Turkish Prime Minister Recep Tayyip Erdogan received a red carpet welcome in Baghdad on Monday, on a visit Iraq hopes will boost trade and overcome differences over a decades-old Kurdish insurgency.
Erdogan, who arrived with Foreign Minister Ahmet Davutoglu and a delegation of several dozen businessmen, was received on his second visit to Baghdad since October 2009 by Nuri al-Maliki, his Iraqi counterpart.
During his two-day visit Erdogan will also travel to Iraq's northern autonomous Kurdish region, the first Turkish prime minister to do so.
Turkey's fight against the Kurdistan Workers' Party (PKK), which has rear-bases in Iraq's border regions, is on the agenda of Erdogan's talks, sources in Ankara said.
But a key goal of the visit is to boost economic ties between the two neighbours, with the head of Iraq's National Investment Committee saying his war-ravaged country needs investment in everything from housing to oil refineries, hospitals to schools, and airports to power plants.
"There are many investment opportunities," Sami al-Araji said in a meeting with the delegation of Turkish businessmen. "We are waiting for you to come."
Iraq, still reeling from the 2003 US-led invasion that ousted Saddam Hussein and unleashed a wave of destruction, needs to rebuild or rehabilitate all industries.
Turkey has been a major investor in Iraq. It has invested in the gas sector, is a key conduit for Iraqi oil exports through its port of Ceyhan on the Mediterranean, and provides much-needed electricity. Turkish Airlines is one of a handful of international carriers with scheduled flights to Baghdad.
A senior Turkish official with the business delegation, addressing the meeting, said Turkey hoped that bilateral trade would rise from US$7.5 billion last year to $10 billion this year.
"Our goal is to reach a $25 billion target, and this is not impossible," he added.
Turkish firms provide some 80 per cent of the Kurdish region's food and clothes, and trade rose 30 per cent between 2008 and 2009.
Turkey has repeatedly accused Iraqi Kurds of turning a blind eye to activity within Iraq by the PKK but their leaders have been careful not to anger the larger neighbour.
The PKK, which is blacklisted as a terrorist group by much of the international community, took up arms against Ankara in 1984 for self-rule in Turkey's Kurdish-populated southeast, sparking a conflict that has claimed some 45,000 lives.
Kurdish populations live in northeastern Syria and western Iran as well as southeastern Turkey and northern Iraq. Some 2,000 PKK fighters are holed up in mountains in southern Turkey which straddle the border with Iran.