What the Iran Deal could cost Turkey

What the Iran Deal could cost Turkey

Merve Tahiroğlu*
The nuclear deal between six world powers and Iran signed earlier this month presents a predicament for Turkey. On one hand, the Islamic Republic is a neighbor that offers vast economic and energy opportunities. On the other, it is a menace that threatens Turkey’s regional interests. The international sanctions on Iran allowed Ankara to enjoy the best of both worlds – for a time. Turkey not only benefitted from Iran’s restricted military capability, it exploited Tehran’s economic isolation by purchasing its oil on the cheap. At the same time, by publicly opposing the sanctions, Turkey enjoyed relatively warm ties with Iran. Those ties are now likely to be significantly less friendly.

Turkish Foreign Minister Mevlüt Cavuşoğlu’s first comment on the deal was the “direct positive impact” lifting sanctions on Iran would have on Turkey. With European companies now lining up to dive into the Iranian market, Turkish businesses are expecting priority access as a reward for Ankara’s public and private anti-sanctions efforts. Iran’s ambassador to Turkey, Ali Reza Bikdeli, already disclosed his country’s readiness to offer exclusive and better opportunities to Turkey than to the West. With a preferential trade agreement that came into effect in January, Turkey now hopes to reach $50 billion in bilateral trade – a $20 billion increase from the target last year and more than thrice the current $14 billion. Turkey is also projected to increase its oil imports from Iran and connect Iranian gas fields to its Trans Anatolian Natural Gas Pipeline (TANAP).

Still, an economically vibrant Iran may not be as much in Turkey’s interest as it might appear. Under the sanctions regime, Tehran became dependent on Turkish investors, businesses and banks. Once sanctions are removed, not only could Turkey lose this privilege, it could be outmuscled by Iran’s entrance into the world economy after years of isolation. Turkey’s economy is highly dependent on foreign investment, which is already plummeting due to political instability and the war in neighboring Syria. Competing with an investment-hungry Iran will now make it even more difficult to draw investors. As one Turkish headline read in the aftermath of the nuclear deal, “The Door of Opportunity Opens, the Giant Competitor Awakens.” In short, Tehran’s economic growth may come at Turkey’s expense. 

Moreover, a politically and militarily strengthened Iran could be catastrophic to Turkish regional interests. After initially hailing the nuclear deal’s economic prospects, Çavuşoğlu called on Iran to “abandon its sectarian politics” and revise its foreign policy. This was a rather muted critique of Iran’s sponsorship of terrorism and destabilizing policies in Syria, Iraq and Yemen – all entangled in conflict and terrorism. Only four months ago, Turkish President Recep Tayyip Erdoğan lashed out against Tehran publicly, accusing it of trying to “dominate” the region. The outburst reflected Ankara’s long-running frustration with Tehran’s sectarian policies in Iraq and Syria – their two shared neighbors now in the throes of internecine conflict. Iran supports the Shia militias in Iraq and the Alawite regime of Bashar al-Assad in Syria, while Turkey backs the Sunni minority in the former and ousting Assad in the latter. 

In his phone call to Erdoğan last week, Iranian President Hassan Rouhani stressed that Ankara and Tehran could now cooperate to achieve “a win-win solution” in the Middle East. But with an estimated $150 billion at its disposal in sanctions relief, Iran is unlikely to concede on its regional interests. Assad is likely to get cash infusion. So will Shia militias in Iraq, not to mention a host of other destabilizing forces. 

Turkey is not likely to give up on its regional interests, either. Not only does Erdoğan (who has at least four more years of presidency left) feel a personal enmity towards Assad, but Ankara’s ties to the Free Syrian Army – which includes Turkmen rebel groups – also run deep. Furthermore, Ankara believes Assad is assisting Syrian Kurdish groups that are affiliates of its own separatist Kurds, in an effort to undermine Turkey’s territorial integrity. 

Moreover, in March, Turkey officially allied itself with the Saudi-led campaign against the Iranian-backed Houthis in Yemen. This is an increasingly awkward position for Ankara, particularly as it seeks to cash in on the opening of the Iranian economy. Indeed, financial ties to Iran may come at the expense of its relationship with the Persian Gulf. Conversely, its regional cooperation with the Gulf, particularly any anti-Assad initiative in Syria, could cost it the Iranian market. 

Turkey is caught between two regional powers now headed for a sectarian collision. As Iran’s rapprochement with the West solidifies, a more agitated Saudi Arabia will likely increase its pressure on Turkey to fully align with its Sunni bloc in what promises to be a region-wide sectarian contest. Similarly, an emboldened Iran could be less hesitant to threaten to withhold energy from Ankara if Turkey is perceived to be too close to the Saudi camp. 

With many of Iran’s sanctions set to be expunged upon implementation of the nuclear deal, Turkey doesn’t have much time to recalibrate and whatever course it takes will not be easy. For Ankara – unwilling to surrender to Iranian influence, unsure how to balance between regional powers, and unable to risk its economic investments – many challenges lie ahead. 

*Merve Tahiroğlu is a research analyst at the Foundation for Defense of Democracies.