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Iraq had built new pipelines through Turkey and Syria, and it developed a new port and offshore oil- loading terminals in the Persian Gulf.
The ruling Ba'ath Party in Iraq was socialist and pro-Soviet, whereas the Iranian shah was anti-socialist (though certainly not democratic) and pro-Western.
The essentially secular Iraqi leadership became more of an issue after the Iranian revolution, when Ayatollah Khomeini, who had spent part of his exile in Iraq (he was expelled in October 1978), began encouraging his former colleagues to overthrow Saddam Hussein in Iraq because his regime was anti-Islamic.
Saddam outlawed the group, deported large numbers of Iraqis who'd been born in Iran, and executed one of the Shiite clerics who'd led the protests against his regime.
Khomeini then began to publicly call for the overthrow of Saddam.
Both nations are Muslim, with the leaders of Iraq primarily from the Sunni branch, and the Iranians, the Shiite.