Iran is continuing to bolster trade ties with neighbouring Iraq, despite tightening international sanctions.

The Iranian Trade Development Organisation (ITDO) reported more than $5.2bn-worth of trade exchanges between the two countries over the past 12 months.

According to data published by ITDO, Iran supplied $1.6bn-worth of engineering services to Iraq’s reconstruction programme, while a further $1bn in trade exchanges were accounted for by tourism, specifically religious tourism.

Iraq is home to several sites of religious significance to Shias, most notably the Imam Ali mosque in Najaf and the Imam Husayn shrine in Karbala, which attract hundreds of thousands of pilgrims from Iran every year.

Iraqi exports to Iran amounted to $121m in 2011, although this figure is expected to grow in 2012 as the country’s economic outlook improves.

Iran is also seeking greater involvement in Iraq’s utilities sector. Iran’s Energy Minister, Majid Namjou, recently told reporters in Tehran that the country was willing to build new power plants to help meet Iraq’s shortfall in electricity supply.

Iran’s recently commissioned Karkheh al-Emara power transmission line has the capacity to supply 1,200MW of electricity a day to Iraq.

Trade and diplomatic relations between Iran and Iraq continue to improve, with the Islamic Republic seeking to build closer ties with its western neighbour, much to the consternation of the US, which withdrew troops from Iraq in 2011.