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The Honolulu Advertiser
Posted on: Sunday, January 18, 2009

COMMENTARY
U.S. keeping eye on strengthening ties between Iraq, Iran

By Tiare Rath

BAGHDAD — Iraqi Prime Minister Nouri al-Maliki's visit to Iran earlier this month — his fourth since becoming premier in May 2006 — suggests that ties between the two countries will grow stronger as the United States reduces its troop presence in Iraq and reduces its financing of reconstruction in the coming years.

Al-Maliki's latest visit was intended to ease Iranian concerns about the lingering U.S. presence in Iraq and to drum up Iranian support for the reconstruction projects in his war-torn country.

While the United States plans to scale back its military and economic presence, Iran has been positioning itself as a key provider of goods, services and energy to Iraq, as well as a potential savior of its crumbling infrastructure.

Iran is already looking to invest in Iraq's oil and electricity industries and has won several contracts to build power plants in the country. Officials in both countries have said they hope to see trade between the two countries reach $10 billion annually by next year.

About 30 percent of Iran's exports are destined for Iraq. Iranian food and other goods are widely sold here, particularly in border cities and towns. Iraq's chronic energy shortages are shored up by Iranian fuel and electricity.

Iran seems especially eager to become involved in Iraq's reconstruction efforts, an area where, despite the expenditure of hundreds of billions of dollars, the United States has come under intense criticism.

The current state of Iraq's electric system is an example. Despite spending $5 billion to restore the country's power grid — much of which was destroyed during the U.S. invasion in 2003 — electric output has yet to reach production-level targets the United States set in 2004, and only reached pre-war levels last year.

According to a report by the Brookings Institution, Iraqis had electricity for 14 hours a day on average last month.

No wonder many Iraqis are wondering if their neighbors couldn't do a better job.

Meanwhile, faced with trillion-dollar budget deficits and its worst economic crisis since the Great Depression, Washington has made it clear that it is no longer in a position to pour billions of additional dollars into reconstructing Iraq, especially when Baghdad last year reported a budget surplus of its own.

Iraq's budget surplus, however, was accumulated when oil was selling on world markets for $140 a barrel. With oil now selling at less than $40 a barrel, and American aid diminishing, it's no surprise that Iraq is looking to its neighbor for investment help.

The Iran-Iraq connection, of course, goes far beyond economic interests. Many Iraqi leaders, particularly Shia, have deep political and religious ties to Iran. Maliki's Dawa Party has especially strong Iranian links, forged during its years in exile plotting the overthrow of former President Saddam Hussein.

But even Iraqi President Jalal Talabani, a Kurd who enjoys strong American support, is known to have a very warm relationship with Tehran.

Only Iraq's minority Sunni population, which saw its authority over Iraq diminish with the overthrow of Saddam, has remained wary of Iran's increased role in the country.

Of course, Iran isn't the only country looking to expand its economic presence in Iraq. Its $32 million project to drill nine oil wells in an area north of Baghdad pales in comparison to the $3 billion oil-development project Baghdad recently signed with a state-owned Chinese oil company.

Even American firms can be expected to continue to vie for Iraq reconstruction projects. Baghdad recently agreed to buy $3 billion worth of gas turbines from General Electric, for example.

But with the United States already having expressed deep concern over Tehran's growing economic and political influence in the region, Washington will undoubtedly be keeping a close eye on Iranian investments in Iraq.

Tiare Rath is the Middle East editor for The Institute for War & Peace Reporting, a nonprofit organization that trains journalists in areas of conflict.