TEHRAN, July 28 (AFP) - Turkish Prime Minister Recep Tayyip Erdogan was in Tehran on Wednesday for talks he hoped would boost cooperation in the fight against Kurdish rebels and smooth over a series of bitter business disputes.
The visit is a sign of growing political and economic ties between the two neighbours, whose relations had been beset by deep-rooted ideological differences.
Erdogan said he expected Iran would put Turkish Kurd rebels on its list of terrorist groups during the talks. This would be a major breakthrough in ties, as both sides have in the past traded accusations of sheltering dissidents.
"Tomorrow we will sign a memorandum of understanding on terrorism. We will sign the memorandum in a way which will include Kongra-gel/PKK as a terrorist organisation," he told reporters here.
The former Kurdistan Workers' Party (PKK), now known as Kongra-Gel, has waged a 15-year separatist war in predominantly Kurdish southeast Turkey. The group ended a five-year unilateral ceasefire with the government on June 1.
Turkey and Iran have recently boosted their cooperation on security matters, including against the PKK, and foreign ministry officials in Iran said the matter was due to be discussed in depth on Wednesday.
Iranian security forces this month launched a major crackdown on PKK militants hiding on Iranian territory along the border with Turkey, in which at least 10 rebels and two Iranian soldiers were reported killed.
Iran also has a Kurdish minority and shares Turkey's concerns that any moves toward greater autonomy by the Kurds in northern Iraq could spark unrest among their cousins in neighbouring countries.
"We saw that Iran shares the same views with Turkey on Iraq," said Erdogan, who is on a two-day visit and accompanied by a high-level political and economic delegation including some 130 businessmen.
"They agree with us on Iraq's territorial integrity, they are not keen on the idea of ethnic elements dominating each other and they share the same view that all of Iraq's underground resources belong to the Iraqi people," he said, referring to the rich oil resources in northern Iraq.
Economic cooperation will also be high on the agenda of Erdogan's talks with Iranian leaders.
According to official figures, trade between the two countries has increased dramatically in recent years, and was valued at 2.4 billion dollars (2.0 billion euros) in 2003, a 90 percent increase on the previous year.
Iran says the figure could surge to 10 billion dollars in the coming years.
But trade relations have been badly damaged by a disagreement over the price of natural gas Turkey is importing from Iran under a 1996 deal. Turkey halted imports, complaining of poor quality and asking Iran to reduce the price.
Erdogan said the two sides had appointed Turkish Energy Minister Hilmi Guler and Iran's Oil Minister Bijan Namdar Zanganeh to work on ironing out the hitches concerning the gas deal.
There has also been an embarrassing dispute over a contract to operate Tehran's new international airport won by a Turkish-led consortium.
Iran's Revolutionary Guards shut down the sprawling capital's new showpiece airport on May 8 after just one flight landed.
The Guards argued that the contract with Tepe-Akfen-Vie (TAV), an Austrian-Turkish consortium, endangered the Islamic republic's security because the operators also had business dealings with Israel.
President Mohammad Khatami, a reformist, said in mid-July the dispute had been resolved and the airport could now reopen, but top deputies in Iran's now-conservative parliament have vowed to impeach Iran's transport minister if the deal goes ahead.
However, the official news agency IRNA quoted a statement from TAV saying the contract problem had been solved after an Iranian company was admitted into the operation.
Erdogan met with the head of the parliament Wednesday, officials here said. He also met with powerful former president Akbar Hashemi Rafsanjani, and would be meeting with Khatami on Thursday.