Turkish businesses and the referendum in northern Iraq

Turkish businesses and the referendum in northern Iraq

An independence referendum set to take place on Sept. 25 in northern Iraq, which has been suffering from an economic crisis for three years, preoccupies the agendas of businessmen who are associated with the area.

The most comfortable ones are Turkish contractors. The president of an association of Turkish construction firms, Mithat Yenigün, said, “We already left the area. The result of the referendum does not directly affect us.”

The Kurdish Regional Government (KRG) announced that there will be an independence referendum, arguing that they are not supported efficiently enough by the central government of Iraq. There is no doubt that the referendum will change the political equilibrium in the region.

Many countries, especially the United States, are supporting this decision. But Turkey is not happy with the decision and announced many times that it is against the referendum. Only five years ago there were more than 1,500 Turkish companies and Turkish contractors with investments worth $30 billion in the region.

What can happen in the economy of this market? How will an independence decision to emerge out of the referendum influence companies?

There has been an economic crisis for three years in the area. Northern Iraqi oil cannot be sold and the region does not get enough shares from the budget of the central government. The investments have been stopped. Turkish contractors left the area since they could not collect their dues worth almost $3 million.

The president of the Turkish Contractors Association (TCA) said there is no progress on the issue.

I asked Emin Taha, the president of the Turkish-Iraq Business Council which operates under the Foreign Economic Relations Board of Turkey (DEİK), about the current situation and the possible effects of the referendum.

He said the contracting companies already stopped work and left the market. Nevertheless, he did add that northern Iraq is an essential market for Turkey despite its problems. The projects of some companies have been left unfinished but they can return to the market once payments start, according to Taha.

Visa problem solved
“There is a certain restlessness,” he said about the referendum, adding, “We are in a waiting period but there is no problem with the relations. We solved the problem regarding visas. The amount of tourists coming from Iraq to Antalya, İzmir, and Yalova increased. Exports exceeded more than $4 billion in the first five months of this year. According to my prediction, it will reach $10 billion by the end of this year.” 

The way the referendum will influence these developments will depend on the decisions the government will take, according to Taha. “Trade and export must continue. I believe they will continue anyway. The survival of the southern provinces such as Gaziantep depends on this. If these factories also close, unemployment would increase. And this strengthens terror,” he said.

This conversation shows that even though there might be a problem at the political level, the economy will continue in the same way as it is now. Besides, the reconstruction of Iraq is also another current issue being discussed. It is said that the government of Iraq needs $100 billion. These issues point toward a very serious economic development. How much will Turkish companies benefit from these opportunities? All of this will depend on the political developments in the area.