Iran and Iraq Relations: Set to Expand Ties in Energy, Agro, and More

President Hassan Rouhani of Iran met with Iraqi government officials in Baghdad.

Rouhani visited a Shia shrine in the heart of the capital of Iraq. Yet the president’s motives for visiting extended beyond tourism.

Reimposed sanctions on Iranian international trade led to Rouhani’s meeting with President Salih and Prime Minister Mehdi. In this meeting, Iran and Iraq nearly doubled their trade ties.

What led Iran to strengthen trade ties between the neighboring countries? And how will these new trade agreements affect US relations with Iraq? Learn the answers to these questions and more below.

Iran and Iraq Sign Agreements

The presidents came to agreements about oil, trade, health, agriculture and transportation routes.

Rouhani and Salih also agreed on bureaucratic reforms. These reforms aim to improve business relationships and transactions between Iran and Iraq. In a statement, the president of Iran thanked the Iraqi government for bypassing US-imposed sanctions.

Iran’s agreements with their neighbors in Iraq may be the only thing to save the country from economic implosion.

Iran’s Deteriorating Economy

Last year, Trump announced that the US was pulling out of the 2015 nuclear deal.

This deal reduced sanctions on Iranian trade in exchange for the country’s agreement to cut back on nuclear ballistics. Trump claimed the original deal did nothing to curb Iran’s efforts to develop nuclear weapons.

Since the Trump administration’s decision, US-imposed sanctions have led Iran’s economy to deteriorate.

Iran has threatened to pull out of the nuclear deal if its economic benefits aren’t protected. But many European businesses are still shying away from Iranian investments.

At the same time, the Iranian oil market has decreased in profit and the Rial has dropped in value. Since Iran and Iraq already have a strong economic relationship, these new trade ties were inevitable.

Hopefully, Iran had a pay stub maker on hand for receipts, though, because Iraq may end up pulling out of these agreements.

The Impact on Iraq

Currently, Iraq is excused from US trade sanctions imposed on Iran. That leaves the country vulnerable now that they’re powerful trading allies with Iran.

Yet the Iraqi government must see some benefit to these new agreements. Benefits, one must assume, that will outweigh the cost of angering Trump.

Indeed, Iran and Iraq aren’t just partners in trade. Iran exerts considerable military and political influence over the neighboring country.

Senior officials from Iran often propose business to the Iraqi government and vice versa. During the Islamic State uprising in Iraq, Iran offered militant aide. Today, Iran continues to provide weapons and training to Iraqi paramilitary forces.

Some Iraqis worry that the paramilitary holds more allegiance to the Iranian government than to their home country.

What This Means on a Global Scale

From the EU’s declining investiture to a possible US fallout with Iraq, it is clear Iran’s economic troubles are making global waves. There’s no telling which global powers will get involved with the economic troubles in the middle east next.

The Trump administration has yet to respond to the new agreements between Iran and Iraq.

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