Iran Is Playing a Growing Role in Iraq Economy

NAJAF, Iraq — While the Bush administration works to stop Iran from meddling in Iraq, Iranian air-conditioners fill Iraqi appliance stores, Iranian tomatoes ripen on the windowsills of kitchens here and legions of white Iranian-made Peugeots sit in Iraqi driveways.

Some Iraqi cities, including Basra, the southern oil center, buy or plan to buy electricity from Iran. The Iraqi government relies on Iranian companies to bring gasoline from Turkmenistan to alleviate a severe shortage. Iraqi officials are reviewing an application by Iran to open a branch of an Iranian bank in Baghdad, and Iran has offered to lend Iraq $1 billion.

The economies of Iraq and Iran, the largest Shiite-majority countries in the world, are becoming closely integrated, with Iranian goods flooding Iraqi markets and Iraqi cities looking to Iran for basic services.

After the two countries fought a devastating war from 1980 to 1988, Saddam Hussein maintained tight control over cross-border trade, but commerce has exploded since the American-led invasion of 2003.