The National - Iraq and Iran have agreed to ease visa restrictions in an effort to boost investment and tourism, despite mounting US sanctions aimed at debilitating Tehran's financial alliances in the region.

Tehran has increasingly cosied up to Baghdad, in search of its neighbour's support as it faces the Trump administration's embargo, following the US' decision to withdraw from the 2015 Iran nuclear deal.

President Hassan Rouhani, accompanied by a high ranking political and economic delegation, arrived in Iraq on Monday for his first ever official visit.

The two sides announced that this week the signing of several memorandums of understandings � including agreements on oil, trade, health and a railway linking the southern oil-rich city of Basra and the Iranian border town of Shalamcheh.

They also agreed to ease the visa process for businessmen and investors and issue tourist visas free of charge.

�Visas will be issued by both sides and will be free of charge to Iranian an Iraqi pilgrims and tourists as of April,� Mr Rouhani�s office announced on Tuesday.

Millions of Iranian pilgrims travel to Iraq every year to visit the southern city of Karbala for the annual pilgrimage of Arbaeen, which marks the end of a 40-day mourning period for the third Shiite Imam, Hussein.

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, according to Iran�s Cultural Heritage, Handicraft and Tourism Organisation.

Iran needs Iraq today more than ever. With the US tightening the screws on Tehran, Iraq becomes an ever more valuable economic lifeline, Fanar Haddad, Senior Research Fellow at the Middle East Institute, told The National.

�The visit fits in with Iraq�s broader foreign policy of strengthening relations with all regional powers. From Iraq�s point of view strengthening bilateral relations with Iran on the one hand and Iraq�s relations with the US on the other are not mutually exclusive � rather, it is a compulsory balancing act,� Mr Haddad said.

Far from the bloody eight-year Iran-Iraq war in the 1980s, the two countries are mutually reliant on each other in more ways than one.

Mr Rouhani said he wanted deeper political economic ties between with Baghdad, while Mr Abdul Mahdi stressed that Iraq was aware of the difficulties Iran had been facing.

�We are cooperating and thoroughly understanding how we can help each other,� Mr Abdul Mahdi said.

Meeting Iraq's top cleric

During the last day of his visit, Mr Rouhani met with Iraq�s most senior Shiite cleric, Grand Ayatollah Ali Al Sistani in the holy city of Najaf. This was the first meeting for an Iranian leader with Ayatollah Al Sistani, who rarely holds meetings with officials. Former Iranian President Mahmoud Ahmadinejad did not meet with Iranian-born cleric during his 2008 visit to Iraq.

"Rouhani's meeting today with Iraq's top cleric Sistani carries major political signals to Rouhani's opponents at home," Ellie Geranmayeh, a Senior Policy Fellow at the European Council of Foreign Relations tweeted on Wednesday.

Mr Rouhani also met with other religious figures, tribal leaders and local officials in Kerbala, as well as his Iraqi counterpart Barham Salih. A "stable Iraq will lead to stability in the region," he said to journalists.

US Warning

Iraq is walking a fine line to maintain good relations with allies Iran and US, as the two struggle to mend a deteriorating relationship.

Washington warned Iraqis that the Iranian president�s visit hides ulterior motives.

"When President Rouhani comes into Iraq, you have to question the motive," Brain Hook, the US Special Representative for Iran said on Tuesday.

"I think what Iran would ultimately like to see happen is Iraq turn into a province of Iran so that they can create a military highway across the northern Middle East that the Iran Revolutionary Guard Corps can use to ferry missiles and weapons."

Mr Hook stressed that Iran is "the last revolutionary regime on earth," and it is trying to further destabilise the Middle East by reinforcing the sectarian divide.

�Rouhani�s visit to Iraq is not in the interest of serving Iraqis,� he told Al Hurra TV.

Last December, a range of Iraqi lawmakers criticised US President Donald Trump over his surprise visit to a US military base in Iraq.

Mr Trump failed to meet any of the officials in Baghdad.

�For me the most glaring thing about Rouhani�s visit is how starkly it contrasts with Trump�s visit last year. The former underlines and doubles down on Iran�s investment in Iraq while the latter signals an arrogant disregard for the country,� Mr Haddad said.

Mr Trump spoke on the phone with the Iraqi premier and invited him to visit the White House. Plans for the two to meet in person at the base were cancelled due to security purposes, said Sarah Huckabee Sanders, the White House press secretary.

Tehran sees a US military presence at its doorstep in Iraq as a threat, one that could undermine its influence over Baghdad.

Mr Rouhani, who is on a second four-year term, is particularly vulnerable because of the Tehran�s economic crisis.