A member of the Saudi Arabia delegation arrives for the opening ceremony of their consulate in Baghdad, Iraq, Thursday, April 4, 2019. Saudi Arabia is opening four new consulates in Iraq and plans to invest one billion dollars for Saudi projects in Iraq. (AP Photo/Hadi Mizban)

BAGHDAD - Saudi Arabia on Friday reopened a consulate in Baghdad for the first time in nearly 30 years and announced a $1 billion aid package for Iraq, a sign of improving ties between the two neighbours whose relations have been uneasy for years.

The consulate, which will issue visas to Iraqis, was opened at a ceremony in Baghdad's heavily fortified Green Zone, during which Iraq's Foreign Minister Mohamed Alhakim raised a green Saudi flag over the building.

Iraqi Foreign Ministry spokesman Ahmad Sahhaf said the move was expected to benefit both countries.

"This will reflect positively on pilgrims and investors," he told The Associated Press. He said work was also underway to reopen border crossings between Iraq and its southern neighbour.

Iraq lies on the fault line between Shiite Iran and the mostly Sunni Arab world, and its relations with the Sunni kingdom have long been troubled. Saudi Arabia cut ties with Iraq when it invaded Kuwait in 1990. Diplomatic relations were resumed in 2015 when Riyadh sent an ambassador to Baghdad, and improved with the then-Saudi Foreign Minister Adel Al-Jubeir's visit in 2017, the first by a Saudi foreign minister since 1990.

But consulate services were not resumed and Iraqis applying for visas had to go through the Saudi embassy in Jordan.

Riyadh is now seeking closer ties to Iraq to counter Iran's growing influence in the region and in Iraq in particular, while Baghdad seeks to attract Saudi investments to spur economic growth.

Thursday's consulate ceremony came on the second day of a two-day visit by a delegation headed by the Saudi minister of commerce and investment, Majid bin Abdullah al-Qasabi. The delegation met with Iraq's prime minister, Adel Abdul-Mahdi, and held talks with Iraqi businessmen and senior Iraqi officials meant to boost relations between the two countries.

Al-Qasabi said three more consulates were expected to open in Iraqi cities. He also said Saudi Arabia would provide Iraq with $1 billion in loans for development projects and a gift from King Salman for a sports stadium to be built south of Baghdad.

"We have started a new phase in relations between Iraq and Saudi Arabia," he said.

Iraq's Prime Minister Adel Abdul-Mahdi is visiting Iran on Saturday and plans to visit Saudi Arabia later this month during which a number of trade agreements are expected to be signed.

News from © The Associated Press, 2019