Iran envoy vows close economic ties with Iraq

Iran's new ambassador to Iraq said Tuesday that trade between the one-time rivals will double in the near future, even as his country is under stringent international sanctions over its nuclear program.

The prediction by Hassan Dannaie Fir reflects the strengthening of relations between the two Shiite-led neighbors who fought a ruinous eight-year war starting in 1980. The growing ties have worried the U.S. as Washington looks sharply to scale back troop presence in Iraq by the end of the month and withdraw all forces next year.

Fir described Iraq as a "fertile market" for Iranian goods, adding that he doesn't believe "the sanctions will affect the economic ties."

"Instead, I'm seeing that this relationship is developing day after day," Fir told reporters.

Trade between the two neighbors stands at about $7 billion per year, with the overwhelming majority stemming from Iranian exports to Iraq. The boost came after Saddam Hussein's ouster in 2003, with the collapse of his Sunni regime giving Tehran a new foothold in Iraq.

Many of Iraq's current Shiite political elite took refuge in Iran during Saddam's rule.

The Shiite-led government in Baghdad has been a boon for Iran, whose economy was already in poor condition before the fourth round of U.N. sanctions imposed in June. Those measures were further supplemented by sanctions by the U.S. and the European Union, leaving Iran with an increasingly narrowing sphere of trading partners.

The warming of relations has also sparked security and political concerns on the part of Washington, which has accused Iran of meddling in Iraq by financing and training Shiite militias that have repeatedly targeted U.S. forces in the country.

Fir, who was in charge for the Iraq-Iran economic ties for seven years in Tehran, said those charges as "baseless, and are totally rejected" by the Iranian government.

He also denied any involvement by Tehran in Iraq's political affairs, saying his nation only "offers advice to its Iraqi friends." Iran is committed to an inclusive central government that represents all of Iraq's various religious and political factions, he said.

Iraqi officials have been deadlocked since the March parliamentary elections, unable to agree on forming a new government.

The Sunni-backed Iraqiya alliance, headed by former Prime Minister Ayad Allawi, a secular Shiite, narrowly defeated the State of Law bloc headed by Shiite Prime Minister Nouri al-Maliki, but neither secured the necessary number of parliamentary seats to govern alone.

Iran is believed to have heavily supported a union between State of Law and the Iraqi National Alliance, which has strong ties to Iran. That alliance would be only four seats shy of the necessary majority, but a fight over who would hold the premiership has raised doubts the viability of such a partnership.