Iraq is close to reaching a deal with Iran to build a railway system connecting the southern port city of Basra with the town of Shalamjah, just over the border, the government said this week.
The railway will link Iran with Syria and the Mediterranean, a long-held ambition of Tehran's, according to Iranian officials.
“Negotiations with Iran to build a railway system between Basra and Shalamjah has reached its final stages. In addition, we have signed 15 agreements and memorandums of understanding with Jordan and Egypt regarding energy and transportation lines,” said a statement from the office of Iraq’s Prime Minister, Mustafa Al Kadhimi.
Iraq’s cabinet approved funding for the project last month that is expected to run for about 30 kilometres and will cost approximately $150 million.
Iran's Mostazafan Foundation (MFJ), a semi-governmental charity that specialises in construction, will be responsible for the funding and execution of the entire project in Iran and Iraq.
Iranian state media reported that the railway link on the Iranian side has already been completed.
Iran proposed the idea in 2018, saying it “hopes to build a connection between the two cities".
If the project succeeds, then it would be the first rail connection between the neighbouring countries.
It would also improve ties and communication not only between Baghdad and Tehran but will bring Damascus closer.
Iranian President Hassan Rouhani praised the development and said the region will “witness a fundamental change”.
"This will be a big change and Iran's railway will be connected to Iraq and Syria, and in fact to the Mediterranean, which is very important," he said during a video conference last week.
In March, Iran’s Transport and Urban Development Minister Mohammad Eslami held talks with his Iraqi counterpart Nasser Al Shibli and said that a transportation link between the two is “vital for trade”.
Mr Eslami said Iran is ready “to strengthen transport relations between the two neighbouring countries in order to improve mutual economic cooperation,” according to a statement carried by Iran’s state news agency, IRNA.
Iran’s ambassador to Iraq, Iraj Masjidi, said the railway will make Baghdad a “regional transport hub”.
"Iraq could become one of the largest transit countries in the region, which will be connected to China through Iranian railways,” he said, according to IRNA.