TEHRAN, July 29 (AFP) - Turkey`s Prime Minister Recep Tayyip Erdogan was wrapping up a landmark visit to Iran on Thursday, with the two sides appearing to have put aside deep-rooted differences by pledging to boost trade and address their common fear of Kurdish rebels.
The two-day visit, which caps a recent warming of ties between the two neighbours, was due to culminate with the signing of three key financial agreements and one on security cooperation later in the evening before Erdogan`s departure.
Erdogan has been pressing Iran to put Turkish Kurd rebels on its list of terrorist groups. This would be a major breakthrough in ties, as both sides have in the past traded accusations of sheltering dissidents.
The premier said he hoped Iran would be officially signing up to fight the former Kurdistan Workers` Party (PKK), now known as Kongra-Gel. The group has waged a 15-year-long separatist war in predominantly Kurdish southeast Turkey.
Turkey and Iran have recently boosted cooperation on security matters, including against the ex-PKK, with Iranian security forces earlier this month launching a major crackdown on their militants hiding in Iranian territory along the border with Turkey.
Iran also has a Kurdish minority and shares Turkey`s concerns over any moves toward greater autonomy by the Kurds in northern Iraq.
Erdogan, accompanied by a political and economic delegation including some 130 businessmen, told reporters that "Iran shares the same views with Turkey on Iraq".
And Iranian President Mohammad Khatami, quoted by the official news agency IRNA, said there was a "political urgency" for improved ties -- a clear reference to ongoing violence in Iraq.
During his visit, Erdogan also met the Islamic republic`s ministers of oil, defence and foreign affairs. He was also greeted by powerful former president Akbar Hashemi Rafsanjani, as well as the head of the new conservative-controlled parliament.
Much of the talks were aimed at resolving a series of bitter trade disputes that have badly damaged confidence on both sides, already far apart in ideological terms.
Officials close to the talks 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 a natural gas supply deal signed in 1996.
Turkey has halted imports, complaining of poor quality and asking Iran to reduce the price.
There has also been an embarrassing spat 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, arguing 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.
Officials said the problem was close to being finally resolved, with the compromise being that Iranian companies would have a greater role in the work. But hardliners in the new parliament have continued to assert their opposition to the government allowing the deal to go ahead.
The third trade issue was centered on the awarding of a contract to Turkcell, Turkey`s biggest mobile phone operator, to set up Iran`s first private mobile telephone network.
The company could invest up to three billion dollars in the project, which would rank among the largest foreign investments here since Iran`s Islamic revolution 25 years ago.
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.