Lifting sanctions on Iran poses opportunities and risks for Turkey: DEİK
Merve Erdil - ISTANBULThe lifting of sanctions on Iran creates both opportunities and risks for the Turkish economy so the process needs to be run very carefully, according to the head of the Foreign Economic Relations Board (DEİK).
“The lifting of sanctions on Iran marks the biggest global economic integration case since the integration of the Eastern Bloc after the end of Cold War. This process creates both opportunities and risks for us,” said DEİK head Ömer Cihad Vardan at the launch of a joint assessment report with the Turkish Exporters’ Assembly (TİM) late on June 16.
Vardan noted that Iran would likely rival Turkey in energy-intensive sectors such as the cement sector, the iron and steel sector, and the ceramics sector.
“Iran will also be a strong competitor in trade, especially in the Iraqi, Afghan and Tajik markets. We need to manage the risks thoroughly when evaluating the opportunities,” he noted.
Vardan also added that the retail, construction and tourism players will likely find big opportunities in the Iranian market.
‘Four priorities defined’
The DEİK has defined a number of priorities for the Iranian market, Vardan stated.
“These include modernizing the existing customs and logistics infrastructure, extending the preferential trade agreement between Turkey and Iran, gradually transforming this deal into a free trade deal, normalizing banking relations between the two countries, extending Eximbank credit lines, and managing political, managerial and regulatory risks in the Iranian market. We do not want to experience the bad experiences we faced in the past again,” he added.
“We will speed up organizing trade and investment delegation visits to Iran’s leading economic hubs especially for Turkish companies, which are active in the competitive sectors,” noted Vardan.
According to the report, the elimination of some of the negative effects of the sanctions will take time.
Turkish companies that want to do business in Iran need to be careful about the nontransparent tax structure there, several unproductive bureaucratic procedures, the strong state presence in the economy, and the fairly strict business regulations, among others.
According to the best scenario in the report, Turkey’s exports to Iran could rise to 13.7 percent of all exports.
Annual exports to Iran would reach $5.1 billion by 2020, according to these estimates.
“With the sanctions, our exports to Iran saw a dramatic decline, although the annual growth rate hit up to 26 percent in the pre-sanctions era. Turkey’s exports have declined by 55.4 percent now compared to the pre-sanctions era. In the new era, we have achieved an increase in our exports to Iran of around 25 percent.
Iran is now our second biggest target country for our exporters,” Turkey Exporters Assembly (TİM) President Mehmet Büyüekşi has said.