Saudi Arabia will put $3 billion into a new joint fund with Iraq to spur development in the private sector.
The joint fund will be for the “benefit of the Saudi and Iraqi economies, with the participation of the private sector from both sides”, the kingdom announced on Wednesday night after a visit by Iraqi Prime Minister Mustafa Al Kadhimi.
Saudi Crown Prince Mohammed bin Salman met Mr Al Kadhimi on Wednesday, during the visit aimed at boosting co-operation as Baghdad seeks to build closer ties to the Gulf.
Saudi Arabia’s investments in Iraq are expected to increase to 10 billion riyals ($2.67bn) from about two billion riyals at present, the state-run SPA news agency said.
“Over the past few months relations with Saudi Arabia have accelerated in a positive direction,” Mr Al Kadhimi said.
“We succeeded in overcoming a lot of the challenges that were obstructing the progress of the relationship.”
The pair also agreed to grow co-operation in renewable energy and maintaining stability in the global oil markets, a joint statement said.
Iraq is the second-largest producer in Opec, outranked only by Saudi Arabia.
The two countries signed three new agreements – one to avoid double taxation, another for co-operation in planning for economic diversification and private sector development, and the third on financing Saudi exports.
Mr Al Kadhimi’s trip came after the countries reopened their Arar land border crossing in November for the first time since Riyadh cut diplomatic ties with Baghdad in 1990 when Iraqi dictator Saddam Hussein invaded Kuwait.