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›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
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With a conventional military and weapons of mass destruction (WMD) threat from Saddam
Hussein’s regime removed, Iran seeks to ensure that Iraq can never again become a threat to Iran,
either with or without U.S. forces present in Iraq. Some believe Iran’s intentions go well beyond
achieving Iraq’s “neutrality” – that Iran wants to try to harness Iraq to its broader regional policy
goals and to help Iran defend itself against international criticism of Iran’s nuclear program. By
supporting armed Shiite factions, Iran’s activities in Iraq have hindered – and continue to pose a
threat to—U.S. efforts to stabilize Iraq, and have heightened the U.S. threat perception of Iran
generally. However, Iran faces difficult choices in Iraq now that its protege Shiite factions,
formerly united, are competing and often fighting each other. This competition is intensifying in
the run-up to January 31, 2009 provincial elections. This report will be updated; also see CRS
Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.

˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
˜—Ž—œȱ
Background ..................................................................................................................................... 1
Assertions of Iranian Support to Armed Groups ............................................................................. 2
The Intra-Shiite Rift and Implications for Iran ................................................................... 3
U.S. Efforts to Reduce Iran’s Activities in Iraq .................................................................. 4
Negotiations With Iran........................................................................................................ 5
Iranian Influence Over Iraqi Political Leaders ................................................................................ 5
Prospects.......................................................................................................................................... 7

˜—ŠŒœȱ
Author Contact Information ............................................................................................................ 7

˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
ŠŒ”›˜ž—ȱ
During 2003-2005, Iran calculated that it suited its interests to support the entry of Iraqi Shiite
Islamist factions into the U.S.-led election process, because the number of Shiites in Iraq (about
60% of the population) virtually ensured Shiite dominance of an elected government. To this
extent, Iran’s goals did not conflict with the U.S. objective of establishing democracy. Iran helped
assemble a Shiite Islamist bloc (“United Iraqi Alliance”), encompassing the Islamic Supreme
Council of Iraq (ISCI), the Da’wa (Islamic Call) party, and the faction of the 34-year-old cleric
Moqtada Al Sadr—the bloc won 128 of the 275 seats in the December 15, 2005, election for a full
term parliament. Dawa senior leader Nuri al-Maliki was selected as Prime Minister; several ISCI
figures took other leadership positions. ISCI’s leaders, including Ayatollah Mohammad Baqr Al
Hakim, who was killed in an August 2003 car bomb in Najaf, had spent their years of exile in Iran
and built ties to Iranian leaders.1 ISCI’s militia, the “Badr Brigades” (now renamed the “Badr
Organization”), had been recruited, trained, and armed by Iran’s Revolutionary Guard, the most
politically powerful component of Iran’s military, during the 1980-88 Iran-Iraq war. In that war,
Badr guerrillas conducted attacks from Iran into southern Iraq against Baath Party officials, but
did not shake the regime. After Saddam’s fall, Iran continued to provide political, financial, and
military support to ISCI and the Badr Brigades militia, which numbered about 15,000. During
2005-6, with the help of ISCI member Bayan Jabr as Interior Minister (and close ally of ISCI
leader Abd al Aziz al-Hakim, younger brother of Mohammad Baqr), the militia burrowed into the
Iraqi Security Forces (ISF) and the Interior Ministry, which oversees the various police forces.
The Sadr faction’s political ties to Iran were initially limited because his family remained in Iraq
during Saddam’s rule. Still, the Sadr clan has ideological ties to Iran; Moqtada’s cousin,
Mohammad Baqr Al Sadr, was founder of the Da’wa Party, a political ally of Ayatollah
Khomeini, and was hung by Saddam Hussein in 1980. Moqtada is married to a daughter of
Mohammad Baqr Al Sadr. Iran later came to see political value and potential leverage in Sadr’s
faction—which has 30 total seats in parliament, a large and dedicated following among lower-
class Iraqi Shiites, and which built an estimated 60,000 person “Mahdi Army” (Jaysh al-Mahdi,
or JAM) militia after Saddam’s fall. Sadr unleashed the JAM on several occasions as part of a
strategy of challenging what he sees as a U.S. occupation of Iraq, but U.S. military operations
defeated the JAM in April 2004 and August 2004 in “Sadr City” (Sadr stronghold in east
Baghdad), Najaf, and other Shiite cities. In those cases, fighting was ended with compromises
under which JAM forces stopped fighting in exchange for amnesty for Sadr.
Perceiving the JAM as useful against the United States in the event of a U.S.-Iran confrontation,
in 2005, Iran began arming it through the Revolutionary Guard’s “Qods (Jerusalem) Force,” the
unit that assists Iranian protege forces abroad. During 2005-6, the height of sectarian conflict in
Iraq, Badr fighters in and outside the ISF, as well as JAM militiamen, were involved in sectarian
killings of Sunnis, which accelerated after the February 2006 bombing of the Al Askari Mosque
in Samarra.

1 In 1982, Mohammad Baqr was anointed by then Iranian leader Ayatollah Ruhollah Khomeini to head a future
“Islamic republic of Iraq.”
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
œœŽ›’˜—œȱ˜ȱ ›Š—’Š—ȱž™™˜›ȱ˜ȱ›–Žȱ ›˜ž™œȱ
Iran’s arming and training of Shiite militias in Iraq has added to U.S.-Iran tensions over Iran’s
nuclear program and Iran’s broader regional influence, such as its aid to Lebanese Hezbollah and
the Palestinian organization Hamas, which now controls the Gaza Strip. By supplying armed
groups in Iraq, U.S. officials feared that Iran sought to develop a broad range of options that
included: pressuring U.S. and British forces to leave Iraq; to bleed the United States militarily;
and to be positioned to retaliate in Iraq should the United States take military action against Iran’s
nuclear program.
U.S. officials have provided specific information on Qods Force and Hezbollah aid to Iraqi Shiite
militias, particularly the JAM. No firm information exists on the number of Iranian agents in Iraq.
One press report said there are 150 Qods and intelligence personnel there.2 Some U.S.
commanders who have served in southern Iraq said they understood that there were perhaps one
or two Qods Force personnel in each Shiite province, attached to or interacting with pro-Iranian
governors in those provinces. Qods Force officers often do not wear uniforms and their main role
is to identify Iraqi fighters to train and to organize safe passage for weapons and Iraqi militants
between Iran and Iraq, although some observers allege that Iranian agents have sometimes
assisted the JAM in its combat operations. A study by the “Combatting Terrorism Center” at West
Point, published October 13, 2008 (“Iranian Strategy in Iraq: Politics and ‘Other Means’”), details
this activity, based on declassified interrogation and other documents.
• On February 11, 2007, U.S. military briefers in Baghdad provided what they said
was specific evidence that Iran had supplied armor-piercing “explosively formed
projectiles” (EFPs) to Shiite (Sadrist) militiamen. EFPs have been responsible for
over 200 U.S. combat deaths since 2003. In August 2007, Gen. Raymond
Odierno, then the second in command and who is now overall commander in
Iraq, said that Iran had supplied the Shiite militias with 122 millimeter mortars
that are used to fire on the Green Zone in Baghdad. On August 28, 2008, the
Washington Times reported that pro-Sadr militias were now also using
“Improvised Rocket Assisted Munitions”—a “flying bomb” carrying 100 pounds
of explosives, propelled by Iranian-supplied 107 mm rockets.
• On July 2, 2007, Brig. Gen. Kevin Begner said that Lebanese Hezbollah was
assisting the Qods Force in aiding Iraqi Shiite militias, adding that Iran gives
about $3 million per month to these Iraqi militias. He based the statement on the
March 2007 capture of former Sadr aide Qais Khazali and Lebanese Hezbollah
operative Ali Musa Daqduq. They were allegedly involved in the January 2007
killing of five U.S. forces in Karbala. On October 7, 2007, Gen. David Petraeus,
then overall U.S. commander in Iraq, told journalists that Iran’s Ambassador to
Iraq, Hassan Kazemi-Qomi, is himself a member of the Qods Force.
Continuing to present evidence of Iranian material assistance to Shiite militias, Gen. Petraeus
testified on April 8-9, 2008, that Iran was continuing to arm, train, and direct “Special Groups”—
radical and possibly breakaway elements of the JAM—and to organize the Groups into a
“Hezbollah-like force to serve [Iran’s] interests and fight a proxy war against the Iraqi state and
coalition forces....” The testimony was delivered amidst an ISF offensive, launched by Maliki on

2 Linzer, Dafna. “Troops Authorized To Kill Iranian Operatives in Iraq,” Washington Post, January 26, 2007.
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
March 26, 2008, to clear JAM militiamen from Basra, particularly the port area which the JAM
and other militias controlled and used for financial benefit. In the initial assault, the ISF units
(dominated by Badr loyalists) failed and partly collapsed—1,300 of the 7,000 additional ISF sent
in for the assault did not fight. Later, U.S. and British forces intervened with air strikes and
military advice, helping the ISF gain the upper hand and restore relative normality. Sadr, who
reportedly received Iranian aid during the fighting, agreed to an Iran-brokered “ceasefire” on
March 30, 2008, but not to disarm. Some fighting and JAM rocketing of U.S. installations in
Baghdad continued subsequently, in some cases killing U.S. soldiers, and U.S. forces continued
to fight JAM elements in Sadr City until another Sadr-Maliki agreement on May 10, 2008.
Subsequently, the ISF moved into Amarah unopposed on June 16, 2008, and quieted that city,
while prompting Sadrists protests about ISF arrests of the Amarah governor and other Sadrists.
Other arrests of Sadrists took place in Sadr’s former stronghold of Diwaniyah, the capital of
Qadisiyah Province. The weakening of Sadr’s faction facilitated the handed over of that province
to Iraqi control in July 2008.
‘Žȱ —›ŠȬ‘’’Žȱ’ȱŠ—ȱ –™•’ŒŠ’˜—œȱ˜›ȱ ›Š—ȱ
The Basra battles were the most dramatic manifestation of a rift between Maliki and Sadr that had
begun in 2007. Maliki reportedly launched the Basra offensive in part to reduce Sadrist strength
in provincial elections planned for the fall of 2008 (but now put off until January 31, 2009). In
2007, Maliki and ISCI recognized the need to cooperate with the U.S. “troop surge” launched that
year by permitting U.S. forces to place military pressure on the JAM. In 2006, Maliki had been
preventing such U.S. operations in an effort to preserve his alliance with Sadr. As a result of
Maliki’s shift in 2007, Sadr broke with him, pulled the five Sadrist ministers out of the cabinet,
and withdrew his faction from the UIA bloc. The rift widened throughout 2007 as JAM fighters
battled Badr-dominated Iraqi forces, and U.S., and British forces for control of such Shiite cities
as Diwaniyah, Karbala, Hilla, Nassiryah, Basra, Kut, and Amarah. This also caused a backlash
against Sadr among Iraqi Shiite civilian victims, particularly after the August 2007 JAM attempt
to take control of religious sites in Karbala. The backlash caused Sadr to declare a six month
“suspension” of JAM activities. (He extended the ceasefire in February 2008 for another six
months.) The intra-Shiite fighting expanded as Britain drew down its forces the Basra area from
7,000 to 4,000 in concert with a withdrawal from Basra city to the airport, and the transfer of
Basra Province to ISF control on December 16, 2007.
The Basra battles appeared to succeed in weakening Sadr politically. Sadr told his followers on
June 13, 2008 that most of the JAM would now orient toward “peaceful activities,” clarified on
August 8, 2008 to be social and cultural work under a new movement called “Mumahidun,” or
“trail blazers;” and that a small corps of “special companies” would be formed from the JAM to
actively combat U.S. (but not Iraqi) forces in Iraq. Suggesting that he did not feel overly
confident about Sadrist prospects in the January 31, 2009 elections, Sadr also announced in
August 2008 that he would back technocrats and independents for upcoming provincial elections
but not offer a separate “Sadrist” list. Iraq’s election authorities have published candidate lists but,
as of early January 2009, Sadr representatives have not specified who are the Sadrist candidates,
but the pro-Sadr “Risalyun” (Mission) grouping has filed candidate slates in several provinces
mostly in the south. Two other parties competing are considered Sadrist – the “Blamelessness and
Reconstruction” party and the “Sadr al-Iraq” party.
U.S. commanders in Iraq, including the number two commander in Iraq Gen. Lloyd Austin,
explaining the relative inactivity of the JAM in recent months in military terms rather than a
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
řȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
deliberate decision by Sadr to focus on political competition. He said on August 18, 2008 that
U.S. forces were increasingly uncovering arms caches and other JAM weaponry and that JAM
fighters had gone to Iran temporarily for more training and resupply. In December 2008, Lt. Gen.
Thomas Metz said that there was a marked decline in the number of explosive devices coming
into Iraq from Iran.3 The relative quiescence of the JAM could also explain why a U.S. briefing
on new information on Iranian aid to the JAM, first expected in May 2008 but opposed by Iraqi
leaders who do not want to draw Iraq into a U.S.-Iran dispute, was not held. Nor has there been
further follow-up from an Iraqi parliamentary group that visited Iran to discuss the issue in April
2008, or from an Iraqi commission investigating Iran’s aid to the JAM.
At the same time, Iran’s political influence in Iraq is being further unsettled in the run-up to the
January 31, 2009 provincial elections. A new rift has opened up between Maliki and his erstwhile
political ally, ISCI. ISCI and Maliki’s Da’wa Party have long been the core of the Shiite alliance
that dominates Iraq, but they are competing against each other vigorously in the elections. ISCI
activists assert that Maliki has surrounded himself with Da’wa veterans who have excluded ISCI
from decision-making influence. Maliki, trying to compensate for Da’wa’s organizational
deficiencies, has tried to align his party with tribal leaders in the south to win provincial council
seats. The net effect is to introduce new splits in the Shiite bloc in Iraq and to cause Iran to have
to choose among its various Shiite allies in Iraq.
ǯǯȱ˜›œȱ˜ȱŽžŒŽȱ ›Š—ȂœȱŒ’Ÿ’’Žœȱ’—ȱ ›Ššȱ
In addition to the U.S. and Maliki efforts against the JAM, U.S. forces arrested a total of 20
Iranians in Iraq, many of whom are alleged to be Qods Forces officers, during December 2006-
October 2007; five of which were arrested in January 2007 in the Kurdish city of Irbil. In late
2007, the U.S. military released ten of them, but continue to hold ten believed of high intelligence
value. On August 12, 2008, U.S.-led forces arrested nine Hezbollah members allegedly involved
in funneling arms into Iraq, and on August 29, 2008, U.S. forces arrested Ali Lami on his return
to Iraq for allegedly being a “senior Special Groups leader.” On March 24, 2007, with U.S.
backing, the U.N. Security Council unanimously adopted Resolution 1747 (on the Iran nuclear
issue), with a provision banning arms exports by Iran—a provision clearly directed at Iran’s arms
supplies to Iraq’s Shiite militias and Lebanese Hezbollah. In 2007, the U.S. military built a base
near the Iranian border in Wasit Province, east of Baghdad, to stop cross-border weapons
shipments. In July 2008, U.S. forces and U.S. civilian border security experts established
additional bases near the Iran border in Maysan Province, to close off smuggling routes. In
December 2008, Secretary of State Rice attributed the apparent decline in Iran’s activities in Iraq
to these policies, saying the United States had been “very aggressive” against [Qods Force]
agents.
In an effort to financially squeeze the Qods Force, on October 21, 2007, the Bush Administration
designated the Qods Force (Executive Order 13224) as a provider of support to terrorist
organizations. On January 9, 2008, the Treasury Department took action against suspected Iranian
and pro-Iranian operatives in Iraq by designating them as a threat to stability in Iraq under a July
17, 2007 Executive Order 13438. The penalties are a freeze on their assets and a ban on
transactions with them. The named entities are: Ahmad Forouzandeh, Commander of the Qods
Force Ramazan Headquarters, accused of fomenting sectarian violence in Iraq and organizing

3 Barnes, Julian. “U.S. Says Drop in Iraq Deaths Tied to Iranian Arms Cutback.” Los Angeles Times, December 12,
2008
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Śȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
training in Iran for Iraqi Shiite militiamen; Abu Mustafa al-Sheibani, the Iran-based leader of
network that funnels Iranian arms to Iraqi Shiite militias; and Isma’il al-Lami (Abu Dura), a
Shiite militia leader—who has broken from the JAM—alleged to have planned assassination
attempts against Iraqi Sunni politicians. Also on October 21, 2007, the Administration designated
the Revolutionary Guard and several affiliates, under Executive Order 13382, as proliferation
concerns. The designations carry the same penalties as do those under Executive Order 13224.
Neither the Guard or the Qods Force was named a Foreign Terrorist Organizations (FTOs)—
recommended by the FY2008 defense authorization bill (P.L. 110-181) and H.R. 1400 (passed
September 25, 2007).
However, U.S. concerns remain that Sadr might reactivate militia operations for political
purposes. The Defense Department’s “Measuring Stability and Security in Iraq” report for
September 2008 (it is published quarterly) assessed that continuing Iranian support for the special
groups constitutes “the most significant threat to long term stability in Iraq.”The U.S. commander
for Baghdad city, Maj. Gen. Jeffery Hammond, told journalists on October 19, 2008 that some
special groups fighters had been returning to Baghdad, perhaps to try to influence the provincial
elections. Some suspected JAM rockets were fired against U.S. installations in Baghdad in late
December 2008.
Ž˜’Š’˜—œȱ’‘ȱ ›Š—ȱ
The United States has also sought to persuade Iran to curb its activities in Iraq. U.S. officials
initially rejected the recommendation of the “Iraq Study Group” (December 2006) to include Iran
in multilateral efforts to stabilize Iraq, in part because of concerns that Iran might use such
meetings to discuss Iran’s nuclear program. However, in a shift conducted in concert with the
“troop surge,” the United States attended regional (including Iran and Syria) conferences
“Expanded Neighbors Conference”) in Baghdad on March 10, 2007, in Egypt during May 3-4,
2007, and in Kuwait on April 22, 2008. Secretary of State Rice and Iranian Foreign Minister
Mottaki held no substantive discussions at any of these meetings. In a more pronounced shift, the
United States agreed to bilateral meetings with Iran, in Baghdad, on the Iraq issue, led by U.S.
Ambassador to Iraq Ryan Crocker and Iranian Ambassador Kazemi-Qomi. The first was on May
28, 2007. A second round, held on July 24, 2007, established a lower level working group; it met
on August 6, 2007. Talks in Baghdad scheduled for December 18, 2007, were postponed because
Iran wanted them at the ambassador level, not the working group level. On May 6, 2008, Iran said
it would not continue the dialogue because U.S. forces are causing civilian casualties in Sadr City,
although the Iranian position might reflected a broader Iranian assessment that it needs to make
no concessions to the United States in Iraq.
›Š—’Š—ȱ —•žŽ—ŒŽȱŸŽ›ȱ ›Šš’ȱ˜•’’ŒŠ•ȱŽŠŽ›œȱ
Iran has exploited its close ties to Iraqi leaders to try to build broad political and economic
influence over outcomes in Iraq, although Iran’s commerce with and investment in Iraq, do not
necessarily conflict with U.S. goals. The most pressing concern for the United States was Iran’s
efforts to derail a U.S.-Iraq Status of Forces Agreement that would authorize the U.S. military
presence beyond December 31, 2008. Senior Iranian leaders publicly opposed the pact as an
infringement of Iraq’s sovereignty—criticism that likely masks Iran’s fears the pact is a U.S.
attempt to consolidate its “hold” over Iraq and encircle Iran militarily. This criticism might have
contributed to insistence by Iraqi leaders on substantial U.S. concessions to a final draft
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
śȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
agreement. As an example of the extent to which Iran was reputedly trying to derail the
agreement, Gen. Odierno said on October 12, 2008 that there are intelligence reports suggesting
Iran might be trying to bribe Iraqi parliamentarians to vote against it. In the end, Iran’s concerns
were attenuated by a provision in the final agreement (passed by Iraq’s parliament on November
27, 2008 and now in force as of January 1, 2009) that U.S. forces could not use Iraqi territory as a
base for attacks on any other nation. Iranian opposition was also reduced by U.S. agreement to an
Iraqi demand to set a timetable (end of 2011) for a full withdrawal of U.S. forces from Iraq.
However, even after the pact took effect, Iran’s Supreme Leader Ali Khamene’i (January 5, 2009)
warned Maliki that the United States is cannot be trusted to implement its pledges under the pact.
Previously, Iran’s interests have been served by post-Saddam Iraqi leaders. During exchanges of
high-level visits in July 2005, Iraqi officials took responsibility for starting the 1980-1988 Iran-
Iraq war, indirectly blamed Saddam Hussein for using chemical weapons against Iranian forces in
it, signed agreements on military cooperation, and agreed to Iranian consulates in Basra, Karbala,
Irbil, and Sulaymaniyah. In response to U.S. complaints, Iraqi officials subsequently said that any
Iran-Iraq military cooperation would not include Iranian training of Iraqi forces. On May 20,
2006, Iraq’s Foreign Minister, Hoshyar Zebari, supported Iran’s right to pursue “peaceful” nuclear
technology.4 In accordance with the entry into force of the U.S.-Iraq status of forces agreement
that accords Iraq greater control over U.S. operations in Iraq, Maliki’s aides say Iraq plans to
expel the 3,400 members of the Iranian opposition People’s Mojahedin Organization of Iran
(PMOI), a group allied with Saddam against Iran. Its members are confined by U.S.-led forces to
“Camp Ashraf” near the Iran border, which Iraq says it wants to close once Iraqi forces take
control of the base. PMOI activists fear that, because few countries will accept them as residents
– a consequence of the PMOI designation by many countries (including the United States) as a
terrorist organization – Iraq will eventually repatriate them to Iran, where they fear they will be
killed.
Suggesting the degree to which the Iraqi government views Iran as a mentor and benefactor,
Maliki has visited Iran four times as Prime Minister o consult on major issues and to sign
agreements. The visits were: September 13-14, 2006, resulting in agreements on cross border
migration and intelligence sharing; August 8-9, 2007, resulting in agreements to build pipelines
between Basra and Iran’s city of Abadan to transport crude and oil products for their swap
arrangements (finalized on November 8, 2007); June 8, 2008, resulting in agreements on mine
clearance and searches for the few Iran-Iraq war soldiers still unaccounted for;5 and January 4-5,
2009, primarily to explain to Iran the provisions of the U.S.-Iraq pact but also to continue Iraqi
efforts to buy electricity from Iran. On March 2-3, 2008, Ahmadinejad visited Iraq, a first since
the 1979 Islamic revolution. In conjunction, Iran announced $1 billion in credits for Iranian
exports to Iraq (in addition to $1 billion in credit extended in 2005, used to build a new airport
near Najaf, opened in August 2008, which helps host about 20,000 Iranian pilgrims per month
who visit the Imam Ali Shrine there). The visit also produced seven agreements for cooperation in
the areas of insurance, customs treatment, industry, education, environmental protection, and
transportation. In 2005, Iran agreed to provide 2 million liters per day of kerosene to Iraqis. The
two countries also have developed a free trade zone around Basra, which buys electricity from
Iran, and Iraq is now Iran’s second largest non-oil export market, buying about $2 billion in goods
from Iran in 2007.

4 “Clarification Statement” issued by Iraqi Foreign Minister Hoshyar Zebari. May 29, 2006.
5 Under this agreement, on December 1, 2008, Iran and Iraq exchanged the remains of 241 soldiers killed in that war. It
is unclear how many personnel from each side remain unaccounted for.
˜—›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Ŝȱ

›Š—ȇœȱŒ’Ÿ’’ŽœȱŠ—ȱ —•žŽ—ŒŽȱ’—ȱ ›Ššȱ
ȱ
›˜œ™ŽŒœȱ
Although Iran’s influence in Iraq remains substantial, some believe Iran’s influence is fading as
Iraq asserts its nationhood, as the security situation has improved, and as Arab-Persian differences
reemerge. Many experts point out that Iraqi Shiites generally stayed loyal to the Iraqi regime
during the 1980-1988 Iran-Iraq war. Najaf, relatively secure and prosperous, might eventually
meet pre-war expectations that it would again exceed Iran’s Qom as the heart of the Shiite
theological world. Iran has not returned the 153 Iraqi military and civilian aircraft flown to Iran at
the start of the 1991 Gulf War, although it allowed an Iraqi technical team to assess the aircraft in
August 2005. Another dispute is Iran’s allegations Iraq is not doing enough to deny safe haven to
the Party for a Free Life in Kurdistan (PJAK), an Iranian Kurdish separatist group, which Iran
says is staging incursions into Iran. On the other hand, most territorial issues that have
contributed to past disputes were resolved as a result of an October 2000 rededication to
recognize the thalweg, or median line of the Shatt al Arab waterway as the water border (a
provision of the 1975 Algiers Accords between the Shah of Iran and the Baathist government of
Iraq, abrogated by Iraq prior to its September 1980 invasion of Iran.) The water border is subject
to interpretation, but the two sides agreed to renovate water and land border posts during the
March 2008 Ahmadinejad visit.

ž‘˜›ȱ˜—ŠŒȱ —˜›–Š’˜—ȱ

Kenneth Katzman

Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612




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