Iran, Iraq Look to Create Free Trade Zones and Cross Border Rail

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In moves unthinkable until recently, Iranian President Hassan Rouhani said over the weekend that he and his Iraqi counterpart Barham Salih had agreed to create a free trade zone on their border.

“We have agreed to create a free trade zone between the two countries, which will enable us to launch joint ventures,” Rouhani said at a press conference held after the meeting, as broadcast by Press TV. Rouhani added that while the Iranian-Iraqi trade currently amounted to around US$12 billion, it could be raised to US$20 billion in the near future if both sides made an effort. Earlier in the day, Rouhani and Salih held a meeting in the Iranian capital of Tehran, during which they discussed bilateral cooperation and regional development.

In a joint press conference in the Iranian capital on Friday, Salih declared that the relationship between the two neighboring countries is a “fixed principle” that is “rooted in shared history, faith and geography”. Rouhani also said that the two leaders also talked about electricity and gas swaps, as well as cooperation on petroleum products and oil exploration.

According to reports, the two leaders have also discussed building a 35 km railway linking the two countries.

The Free Trade Zone and cross border rail are likely to be positioned at one or both of either the Piranshahr–Haji Omran crossing or the Bashmaq–Penjwen border.

Potential sites For Iran/Iraq Free Trade Zone

Iran is an important Belt and Road nation; China is its largest trade partner, while it also shares borders with Turkey, Armenia, Azerbaijan, Pakistan, Afghanistan, and Turkmenistan. It is an important Belt and Road transit point for goods from both China via the Caspian Sea, as well as via the International North-South Transportation Highway commencing at Chabahar Port, and receiving shipped goods from India, then heading north up to Azerbaijan and onto Russia, and west into Turkey and from there to the EU.

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