Iran finds neighboring Iraq its closest ally in the Arab world as well as a big market for its domestically produced goods.

“Iraq needs everything, which makes it the best market for Iranian-made goods,” boasts Yahya Ale Es’haq, head of the Iran-Iraq Chamber of Commerce.
Iran’s trade with the Arab world, however, has largely remained confined to Iraq while the United Arab Emirates, the top trade hub in the region, is Iran’s first destination for its re-exports. Despite the obvious benefits of more regional trade, politics has stood in the way.
Although officials and analysts in Tehran say that Iran’s high levels of security, diverse economy and educated workforce could make it a new conduit in a crisis-hit region, hopes of better commercial ties will continue to be stymied by power struggles and political tensions.
Last year Iran reached an agreement with major powers — the U.S., UK, France, Russia, China and Germany — to scale back its nuclear program in return for a lifting of economic sanctions, and now Iranian businessmen regularly host western and Asian trade delegations.
Businesspeople in Tehran argue that Iran is no longer just a market of its 78m-strong population; it should be seen as a market of more than 300m people thanks to its location, allowing access to Arab states in the south and west; central Asia in the north; and Afghanistan and Pakistan in the east.
Mr. Ale Es’haq says that Iran can position itself as a conduit to Iraq. “We can work with European partners who are not familiar with the Iraqi market and are worried about security there. They can rely on us because thanks to our historical and cultural commonalities we can operate in Iraq better.”
From Iran’s $42.4 billion of non-oil exports during the last Iranian year (which ended on March 19), $6.2 billion went to Iraq and about $4.9 billion worth of non-oil goods were re-exported through the UAE.
Iranian businessmen speak of a day when they can exploit their country’s geostrategic position to export to many more Middle Eastern markets. For now, however, other than with Oman, to which Iran exported $375 million of goods, trade with other Persian Gulf states, Lebanon, Syria and North African Arab states remains insignificant.
Now that western sanctions are being lifted, Iranian companies are less dependent on the Dubai route for transportation. Imports from the UAE amounted to $7.8 billion during the last Iranian year, down from $12.1 billion the previous year.

(Source: Financial Times)