Turkey Pulse

Turkey hopes trade with Iran will double by 2015

Article Summary
In an official visit to Turkey, Iranian President Hassan Rouhani discusses expanded trade ties while continuing to differ on Syria.

In August 2013, Turkish Foreign Minister Ahmet Davutoglu attended the oath of office in Tehran for newly elected Iranian President Hassan Rouhani. Turkish Prime Minister Recep Tayyip Erdogan followed up with a visit in January 2014, trying to bridge Iranian and Turkish differences on Syria and to increase bilateral cooperation, particularly on economic and trade ties. On June 9, almost a year since his election, Rouhani made Iran's first official presidential visit to Ankara in 18 years.

This timeline coincides with the breakthrough between the United States and Iran, where the two sides’ delegations are holding bilateral talks in Geneva on June 9-10 to discuss the nuclear issue. It also comes after the May 15 meeting in London of the "Friends of Syria" where foreign ministers from several nations discussed ways to support Syria’s opposition. Diplomatic sources told Al-Monitor that Turkey continues to court for “action in Syria” — meaning either providing the opposition with “lethal weapons” or for a “foreign military intervention.”

That is in strict contrast to Iran’s unwavering position on Syria. Rouhani repeated it during the joint news briefing with his hosting counterpart, Abdullah Gul. “What is important for us is to reach an agreement for the sake of stability and security in these countries [Syria and Egypt], to make sure that the people’s votes determine the governance of these countries and therefore this ends the bloodshed in the region,” the Iranian president said. He also said during the joint news briefing with Erdogan that "extremism and violence is harmful to all countries in the region." Plus, Rouhani confirmed that he sent a congratulatory message to Syrian President Bashar al-Assad for winning the presidential election on June 3. Egyptians also went to polls last month, electing Abdel Fattah al-Sisi, who brought down Mohammed Morsi of the Muslim Brotherhood, as president. Rouhani's comments showed that Iran and Turkey will continue to have different approaches to both Syria and Egypt.

Despite those differences, Iran is aiming for the visit to have a positive outlook overall. “They will showcase what good relations they have with Turkey, a NATO member country, and how the Shia are not the enemy of Sunni Muslims,” one European diplomat told Al-Monitor. “In other words, Iranians will get some good oxygen from Turkey and that is all about it.”

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Mehmet Akif Okur, an Iran expert at the Ankara Strategy Institute, takes note how the radicalization in Syria is offering odd cooperation opportunities. “I also believe that the US is encouraging Turkey and Iran to move closer,” he told Al-Monitor. “The more the moderate opposition loses ground in Syria, and the more radicals such as al-Qaeda franchises dominate the theater, the more the Sunni radical threat is spoken about, creating some odd opportunities of cooperation between the US and Iran. Turkey’s declaration that Jabhat al-Nusra is a terror organization could also be perceived in this framework as driving all these countries into some sort of cooperation.”

Whether this interpretation is right or wrong, Okur also stresses how Iran is talented in framing the radical threat only as a Sunni issue and that nobody talks about Iran-supported Hezbollah actions in Syria.

Yet, Gul equated the June 9 "High Level Cooperation Council" meeting to "the first joint Council of Ministers meeting between the two countries." Turkey also held such a joint council of ministers meeting with Syria in March 2010 just as the unrest started in the country.

Gul also stressed that the Turkey-Iran relationship is more than what it means bilaterally, and that it provides a strategic depth to the region. Gul also talked about the potential of the economic and trade ties between the two countries. Stressing the current trade volume of about $15 billion, Gul said, “We target to bring it up to $30 billion. Both sides have the will and the potential to make it happen.” He added, “Iran’s new policies are allowing it to open up its markets. With President Rouhani’s special attention to the private sector, I understand that it will be possible to increase the investment and trade ties between our private sectors.”

Rouhani announced from his Twitter account June 9 that the two countries signed 10 new agreements on a wide range of issues. But while the two countries are signing more agreements than ever since the Syrian civil war broke out, the agreements are not helping Turkey and Iran to move closer. On the contrary, these two countries remain rivals as ever regarding their desire for regional influence and their interests are not identical.

During Erdogan’s visit to Tehran in January, they signed the "Preferential Tariffs Agreement," whose status remains unclear. However, the US continues to stress that although there is a relative ease in sanctions toward Iran, there is no business-as-usual approach toward the Islamic Republic until all differences on the nuclear dossier are worked out.

On June 4, for example, State Department Deputy spokeswoman Marie Harf responded to a question about Iran and Russia discussing an oil-for-goods deal. “We know they talked about it,” Harf said. “They’ve also come out publicly and said that they’re not moving forward with it right now. So, nothing to indicate this is actually getting close to completion. And I’m sure we’ll respond.”

Indeed, Washington very much demands to continue with the sanctions regime. In the words of a European diplomat, though, “The main obstacle is coming from the Iranian regime. They don’t want to open up because they believe if they do allow free trade and economic relations, the regime will risk collapse.”

The regime and the permanent members of the United Nations and Germany (P5+1), however, continue the negotiations without a clear end in sight. While expressing hope that these negotiations will conclude by bringing an end to the sanctions regime on Iran, Gul again stressed Turkey’s support for Iran's development of civilian nuclear energy. The diplomatic sources stressed to Al-Monitor that the nuclear file is a "status issue" for Iran. Stressing Iran’s insecurities about the regime’s survival, one European told Al-Monitor, “Nuclear deterrence [for Iran] is to achieve stability against external threats.”

It will be difficult for Turkey to greatly increase its trade ties without violating the US-imposed sanctions regime. Okur also spoke to Al-Monitor about the Turkey's trade imbalance with Iran. “Turkey is buying natural gas and oil from Iran, but Iran is importing its goods through Dubai,” he said, stressing that this puts Turkey at a disadvantage in the Iranian market.

Still, Gul sounded optimistic that the two sides will double their trade volume by 2015, and that the relationship is stronger than ever.

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Found in: turkey, trade, syria, nuclear talks, iran, hassan rouhani, egypt, abdullah gul

Tulin Daloglu has written extensively for various Turkish and American publications, including The New York Times, International Herald Tribune, The Middle East Times, Foreign Policy, The Daily Star (Lebanon) and the SAIS Turkey Analyst Report.

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