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By Pinar Aydinli
BAGHDAD (Reuters) - Turkish Prime Minister Tayyip Erdogan and Iraqi premier Nuri al-Maliki Thursday signed deals from energy co-operation to water sharing and fighting Kurdish rebels.
Relations between Ankara and Baghdad have been strained in the past by the presence of Kurdistah Workers Party (PKK) separatists who use northern Iraq as a base to launch attacks on southeast Turkey.
But trade and diplomatic ties have bloomed since the 2003 U.S.-led invasion of Iraq that ousted Saddam Hussein as regional heavyweight Turkey has sought to expand its influence in the Middle East under Erdogan's Islamist-rooted AK Party government.
The two countries have estimated trade worth more than $5 billion (3 billion pounds) but there is enormous potential for the future as European Union-candidate Turkey aims to position itself as a vital energy and trade corridor with its eastern neighbors, including Iraq, Iran, Syria and the South Caucasus.
Erdogan flew to Baghdad accompanied by nine ministers who planned to meet their Iraqi counterparts and sign a total of 44 agreements, including a memorandum of understanding to transport Iraqi natural gas to Europe via Turkey, Turkish officials said.
They said they also expected talks on boosting cooperation in the fight against the PKK, whose presence in the mountains of northern Iraq has been a major irritant in relations between the two countries.
Agreements on water sharing, transportation, health, agriculture, education and engineering were also due to be signed under the so-called High Strategic Collaboration meeting.
"The fundamental aim of the High Strategic Collaboration in our region is the establishment of comprehensive economic unity and cooperation," Erdogan said ahead of the trip in Ankara.
Turkey and Syria held a similar meeting Tuesday.
Under international sanctions imposed on Saddam, trade between Turkey and Iraq choked to a trickle. Turkey's complaint that Baghdad was doing little to crack down on PKK rebels also poisoned ties.
But trade improved dramatically after the 2003 invasion, with Turkish companies playing a leading role in reconstruction.
Thursday Turkish Energy Minister Taner Yildiz said Ankara would seek the involvement of Turkish firms in the construction of a 15,000 megawatt (MW) gas-fired power station which Iraq wants to build. Iraq is expected to tender next month for some $500-600 million of gas-fired power station projects, he said.
Iraq will also start natural gas imports to Turkey at a level of 8 billion cubic metres, Yildiz said.
Government sources said Iraqi gas would be sent on to Europe, which would add to Turkey's plans to become a major regional energy hub for European supplies.
It was not clear whether the gas would go through the 7.9 billion euro European Union-backed Nabucco pipeline project, aimed to cut European dependence on Russian gas. Al-Maliki said at a signing ceremony for the project in July that Iraq could supply 15 billion cubic metres of natural gas to Europe.
Turkish officials said the two countries also planned to extend an agreement over an Iraq-Turkey oil pipeline, complete new power lines and boost the capacity of existing ones between the two countries.
In September, Turkey agreed to release more water from the Euphrates river to drought-ravaged Iraq, increasing the outflow to between 450 and 500 cubic metres per second until October 20.
Only a few months before that, Iraqi lawmakers agreed to block any pact signed with Turkey, Iran or Syria that did not include a clause giving Iraq a fairer share of water resources.
PKK rebels have been fighting for 25 years for an ethnic Kurdish homeland in southeast Turkey. Turkey has bombed and shelled PKK areas in northern Iraq using intelligence provided by Washington. Turkey's attacks are believed to have greatly weakened the Kurdish guerrillas, whose attacks on Turkey have dropped in recent months.
Some 40,000 people have been killed in Turkey since the PKK took up arms in 1984.
(Additional reporting by Waleed Ibrahim, writing by Ibon Villelabeitia and Thomas Grove; Editing by Janet Lawrence)

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