Iraq's Parliament has approved a bill exempting Iranian nationals from visa fees to try to increase economic and tourism ties between the countries.
“We want Iraq to be part of the solution to the challenges facing the region, and are working to create an environment that rejects conflict and instead fosters co-operation,” Prime Minister Adel Abdul Mahdi said on Tuesday evening.
Tehran has increasingly reached out to Baghdad for its support as it faces heavy US sanctions after President Donald Trump’s decision to withdraw from the 2015 Iran nuclear deal.
On Wednesday Mr Abdul Mahdi and Iranian President Hassan Rouhani spoke of the importance of strengthening security ties.
The visa waiver will be introduced only if Iran reciprocates.
Mr Rouhani, accompanied by a high-ranking delegation, arrived in Iraq this month for his first official visit.
During his three-day stay, he announced that visa exemptions for Iraqi nationals who intended to visit Iran would begin on April 1.
Millions of Iranian pilgrims travel to Iraq every year to visit the southern city of Karbala for an annual pilgrimage.
More than 80 per cent of foreign visitors to Najaf are from Iran.
But since the imposition of US sanctions the number of people travelling from Iran fell by 30 per cent in the first nine months of 2018 to 5.9 million, Iran’s Cultural Heritage, Handicraft and Tourism Organisation says.
Mr Rouhani said he wanted deeper political and economic ties with Baghdad, while Mr Abdul Mahdi stressed that Iraq was aware of the difficulties Iran was facing.