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Iran and Iraq's modern relationship

The relationship between Iraq and Iran has warmed immensely since the downfall of Saddam Hussein, out of mostly pragmatic interests, as they share a common enemy in the Islamic State. Significant military assistance has been provided by Iran to Iraq, resulting in Iran holding a large amount of political influence in Iraq's newly elected Shia government. Iraq is also heavily dependent on the more stable and developed Iran for its energy needs, so a stable Iraq is an interest for Iran, foreign policy wise.

The Iran–Iraq War is regarded as being a major trigger for rising sectarianism in the region, as it was viewed by many as a clash between Sunni Muslims (Ba'athist Iraq and other Arab States) and the Shia revolutionaries that had recently taken power in Iran. There remains lingering animosity however despite the pragmatic alliance that has been formed as multiple government declarations from Iran have stated that the war will "affect every issue of internal and foreign policy" for decades to come.

The sustained importance of this conflict is attributed mostly to the massive human and economic cost resulting from it, along with its ties to the Iranian Revolution. Another significant effect that the war has on Iran's policy is the issue of remaining war reparations. The UN estimates that Iraq owes about $149 billion, while Iran contends that, with both the direct and indirect effects taken into account, the cost of the war reaches a trillion.

Iran has not vocalized the desire for these reparations in recent years, and has even suggested forms of financial aid. This is due most likely to Iran's interest in keeping Iraq politically stable, and imposing these reparation costs would further burden the already impoverished nation. The most important factor that governs Iraq's current foreign policy is the national government's consistent fragility following the overthrow of Saddam Hussein. Iraq's need for any and all allies that can help bring stability and bring development has allowed Iran to exert significant influence over the new Iraqi state despite lingering memories of the war.

Currently, Iraq is between two opposing interests, one with Iran, who can provide a reliable source of power as well as military support to the influential Shia militias and political factions, and the other with the United States, who can offer Iraq significant economic aid packages, along with military support in the form of air and artillery strikes. If Iraq is seen to be pulled too far into one side's orbit, then the benefits offered to them by the other side will likely be gradually reduced or cut off completely. Another significant factor influencing relations is the shared cultural interests of Iraq and Iran's citizens to freely visit the multitude of holy sites located in each country.