Iran’s exports to Iraq exceeded $10 billion in the last Iranian year (March 2022-23), which marks a record high, registering a 15% rise compared with the year before, according to Farzad Piltan, director general of Iran's Trade Promotion Organization's West Asia Department.
Iraq is one of the main destinations for Iran’s agricultural and food products, as well as mineral and mining industries’ exports.
According to Rouhollah Latifi, a customs expert, the export of natural gas, steel ingots, dairy products, plastic products, urea fertilizer, oranges, eggs, direct-reduced iron (DRI), pipes and profiles, transformers and metallic mineral industries registered growth in the last Iranian year.
Iraq alone accounted for 37% of Iran’s total agricultural and food exports in terms of tonnage in the fiscal 2021-22, the official had said earlier.
“Historical, cultural and religious commonalities between Iran and Iraq and their development of political and economic relations have increased Iran's non-oil exports from $145 million in the fiscal 2001-02 to $9 billion in the fiscal 2019-20,” he said.
“Last year’s [2021-22] exports hit 30 million tons worth $8.92 billion. In recent years, Iraq has become the second-largest export destination of Iranian goods in the world and the top destination among Iran's neighbors.”
According to Amir Sabagh, an official with the state-owned mining holding, Iranian Mines and Mining Industries Development and Renovation Organization, Iraq accounted for about one-fifth of Iran’s total steel exports during the first half of last Iranian year (March 21-Sept. 22).
According to Behnam Aziz-Zadeh, the head of Tile and Ceramic Manufacturers Association, in the fiscal 2021-22, Iraq was the main destination of Iran’s ceramics and tiles, as the neighboring country accounted for 70% of total exports.
“Iraq meets 84% of its tile and ceramic demand from Iran,” he was quoted as saying by IRIB News.
According to Latifi, Iran registered its first jump in exports to Iraq in the fiscal 2005-06 with $1.22 billion worth of shipments, which figure reached $2.76 billion in the following years.
The second jump was in the fiscal 2009-10 with $4.56 billion of exports.
The third jump was registered in the fiscal 2012-13 with $6.34 billion, and the last jump was in the fiscal 2018-19 with $8.99 billion, he added.
Piltan noted that imports from Iraq stood at $200 million during the same period and included auto tires, cement and fabrics.
Iran also imports wheat, barley, oil, corn, soybean, rubber, paper, cereals, machinery, scrap metal, home appliances, electronic equipment and measuring devices from Iraq.
“Iran’s imports from Iraq, which mostly included essential goods, reached a record high of 2.7 million tons of goods worth $1.2 billion in the fiscal 2021-22,” Latifi said.
Iran's total imports during 2000-20 stood at 1.31 million tons worth $1.33 billion. In other words, fiscal 2021-22 imports was more than the volume registered during the two decades.
Kermanshah Province in western Iran shares around 371 kilometers of common borders with Iraq and the Kurdistan Region. The province accounts for around half of Iran’s annual non-oil exports to Iraq.
Tehran is scheduled to host the Iran-Iraq Industrial Cooperation Conference on May 1 from 10 a.m. to 12 p.m.
Rail Connection in the Making
Iran and Iraq have agreed to start construction of the long-planned 32-km railroad from Shalamcheh in Iran to Basra in Iraq after the end of Ramadan (April 20), according to Iran’s deputy foreign minister for economic diplomacy, Mehdi Safari.
“Iraq has allocated a budget of nearly $230 million for the Shalamcheh-Basra railroad and this is happening for the first time,” Safari was quoted as saying by the International Railway Journal.
He was speaking after Iraq’s transport minister, Razzaq Muhibis Al-Saadawi, visited Tehran to finalize bilateral agreements and projects, including the cross-border railroad.
Al-Saadawi met with his Iranian counterpart, Mehrdad Bazrpash, who said that the first phase of construction will involve demining the border area that has remained inaccessible since the end of the Iran-Iraq War in 1988.
This would be followed by work to build an 880-meter moveable bridge across the Shatt Al-Arab River in Iraq, undertaken by Iranian contractors.
Tracklaying is due to start at the same time, with other infrastructure work to be undertaken by Iraqi Republic Railways.
Spokesperson of the Iranian Foreign Ministry, Nasser Kanaani, announced on Monday Iran’s acceptance of bridge construction on the Shatt Al-Arab River linking it with Iraq, Iraqi News reported.
Kanaani, during his weekly press conference, explained that the Iranian-Iraqi relations are good, and have witnessed many achievements.
“Iran accepted the construction of a bridge on the Shatt al-Arab River between Iran and Iraq,” Kanaani stated.
The new railroad is expected to take 18 months to complete. Introducing a rail link between the two countries is forecast to provide a major stimulus for both passenger and freight traffic between Iran and Iraq, including religious tourism.
Connecting Shalamcheh and Basra will also complete a missing link in the region, potentially connecting Iran’s major rail network with Syria and Jordan via Iraq.
According to Al-Monitor, the Islamic Republic of Iran Railways revealed details of a plan to connect Basra with Shalamcheh in 2018. However, the Iraqi side has failed to build the railroad from Shalamcheh to Basra so far due to economic problems and a shortage of funds.
"For almost 20 years, we have had numerous negotiations with Iraq for the implementation of the Shalamcheh-Basra railroad, and there were even many agreements in different periods, which never reached the desired result,” said former Iranian roads minister, Qasem Rostami, after a visit to Iraq in late 2021.
In 2015, the then-roads minister, Abbas Akhoundi, traveled to Abadan to start the extension of the railroad to the border from Khorramshahr to Shalamcheh which borders Iraq.
In order to complete the Shalamcheh-Basra railroad, the 17-kilometer Khorramshahr-Shalamcheh railroad was completed in 2011 to connect Iranian railroads to the Iraqi city of Basra.
The project is aimed at facilitating the travel of Iranian pilgrims, especially during the Arbaeen pilgrimage season and travelers could use this rail link from Iran via Basra to Karbala and other holy cities of Iraq.
While Iraqi passenger and freight trains are using the rail link of Basra to Karbala, Iranian pilgrims have been travelling by train from Tehran to Shalamcheh and from there after a 32-km trip by bus to Basra and depart from Basra to Karbala by Iraqi train.
The importance of this project, according to IRIR CEO Miad Salehi, is the completion of the east-west corridor.
"Our goal is to establish transit corridors and fix any deficiencies," he said at the time of signing the joint cooperation agreement.
The Iranian authorities have always emphasized that completing the railroad will create an east-west rail transit corridor to the shores of the Mediterranean Sea, passing through Iraq to Syria reaching the port of Latakia. It can bring many benefits to the three countries.
Since Iraq is one of Iran's largest economic partners, the connection could allow Iran to increase its trade with Iraq, Syria and Europe.
Today, Iran is connected to many surrounding countries, such as Russia, Turkey and Pakistan. The construction of the Shalamcheh-Basra railroad will connect Iraq to all of Iran, as well as to Afghanistan, Pakistan, the Caucasus, Central Asia, and the Far East. In addition, Iraq may in the future be on the transit route of goods between the south and the Arab countries of the Persian Gulf region with Central Asia and Russia.
According to Rostami, although the initial agreement was to have a 50% stake, Iran will take a larger share of the investment, if the Iraqi side agrees. He stated that this connection is very important for Iran and Iraq both in terms of transit issues and passenger movement, especially for the Arbaeen pilgrimage, when millions of Shias travel to Iraq for visiting Imam Hussein’s (AS) holy shrine, and the relationship between the two countries.
