Iran has announced that it will allow Iraqi travelers and businesspeople to visit the Iranian cities of Abadan and Khorramshahr without the need for a visa, Iranian and Iraqi media reported. According to the consulate general of Iran in the Iraqi city of Basra, Tehran is waiting for the Iraqi government to approve the new policy and cancel the visa requirement for its citizens planning on traveling to the two Iranian cities. The announcement by the Iranian diplomatic mission in Basra drew mixed reactions in Iraq. While some Iraqis welcomed the decision, other Iraqi economic and trade experts cautioned that the visa waiver program only benefited the Iranian side. “The Iraqi economy is going to be the only loser in this deal,” warned Dr. Nabeel Jafaar, an Iraqi economist. He pointed out that even if Iraq reciprocates the visa-waiver program, there are no local products that the Iraqi government and businesses market to Iranian travelers. On the other hand, as more Iraqis buy cheaper Iranian products in Iran, a surplus of good in the Iraqi market will hurt Iraq’s economy, he claimed.

Abdul Saheb Saleh, the vice president of an Iraqi business association in Basra, said the Iranian government has taken a clever decision as more than 2,000 Iraqis travel to Iran every day and contribute to the local businesses there. But he argued that the visa-free agreement between Tehran and Baghdad may indirectly benefit Iraq by encouraging regional Arab countries to relax visa requirements and reduce visa fees for Iraqi tourists and businesses. He noted that Iraqis pay up to $1,800 for a Kuwaiti visa in the black market.

Comment: With ISIS militarily defeated, Tehran believes that a visa-free travel agreement with Iraq would significantly bolster Iranian exports. Iran has exported about $6 billion non-oil goods to Iraq over the past one year and sees Iraq a lucrative market for its domestically produced merchandise.

Tehran has been pushing Baghdad to agree to lift visa requirements for travelers from the two countries for more than a year now.  “We have submitted our request for the removal of visa requirements to the Iraqi government,” Hassan Danaeifar, then Iran’s ambassador to Iraq, said in December 2016. He pointed out that Tehran is waiting for Baghdad to respond to the request. Such an arrangement would facilitate travel for citizens of both countries as millions of Iranians and Iraqis visit each other’s countries every year, predominantly for pilgrimage.

Many Iraqi analysts, however, believe that a visa-free agreement would disproportionately benefit Iran because of the huge trade deficit between the two countries as Iraq is struggling to revive its war-torn economy.

Some Iraqis have also pointed out that while Iran offers visa-free travel to Khorramshahr and Abadan, Iraqi businesses that want to invest in those cities would have to register their assets under the ownership of an Iranian citizen. They express the worry that this fuels corruption, citing that many government officials and parliamentarians from Basra have invested in Iranian visa-free zones but the Iraqi government has no oversight over these assets as they are managed by Iranians.

Moreover, Iraqi analysts argue that Tehran’s proposal is also aimed at countering Saudi Arabia’s recent openness to Iraq. Ahmed Fadel, an Iraqi activist, said many Saudi Arabian companies have lately opened businesses in Basra, and that Riyadh is planning on opening a consulate in Basra in the near future.