Iran hopes to double trade with Iraq to $8 billion this year, an Iranian diplomat said on Sunday, shrugging off Western-backed sanctions aimed at curbing business with the Islamic Republic.

Shi'ite Muslim Iran is the main trading partner of Shi'ite-led Iraq and has been one of the largest investors in Iraq since the fall of Sunni dictator Saddam Hussein.

A series of agreements between Baghdad and Tehran could boost bilateral trade between the two countries to $8 billion in 2010, up from $4 billion last year, Iran's consul in the southern oil hub of Basra Mohammed Reza Baghban said.

We are sure that, if there are no obstacles in Iraqi-Iranian economic relations, bilateral trade between the two countries will be double what it was in 2009, he told reporters at an Iranian trade fair in Basra.

The main areas of trade between the two countries are the construction, food and industrial sectors.

The United States and its European allies have been trying to pressure Iran to suspend its disputed nuclear programme, which the West suspects is aimed at making bombs. Tehran says the programme is for peaceful purposes and will not be halted.

The Islamic state is currently under U.S. and U.N. sanctions.

Iraq wants to boost economic ties with its neighbors and attract investment to develop an infrastructure and economy battered by years of war, under-investment and sanctions.

(Reporting by Aref Mohammed; Editing by Rania El Gamal and Jon Boyle)