Iran Now Iraq's Main Trading Partner

Iraqis snap up Iranian goods because they are cheaper than imported counterparts, Baghdad traders said.

They said Iran has flooded Iraqi markets with cheap commodities, which, despite their low quality in comparison to imports from western countries, meet basic needs of unsophisticated Iraqi customers.

Iranian goods even rival those from China, a country known for its considerably cheap exports.

"Almost all Iraqi traders have now shifted their attention to Iran," said Mohammed Abbas, a Baghdad trader.

He said Iran, rather than China, has become the source of household utensils sold in Iraq.

Iran has several border points with Iraq. There are good paved roads linking the countries and traders, businessmen and industrialists from both sides can travel without restrictions.

Iranian air conditioners and coolers are sold at prices within reach of Iraqi civil servants, the country's middle class.

For example, an Iranian-made small power generator could be fetched at about $100 while those from South East Asia may hit more than $300.

It is not clear whether Iran subsidies goods destined for Iraq. But what is clear is that bilateral trade has mushroomed to billions of dollars from almost a trickle before the 2003 U.S. invasion.

Alaa Hussain said it was wrong to say Iranian goods were all of a low quality. "When comparing the price with the service you get, they are worth buying," he said.

He said Iran has recently been exporting low-voltage household utensils bearing in mind the scarcity of electricity in the country.

Taleb Mohammed said Iranian industrialists seem to have properly analyzed the Iraqi market. "The electrical goods they ship now can be operated by small power generators which are also Iranian and have almost invaded the market," he said.

Iran is now Iraq's top trading partner. Iranian firms execute multi-million dollar projects mainly in the northern and southern parts of Iraq.

Iranian contractors are involved in infrastructure projects like power, health and housing.