02/16/2010, 00.00
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Iran dominates the Iraqi economy

Tehran is especially strong in the field of reconstruction of houses, schools, hotels, shops. Collaborations with Iraqi companies selected according to their proximity to Iranian policies. Tehran's influence is greater today than at the time of Saddam Hussein.

Baghdad (AsiaNews) - The Iraqi government is calling on Iran to urgently meet the commitments made in the field of post-conflict reconstruction and that are waiting to be realized for over a year now. The projects cover major public works: some bridges, three highways and a new city. The Minister for Building and Reconstruction, Bayan Dazaai said that Iraq expected Iranian companies to open up sites as envisaged in the Memorandum of Understanding signed last year between the two majority Shiite nations.

Companies from the Islamic Republic are very active in Iraq, where the Iranian regime exerts a strong influence not only in politics. The aim of constraining the developments in Iraq is motivated by a number of strategic factors, but also by cultural and religious interests.  

Iran is Iraq's biggest trading partner with a trade volume that is forecast to exceed 5 billion dollars in 2010. The economic influence of Tehran has resulted in recent years with the invasion of the Iraqi market of cheap goods (mainly building materials and equipment). The Iranian government has maintained its export paying exporting firms 3% of the value of the product which they sell abroad. This has allowed the sale of Iranian goods below market price squeezing local competition and stifling development. The agricultural sector, once the central economy Iraq, has been impoverished because of the aggressive economic activity of Iran.

The construction sector is still the area where Tehran is most active. Many state companies have invested consistently in post-conflict reconstruction. In 2008, Iran offered a loan of one billion dollars for projects that use Iranian contractors and labour. In February 2009 Iran was awarded the 1.5 billion dollar contract for the proposed construction of a complex of houses, schools, hotels and shops in Basra.  

The building projects in some cases are closely tied to religious tourism, another field in which the influence of the Islamic regime is very strong. Several companies have invested with public participation in the holy cities of Najaf and Karbala pilgrimage sites for Shiite community worldwide. The governor of Najaf, speaks of about 20 million dollars a year for projects to improve infrastructure. The pilgrims who come from Iran each year number in their hundreds of thousands. The Iranian state-owned companies operating in the field t choose with what Iraqi companies to do business for the transport, environmental protection and housing for their clients. The choice is dictated largely by political affiliation, almost all of the Iraqi partner companies are tied to parties that are very close to the interests of Tehran.

Iran has also invested heavily in the banking sector in 2007 a Baghdad branch of the Bank Melli opened. This, according to the U.S. Department of Treasury, is one of the financial instruments through which the Islamic regime gathers material for its nuclear and missile program. The bank also offers financial services to the notorious “Quds” division of the Revolutionary Guard, which provides training to Iraqi militias.   has also invested heavily in the banking sector in 2007 a Baghdad branch of the Bank Melli opened.

Seven years after the American invasion, Tehran has more influence over developments in post-Saddam Iraq than it ever had before.


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