Exports to Iran rise on embargo

Exports to Iran rise on embargo

Servet Yeşilyurt ISTANBUL – Hürriyet Daily News
Exports to Iran rise on embargo

A part of the Maroun Petrochemical plant is seen, at the Imam Khomeini port, southwestern Iran is seen in this file photo. The Islamic republic, one of the largest oil suppliers for Turkey, is facing strict US sanctions. AP photo

Turkey’s exports to Iran rose by nearly 127 percent year-on-year in the first four months of the year mainly due to the side effects of a United States embargo on the Islamic republic, which will become even harsher after July 31. 

“There are several factors why Turkey’s exports to Iran have risen significantly. Sanctions have affected Iran in two ways. First of all, international financial transactions in terms of the dollar and euro have come to an end. We have also taken advantage of being the most important trade partner of Iran among neighboring countries,” Samet İnanır, the strategy and business development counselor to the Foreign Economic Relations Board (DEİK), told the Hürriyet Daily News yesterday in a phone interview. The U.S. and its allies have been tightening their grip with sanctions to stop Iran’s alleged efforts to make nuclear weapons.

Turkey’s exports to Iran exceeded $2.6 billion, taking a 5.5 percent share of total exports, while imports were up 46 percent, hitting $5.2 billion with a 6.9 percent share of total imports in the first four months of the year compared with the same period in 2011.

But a bigger factor is the increasing activities of Iranian companies or partnerships in Turkey over the last year and a half, he said. “These companies have shifted some of Iran’s intermediary goods imports to Turkey,” İnanır added.

Turkish exports to Iran amounted to more than $2.6 billion in the first four months, mainly thanks to a high increase in intermediary good sales.

The exports figures in intermediary goods in the first four months of 2011 reached nearly $750 million, while the annual figure for intermediary good exports exceeded $2.3 billion. Intermediary goods in first four months of this year almost equaled the 2011 figure in this category. The Arab Spring is another factor; with textile exports particularly are reaching Iran through Turkey, İnanır said. 

Gold exports are also an import factor in Turkey’s export mix to Iran, İnanır said. Iranians have been increasingly using gold to hold their savings in a country vulnerable to rising inflation, as an instrument of payment and for financial transactions as sanctions cripple the country’s financial lifelines. 

The estimated inflation rate was 22.5 percent, according to CIA World Factbook. 

Turkey exported $1.2 billion worth of gold to Iran in April, according to TÜİK data. 

In April, Iran became the biggest export market with nearly $1.5 billion, taking 11.6 percent of total exports, surpassing Germany, to which exports totaled $1.1 billion.

Turkey’s exports to Iran have been steadily increasing over the last years. The exports figure was about $2 billion in 2008 and 2009, $3 billion in 2010 and $3.6 billion in 2011, according to data from the Ministry of Economy. The figures for 2011 and 2012 are tentative, the ministry says.

Turkey is under pressure from the United States and the international community to decrease Iranian crude oil purchases, which constitute a big chunk of imports from the country.

But Turkey’s imports from Iran surpassed the level before the global financial crisis in 2011. The imports figure was about $6.6 billion in 2007, $8.2 billion in 2008, $3.4 billion in 2009, $7.6 billion in 2010 and $12.4 billion in 2011 according to data by the Ministry of Economy. In the first four months imports from Iran totaled nearly $5.2 billion according Ministry of Economy data.

Turkey and Iran’s trade volume is currently way under the estimated potential of $40 billion, according to İnanır.