"We consider Iraq as our brother," Iranian Vice-President Mohammad Reza Aref said on Saturday, coinciding with an unprecedented visit to Tehran by Iraqi Prime Minister Ibrahim al-Jaafari.
"In a short time, we cannot only recover from decades of frosty relations but can also draw on what we have in common to become a model of firm ties in the region," he added.
Al-Jaafari, the first Iraqi leader to visit Tehran in decades, said both sides stood to benefit from a diplomatic rapprochement.
"These ties with Iran are very old and are based on our common interests," he said.
Iran and Iraq bludgeoned each other to a stalemate between 1980 and 1988, but on Saturday cemented improving ties with warm words that may foreshadow healthier commercial links, despite Washington's reservations.
Washington has taken a guarded view of predominantly Shia Muslim Iraq's rapprochement with its neighbour, which is overwhelmingly Shia, but regards some bridge building as inevitable.
It accuses Tehran of fomenting resistance to US troops in Iraq, funding anti-Israeli militia and of seeking nuclear arms.
Iran denies these charges.
"These ties with Iran are very old and are based on our common interests"
Iraqi prime minister
Tehran has long had ambitious plans to cooperate with its neighbouring member of the Organisation of the Petroleum Exporting Countries, by swapping crude oil and possibly even jointly developing border oilfields.
Although it seems the visit of al-Jaafari's ministerial delegation will bring neither of these projects tangibly closer, Iraq's oil minister said he hoped his country could pump a small volume of crude oil to Iran in return for much-needed petrol.
Ibrahim Bahr al-Uloum told reporters that he hoped a preliminary agreement would be signed on Monday. The two countries are also expected to negotiate rescheduling regular flights between Tehran and Baghdad and linking Iran's electricity grid to power-hungry Iraq.
Iran's official Islamic Republic News Agency quoted Iraq's industry minister as saying that the two countries would start joint car-making projects.
Iran has agreed to send about 200,000 tonnes of flour to Iraq and will guarantee letters of credit issued by an Iraqi bank to a total of $300 million.