Iran and Iraq are two of the most important countries in the Middle East.
Iraq's 1,336-kilometer border with Iran is the Arab state's longest frontier. Both countries hold huge hydrocarbon reserves, making them the focus of international attention.
Despite having passed a turbulent history and often hostility in relations, the time has come for both sides to take positive and constructive steps towards enhancing two-way cooperation. Strong political action is needed to remove all obstacles for improving two-way cooperation and to reinforce their common interests at regional and international levels.
Such cooperation would pave the way for the establishment of a long-sought convergence in the strategic region and usher effective economic development to the benefit of the two nations.

Improving road transport links will benefit both Iran and Iraq.

Best Opportunity
The current situation provides the best opportunity for the two countries to overcome divergences and take practical steps towards enhancing bilateral relations, especially in key economic areas. Despite the fact that Iran staunchly opposes the presence of foreign troops in Iraq and regardless of highly unstable conditions prevailing in the Arab state, the government in Tehran insists there are no major barriers to establishment of meaningful relations provided there is strong will and determination on both sides.
Although it is crucially important that Iran and Iraq expand ties on the political, cultural and security fronts, however economic cooperation can be the linchpin of such a process.
Through effective programming, the two sides can embark on forming joint businesses on a small-scale, which if directed in the right way can eventually develop into giant projects.
Rich in water and fertile soil and blessed with huge natural resources such as oil and gas, both countries can draw on a bright future for their economies.

Border Trade
Border trade is another area of cooperation.
Expansion of markets in joint border areas will help boost bilateral trade to a great extent and benefit the indigenous population faced with scarce employment opportunities and acute poverty. The situation is far worse in the war-battered neighboring state.
Iranian business owners can explore Iraq's economic opportunities and help rebuild the economy by organizing trade exhibitions in Iraqi cities.
Such activities will not only help the two nations get acquainted with each other's potentials but create jobs on both sides. Their governments are in the meantime responsible for creating the grounds for full normalization and expansion of two-way ties by reducing tariffs, facilitating exports and easing visa formalities to allow for bilateral trade.
Oil Privilege
Insufficient investment has inflicted heavy losses on the economy of both sides, especially in oil and gas sectors. Here is where the two governments can embark on joint development projects, especially in regions close to their shared borders, drawing domestic and foreign investments.
Bilateral cooperation on development of oil and gas resources has many privileges, one being that Iran and Iraq will not have to vie with each other in their quest for proper international energy markets. Instead, they will cooperate within the frameworks of the Organization of Petroleum Exporting Countries (OPEC), resulting in increased foreign investments and economizing costs of developing joint fields. Refineries can also be established in joint border areas and draw private investors for manufacture of oil by-products.
Iran, a major gas producer in the Middle East, can meet Iraq's gas demand and use its territory for re-export of its gas to other regional countries such as Syria and Lebanon. Iraqi ports are presently unable to host giant oil tankers and its oil can reach export markets through a pipeline connecting the Iraqi port city of Basra to the southern Iranian island of Kharq. Transfer of Iraqi oil via such a pipeline will be much less costly and secure compared to the three existing pipelines, which transfers Iraqi oil to Saudi Arabia, Turkey and Syria.

Road Construction
Though the government has gained much success in construction of highways and roads across the country in the past two decades, southern and western parts of the country still face poor transport infrastructures.
Construction of roads in such areas will greatly help the two countries, especially Iraq to develop its transactions not only with Iran but the rest of the world.
Iran can extend its domestic transportation network to its western border areas in a bid to provide the war-ravaged country with the opportunity to use its road and rail transit services just like the Caucasus and Central Asian countries, which use Iranian roads and railways for the purpose of exporting their products. Iran could also allow Iraqis to use one of its southern free trade zones for the import and export of goods.

On Course
Is Iran losing its chances in Iraq? Some believe so.
Head of Iran-Iraq Joint Chamber of Commerce Farhad Fozouni, for example, is of the opinion that the government should put more efforts for creating the grounds for presence of Iranian enterprises in Iraq "for the sake of our national interests".
In an interview with Iran Labor News Agency, Fozouni said some initial steps have been taken but more needs to be done to ensure that Iran gets a fair share in Iraqi reconstruction process otherwise other countries will move in.
"One among such measures was formation of Iran-Iraq joint chamber of commerce that has drawn the framework for enhancement of bilateral trade cooperation by establishing several expert committees including transport, planning and investments assigned to explore investments and trade potentials in the neighboring country."
According to Fozouni, members of the board of directors for each committee have been chosen and assigned the task to remove all barriers for expansion of two-way relations.
"The chamber, per se, is not legally empowered to make laws or execute them. Our task is to come up with effective strategies for boosting trade ties."
As to relations with Baghdad, he said the chamber is doing all in its capacity to prepare the conditions for full resumption of ties. "One such policy would be organizing seminars and exhibitions in Iraq to showcase Iran's potentials and capabilities for helping reconstruct Iraq's infrastructures. Instability in Iraq has forced us to hold back our intentions."
The Iranian official said if the situation does not improve in Iraq, the chamber would intend to hold such expositions in Iran. This, he said, will require full cooperation on the part of the government to facilitate travel between the two sides.
Fozouni said it would be better if such exhibitions were held in joint border areas.
"The outcomes of such events will certainly benefit the Iranian economy in the long run and help Iran emerge as a leading exporter in the region," he said, adding that presently, customs barriers are the major obstacles to expansion of ties with Baghdad. "Iran Customs Administration has given its word for extending every possible assistance to improve the situation."

In oil and gas sectors the two governments can embark on joint development projects.

Bank Branches
Fozouni was also critical of the performance of banks and insurance companies, which he said, are not doing their fair share.
He called on the government to permit establishment of an Iranian bank branch in Iraq so as to expedite and facilitate extension of financial services to Iranian traders and exporters in that country.
"Iraq says it plans to give permits for establishment of up to six foreign branches in that country. Given our proximity to Iraq and long-standing relations, such absence would greatly serve to our disadvantage.
"It is expected of the Iraqi provisional government to facilitate expansion of bilateral cooperation with the neighboring countries with whom Baghdad shares common interests as well as religious and cultural background."