Iraqis in Iran for economy talks

Iran is keen to improve relations with Iraq

The head of the Iraqi Governing Council has arrived in Iran on the first leg of a tour of the region.

Jalal Talabani and a delegation from the council are expected to meet President Mohammad Khatami before heading to Turkey later this week.

Their talks are likely to focus on security and economic issues, such as the export of Iraqi oil via Iran.

Iran still wants the return of remains of prisoners of war it says Iraq captured in the 1980-88 war.

The visit is the first to Iran by the Iraqi Kurdish leader since the fall of Saddam Hussein.

Oil swap

Earlier this month, Mr Talabani urged Tehran to do more to control its borders, saying militants had crossed into Iraq from Iran.

As Iraq's neighbour we cannot remain indifferent towards development in Iraq Kamal Kharrazi

Tehran has pledged to provide Iraq with aid worth $300m and greater access to the Gulf and other trade and transit corridors.

An official source in Tehran told Reuters news agency Iran was prepared to accept 350,000 barrels per day of Iraqi oil at its Abadan refinery, and sell on an equivalent quantity of Iranian oil on Baghdad's behalf via its Kharg Island terminal in the Gulf.

An ambitious tourism scheme hopes to bring $500m in revenue each year from the thousands of Iranian tourists expected to visit Iraq's religious sites.

"As Iraq's neighbour we cannot remain indifferent towards development in Iraq," Iran's Foreign Minister Kamal Kharrazi told correspondents.