Turkey risks boosting economic ties with Tehran

Turkey risks boosting economic ties with Tehran

Iran’s official news agency announced yesterday that the country exported a crude shipment to Europe for the first time since reaching a landmark nuclear deal with world powers.

Under normal circumstances, this news should have been met with excitement by Turkish officials, as it would become much easier to justify the southern corridor, the pipeline project that will pass from Turkey to connect energy producers with consumers. 

Ironically, before the war in Syria, northern Iraq was considered the rising star with potential energy resources to fill the pipeline while Iran was less of an option in the absence of an agreement looming on the horizon. Now it is vice versa and that alone shows us the fluidity in the Middle East.

From increasing economic ties to pipeline policies, Turkey has a lot to gain from the lifting of the embargo on Iran. The news of the nuclear deal followed by the end of sanctions should have been met with enthusiasm in Turkey. Indeed, it did create enthusiasm among the private sector, which has been suffering from the political strains the Justice and Development Party (AKP) has created among Turkey’s neighbors. 

And actually some among them are so desperate that they entered into exaggerated expectations. The tourism sector for instance expects to compensate for losses from Russia and Germany with tourists from Iran. But the numbers might fall rather than increase, since some Iranians used to come to Turkey in order to make their visa applications to third countries. With embassies reopening in Tehran, why bother coming to Turkey?

Having said that, the private sector has every reason to be hopeful since there is tremendous potential between the two countries. Yet this enthusiasm among the private sector needs to be accompanied by that from the government. 

Iran and Turkey are on the opposite sides in the Syrian proxy wars. Turkey’s dream of toppling Syrian President Bashar al-Assad has been dashed by the military support provided by Iran and Russia. With increased Russian involvement in Syria and following the downing of a Russian warplane by Turkey, the government is currently picking a fight with Russia. 

While pro-government media constantly talks about the Russia/Iran duo, demonizing both of them for their presence in Syria, there has not been inflammatory rhetoric lately on the official level against Iran, at least not since the lifting of the embargo. 

The Iranian side seems open to improving economic and trade ties despite a difference of views on Syria. It is not the first time that the two countries are on different pages as far as regional relations are concerned. While the two countries did not see eye to eye in Iraq for instance, they managed to continue their economic cooperation. But that was when the Iranian economy was under sanctions and Turkey was enjoying certain exemptions. Currently Iran has the upper hand, as it can diversify its economic partners. 

In addition it would have been easier to contain any spill over to economic relations from the Syrian issue had the divergence between Turkey and Iran been only on paper; in other words, on a theoretical level. Forging a stronger alliance with Saudi Arabia within the framework of Syria will make it extremely difficult to keep economic relations with Iran immune from political developments.

It seems that the current Iranian regime is trying to lure Turkey with the potential of increased economic relations between the two countries. So can Iranian money beat Saudi money? The private sector would certainly opt for Iran, but how about the public sector? Unfortunately the monetary relations with Saudi Arabia are very opaque. 

In the course of the first eight months of last year $10.9 billion entered Turkey. This is unaccounted for.
Perhaps it is not just ideological affinity that feeds a Turkish-Saudi unholy alliance.