Leap in Trade Relations with Iraq
Turkey and China are Iranís biggest rivals in Iraq. Saudi Arabia,
India and Jordan are also penetrating the Iraqi market, which shows
that access to the Iraqi market is becoming increasingly difficult.
With the arrival of the Iraqi Prime Minister Mustafa Al-Kadhimi in Tehran
(mid-September), a new chapter in Iranís cooperation with this western
neighbor began. During the meetings of this Iraqi government official with
the Iranian officials, the horizon of trade relations between the two
countries at the level of $30 billion was drawn.
The increase in trade between the two countries has been compiled while last
year the volume of trade between the two countries was $7.582 billion. A
review of Iranís customs statistics shows that exports to Iraq in 1999 were
worth $7.448 billion, although imports were limited to $134 million. On this
basis, it seems that achieving the stated goal will not be possible any time
The difficulty of achieving this figure becomes clear when Iran is working
hard to develop exports to Iraq. Studies show that market opening in Iraq is
not an easy task, while the power of regional actors is changing every day.
This means that Iranís competitors are stubbornly seeking to increase their
share of the Iraqi market, which will put more pressure on exports to that
Of course, this analysis does not mean that it is not possible to increase
trade with Iraq, but it does mean that the realization of trade goals has
requirements that must be considered by the countryís trade authorities so
that this goal is not left only on paper.
Last year, exports to Iraq accounted for 21.3% of Iranís total exports in
terms of value. This shows that Iraq is still the second largest export
destination among several major destinations. A review of statistics shows
that in 1999, the volume of goods exported to Iraq was 25.670 million tons,
which was worth $7.448 billion. But imports from this country weighed
103,000 tons and were worth $134 million, which increased Iraqís value share
of total imports to 0.34 percent.
Another important point regarding trade with Iraq is the trade balance with
this country. In fact, the most positive trade balance of Iran among all
trading partners is in trade with Iraq, which is positive $7.314 billion;
but trade is a two-way street that balances imports and exports and ensures
the benefit of both parties. This is one of the things that can create
serious obstacles in the development of trade between Iran and Iraq.
In fact, a careful study of Iran-Iraq exchanges shows an imbalance in the
exchanges between the two countries. Last year, Iraq was not among the 20
countries of import origin for Iran and was the sixth source of imports
among the 15 target countries. Of course, in recent months this neighboring
country has been among the 20 countries of origin of imports. The imbalance
in exports and imports to Iraq appears in the statistics while Iranís rivals
in this market are increasing their share day by day.
Turkey and China are Iranís biggest rivals in Iraq. Saudi Arabia, India and
Jordan are also penetrating the Iraqi market, which shows that access to the
Iraqi market is becoming increasingly difficult. Therefore, in order to
advance in this market, requirements must be considered. Yahya Ale Ishaq had
recently mentioned these requirements in an interview with Fars News Agency.
He said that Iraq has many comparative advantages for developing trade
relations, and that this market cannot be ignored in various fields,
including technical and engineering services and trade.
At the same time, the economic potential of the Iraqi market has made it
difficult for us to maintain this market because the country has the largest
investment capacity in the region for the next 15 years, and therefore in
the near future with a huge volume of economic and trade contracts from
competitors. According to Ale Ishaq, the production and export of Iraqi oil
makes it possible for the country to pay for development projects, and the
country has a large market for investment and consumption that should not be
He also noted the expansion of Saudi Arabiaís presence in the Iraqi market:
ďUntil recently, there was only one active border between Saudi Arabia and
Iraq, but now Saudi Arabia is trying to expand the common border so that
economic actors can travel more between the two countries.Ē According to
this economic activist, Iran should change its approach in order to develop
trade with Iraq, and just as the establishment pays much attention to Iraq
in the security and political dimensions. It should also increase its
support in the economic dimension.
However, the government is not very supportive in the economic dimension and
does not pay much attention to this issue because the profit of the
development of economic relations will benefit the private sector.
While our security is linked to economic development, the government must
look at economic development from a security perspective. Ale Ishaq stated:
ďGovernment support is needed in all sectors of the economy, including
finance, banking, marketing information, litigation, trade agreements, and
transportation. Provide development of trade and economic relations between
the two countries. To develop trade relations between the two countries, we
also need joint trade agreements and joint venture investments.