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Iran Sanctions Drive Up Turkish Energy Costs

Guven Sak writes that sanctions on Iran are raising the costs of Turkish energy.
A Turkish police officer stands guard close to a drilling rig near Famagusta April 26, 2012. Turkey on Thursday began drilling for oil and gas in breakaway northern Cyprus, threatening to inflame tensions with Greek Cypriots and undermine UN-backed efforts to reunite the divided island, key to Ankara's aspirations to join the European Union. At a ceremony in northeast Cyprus, the state-run Turkish Petroleum Corporation (TPAO) launched onshore drilling at the 3,000-metre-deep Turkyurdu-1 well in search of hy

On November 20, the United States added another element to its sanctions against Iran. It now includes a ban on selling precious metals to the country. That bodes ill for Turkey, which was paying for its gas purchases with gold. Does this now mean that the problem is solved? I do not think so. It cannot end without securing energy for Turkey. Grapes are eaten one by one as an Arabic proverb says. Turkish-Iranian economic relations are not based on ideology, but on mutual dependence. That means that they fulfill an economic need and cannot be extinguished by law alone.

Iran is a country in the region with which Turkey has a persistent foreign trade deficit. That is, we buy more from them than we sell. Why? Iran is an important energy supplier to Turkey. A third of our natural gas comes from Iran. That makes the timing of sanctions very inopportune, since the winter cold makes gas buyers more dependent as customers. Turks, on the other hand, cannot sell as much as they want to the Iranians. No one can trade freely with Iran. That is under the control of the central authority there. You can only trade as much as you are allowed to. When it comes to economic policy, Iran is like the late Soviet Union.

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