Skip to main content

How Turkey's foreign policy may have lost it $25 billion in trade with Iran

A preferential trade agreement between Turkey and Iran has failed to stop the decline in bilateral trade as regional political disputes between the two neighbors deepen.

While international appetites grow for business opportunities in Iran following the lifting of economic sanctions, Turkey, owing to its foreign policy, has failed to make use of a special trade arrangement it already had with Iran. A preferential agreement, the product of negotiations that took about a decade, had taken effect between the two neighbors Jan. 1, 2015. With a target of $35 billion in bilateral trade by the end of the year, the deal introduced tariff cuts on 140 products from Turkey and 125 products from Iran. The day it took effect, Turkey’s then-Economy Minister Nihat Zeybekci hailed a “very important beginning for Turkish-Iranian business, friendship, and political and economic cooperation.”

What began with high optimism, however, has resulted in a huge disappointment. The bilateral trade volume at the end of 2015 stood at $9.7 billion, not only far off the target but also below 2014's $13.7 billion. Turkey’s imports from Iran dropped 38% to $6.1 billion in 2015, while its exports decreased 5.7% to $3.66 billion. Given Turkey’s purchase of 10 billion cubic meters of natural gas from Iran, the drop in exports indicates that Turkey has decreased the purchase of Iranian goods other than gas. Similarly, Turkish exports of food, iron and steel, chemicals and automotive sub-industry products had been expected to increase under the deal, but this seems to have not materialized either.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.