRICA

Mideast & N. Africa Section Front

Newsweek: Is Iran playing games with jailed hikers? Pentagon: Insurgents intercepted spy videos Ship carrying dozens sinks off Lebanese coast Yemen: Up to 34 al-Qaida militants killed Moms of US hikers in Iran left in dark about case Car bomb near central Baghdad restaurant kills 3 Mideast & N. Africa Section Front   Add Mideast & N. Africa headlines to your news reader: