Tehran not only has a strong grip on Iraqi politics but also on the country’s local markets. Since 2013, bilateral trade appears to be more in Iran’s favour.
While many welcome Iran’s strategic alignment with Iraq, their budding romance, as subsequent years show, lacks reciprocity. Endemic corruption and an unregulated investment climate in Iraq have empowered Iran to become Iraq’s most dominant trade partner.
As a first step towards expanding commercial interests, in 2004 Iran established a free trade zone in Khuzestan, straddling the Iranian-Iraqi border. The frontier was the site of confrontation during the 1980s Iran-Iraq war but now offers a lifeline through which Iran is reviving its economy.