( AP )- Iranian President Mahmoud Ahmadinejad said Saturday that U.S.-Iran talks have helped improve security in Iraq but he rejected claims that the Islamic republic is fueling violence there, the state news agency reported.
"The outcome of (U.S.-Iran) talks have helped stabilize conditions in Iraq a great deal," IRNA quoted Ahmadinejad as telling Iraqi journalists in Tehran, a day ahead of his landmark visit to Iraq.
Iranian officials also touted their country's growing economic ties to Iraq, particularly $1 billion in loans set aside for infrastructure projects there.
The previously announced loans will be earmarked to reconstruction projects conducted by Iranian companies, Deputy Iranian Foreign Minister Ali Reza Sheikh Attar told the official IRNA news agency late Friday.
The money "was among the main issues discussed with the Iraqi side," Attar said, as he ended a visit to Baghdad as part of a delegation paving the way for Ahmadinejad's visit.
Some 10 other economic cooperation agreements are expected to be signed between Iran and Iraq during Ahmadinejad's visit. The trip will be the first official visit by an Iranian head of state to Iraq.
Iran's relationship with Iraq has concerned the U.S., which accuses Tehran of aiding Shiite Muslim militias in Iraq that target U.S. troops. Iran has denied those allegations, saying its interests are better served if Iraq, a fellow Shiite-majority country, is stable.
"The political aim of the president's visit is to materialize the idea of establishing durable peace borders between Iran and Iraq," IRNA quoted Attar as saying.
The Iranian president also plans to inaugurate two power lines during his trip, Deputy Energy Minister Mohammad Ahmadian said.
He said one 400-megawatt electricity transmission line would run from the Iranian port city of Abadan to the Iraqi town of Alharasa, and another from Iran's Marivan to Panjwin in Iraq.
A third electricity line supplying power to Khaneqin in eastern Iraq is already operational, Ahmadian said.
Tehran had previously signed a $150 million contract to build a 300-megawatt power plant in Baghdad.
Iraq and Iran were hostile to each other throughout Saddam Hussein's regime and fought a long and destructive war during most of the 1980s.
But when Saddam's Sunni regime fell and Iraq's Shiite majority took power after the 2003 U.S.-led invasion, long-standing ties between the Shiites of both countries flourished again, though the two neighbors have yet to sign a peace treaty.
Iran's ambassador to Baghdad, Hasan Kazemi Qomi, said last August that Iran-Iraq trade in 2006 totaled $2 billion - 97 percent of that exports from Iran into Iraq. Iranian Commerce Ministry officials say they hope trade will soar to $10 billion in the next five years.