Iraq edges closer to Iran as fighting with Islamic State intensifies

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Azzaman, September 4, 2014

The stunning military successes by the Islamic State (IS) have made Iraq more reliant on Iran than any time before.

Iran already played a pivotal role in stating Iraqi politics but the geopolitical realities arising from the IS’s invasion have given Tehran more leverage on almost all aspect of life in the country.

Iran is now the only country whose border posts have remained open to the flow of goods and people and are still far away from IS’s increasing sphere of influence.

Trade with other neighbors, like Turkey, Jordan, Syria and Saudi Arabia, has declined dramatically since early June when IS militants controlled large swathes of Iraq within a few days.

Iraqi provinces bordering Iran, including the Kurdish Province of Sulaimaniya in the north, all have their border points to allow for the flow of goods. Some of them have their own special deals with Iran.

Iraq now relies heavily on imports from Iran, including the Kurdish north, as trade exchange with other neighboring states involves increasing hazards with IS controlling numerous border posts.

Iraq is even mulling establishing a joint bank with Iran to facilitate payment and transfer of cash to cover the increased volume of Iranian imports by its private and public sectors.

Since IS appeared on the Iraqi scene, the Iranians have consolidated their presence in various fields across the country.

Militarily, they are dispatching large quantities of arms to both Iraqi and Kurdish forces.

Economically, Iranian goods are replacing commodities from neighboring states.

Provinces bordering Iran, including Iraqi Kurdistan, have become more reliant on imports of Iranian electricity without which the national grid cannot function.

Iranian construction firms have moved in, snatching deals for new housing complexes. Gigantic housing deals that call for the construction of about two million housing units are there for Iranian firms to grab.

The deals are lucrative as the Iranians will build the units using construction materials imported from Iran.

But the biggest deal struck recently is in the oil sector under which Iran will export 2.5 million liters of diesel a day to Iraq to help it drive its power plants.

With Iraq’s largest refinery in Baiji that supplied nearly 35 percent of its domestic needs out of operation due to the ongoing fighting in and around it, Iraq has no other country to turn to meet its domestic fuel deal than Iran.

Iraq’s fuel import bill is in billions of dollars every year and most of its fuel imports originate in Iran.