Old foes Iran and Iraq on Tuesday signed an oil deal they hope will pave the way to further diplomatic rapprochement between them. The signing was the keystone of a visit to Iran by an Iraqi ministerial delegation led by Prime Minister Ibrahim al-Jaafari, the first Iraqi leader to visit Tehran in decades.
Iran and Iraq bludgeoned each other to a standstill in a war between 1980 and 1988 characterised by trench warfare and gas attacks. Hundreds of thousands of people were killed.
Starting to rebuild bridges, Iraq signed a preliminary agreement to export 150,000 barrels per day (bpd) of crude from the southern city of Basra to Abadan refinery in south-west Iran, a spokeswoman for Iran's oil ministry said.
In return, fuel-starved Iraq will import gasoline, gas oil and kerosene across its eastern border.
Iraqi Oil Minister Ibrahim Bahr al-Uloum has said the project could be running within a year as pipeline construction should take only three to six months.
The United States has reservations about growing ties between the two neighbours, but the language from Iranian and Iraqi officials alike has been warm throughout the visit.
"Iran's first priority is to have a united, independent stable Iraq as a neighbour," Supreme Leader Ayatollah Ali Khamenei was quoted as saying by Iranian state media.
Washington has cooled its rhetoric on keeping some distance between predominantly Shi'ite Muslim Iraq and Iran, the Shi'ite world's centre of gravity, but still remains suspicious of ties blossoming too quickly.
The United States has accused Iran of backing attacks against US troops in Iraq, funding anti-Israeli militia and seeking nuclear weapons. Tehran denies the charges.
Iran has ambitious plans for a 350,000 bpd oil swap with Iraq which has raised eyebrows in Washington.
However, officials said no headway had been made on the scheme during Jaafari's visit and the oil-for-fuel deal signed was far smaller than the sort of agreements Iran wants.
Iran has also suggested plans to operate border oilfields jointly, but that is very much on ice and Iran has said that Washington is blocking such moves.
However, the ministerial visit sealed other preliminary agreements on commercial ties, including a $1 billion credit line from Iran to get its exports flowing into its violence-stricken neighbour.
Iran will pay its exporters to send goods to Iraq and will get the money back later from the Trade Bank of Iraq at a very low rate of interest.
Iran also concluded a deal to export about 200,000 tonnes of flour to Iraq.
The two neighbours, both members of the Opec producers' group, vie with each other for the honour of holding the world's second biggest reserves of crude after Saudi Arabia.
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