The adage that “my enemy’s enemy is my friend” was a very simple concept (even if often misplaced) until Turkey put its own twist on that circular old saw. Nowadays, Ankara has no problem in regarding my friend’s enemy as my friend. Turkey’s economic ties with Iran have strengthened considerably recently while Turkish companies also manage to turn a tidy profit in Kurdish Northern Iraq. Trade with Iran was worth an estimated $8 billion in 2007, up nearly a fifth on the previous year. In the first month of this year, the rise was even more spectacular. Bilateral trade hit $700 million, an increase of 32.35% on the same month last year. So the visit to Ankara in March of Iranian Deputy Foreign Minister Alireza Sheikh Attar was a significant step in cementing ties.
Turkey’s mildly Islamist Justice and Development Party (AKP) government certainly looks more favorably towards the Islamic Republic than the staunchly secular, Atlanticist governments of the past. In return, Iran has backed Turkey’s incursion into Iraq, comparing the PKK to its own Kurdish separatist movement, the PJAK (a somewhat spurious but politically useful conflation). More controversially, according to some reports, Iran used Turkey’s military operations as an excuse to conduct its own, shelling villages in Northern Iraq that it believes shelter PJAK militants. This will not play well with Turkey’s American allies. The US apparently supplied the Turkish military with strategic assistance in targeting PKK camps but its patience will be finite if Turkey’s attacks continue.
Turkey also has a difficult circle to square in its relations with both Iran, and its arch enemy, Israel – long a Turkish ally. Prime Minister Erdogan has strongly criticized Israeli assaults on the Gaza Strip, but may be embarrassed by the belligerent stance of Sheikh Attar, who brought up the Gaza issue while in Ankara, and whose government issues regular condemnations of Zionism. Israel’s government, in turn, has accused the Turks of double standards, comparing their incursion into Gaza to Turkey’s in Iraq. But then Iran too knows something about double standards. Israel supplied Iran with spare parts for its ageing F-4 fighters during the eight-year war with Iraq, partly in exchange for allowing Jews out of Iran.
The middleman for all sides
Despite a current diplomatic situation that is – on the surface – uncomfortable at times, Turkey sees trade with Iran continuing to grow. Barring an unforeseen crisis and an unlikely end to Turkey’s ability to see profitable opportunity in every direction, this is a reasonable forecast. Nor does Iran seem to view Turkey’s relations with the Jewish state as an impediment to commerce.
In turn, Turkey is showing willingness to help Iran boost its trade with the wider world, currently limited by sanctions. In March, Saltuk Duzyol, head of Turkish energy firm Botafl, floated the idea that the proposed Nabucco pipeline, which will carry natural gas across Turkey to Eastern and Central Europe, could transport Iranian gas. This raised eyebrows in Washington — the US has long supported the Nabucco project, seeing it as a key to diversifying Europe’s energy supply away from an increasingly belligerent Russia but is publicly opposed to
using Iranian gas, due to its equally public bitter disagreements with Tehran. Admittedly, Duzyol also raised the possibility of transporting Russian gas, which would seem to defeat the whole object of Nabucco. That puts into question whether Turkey’s European partners in the pipeline project are receptive to his suggestions – or indeed take them seriously. The Iran gambit may also alarm Turkey’s ethnic cousins in Central Asia, who were originally intended to be Nabucco’s suppliers (though it seems that Kazakhstan has been bought off by Russian President Vladimir Putin). Turkmenistan’s President Kurbanguly Berdymukhamedov passed through Ankara in March, and the pipeline and his country’s role in it were on the agenda. But Duzyol’s statement can be seen as notice that Turkey still considers Iran a useful trading partner, as it has for decades.
The friend-enemy-friend syndrome appears politically even less logical in Northern Iraq but nevertheless its economic pragmatism has solid roots in history. Turkish-owned trucks made a very profitable (and wholly unofficial) living running a supply chain in and out of Northern Iraq throughout the days of Saddam’s rule in the era of sanctions. On the Kurdish question, the simplistic “Turkey is very wary of all things Kurdish” becomes muddied when muddled with money. Iraq’s response to the eight-day Turkish incursion into the Kurdish region in the north of the country at the end of February, and air strikes that were resumed in mid-March, has been muted. Days after ground troops pulled out, Iraqi President Jalal Talabani, himself a Kurd, visited Ankara, his first trip since assuming the role of head of state. Murat Ozcelik, Turkey’s special representative for Iraq said that, after the visit, “relations between Turkey and Iraq will gain a new momentum and we will enter a period in which a new page will be turned.” While the visit was described as a “working” trip rather than “official”, which was seen as a minor but deliberate snub to Talabani, the meeting was indicative of Ankara’s eagerness not to leave bad blood between the two countries.
Fortunes lost and gained in Iraq
Turkey’s interest in Iraq certainly extends beyond the problems of Kurdish insurgents. The Turkish-Iraqi Business Council estimated before the US-led invasion in 2003 that the cost of the two Iraq wars to Turkey is around $150 billion. However, trade has recently received an “immense” fillip, according to Council president Ercüment Aksoy, who thinks that “the future may be brighter than we had foreseen in 2002,” if the unitary Iraqi state can be held together. Ironically, Turkey may actually have benefited from the occupation of Iraq, as its firms have had access to public tenders and more freedom to operate in the market than had previously been the case. Indeed, reports in the Turkish press in March suggested that Turkey had actually made a net financial gain from the US invasion. However, Aksoy has warned that a break-up of Iraq could lead to the balance tipping drastically into loss again. Furthermore, analysts say that the increase in the price of Iraqi oil exports to Turkey (from $4.1 billion to $12 billion for Turkey’s annual 175 million barrel purchase), means that Turkey has, in fact, still lost out.
Nonetheless, the lifting of the sanctions imposed between 1991 and 2003 has allowed Turkish firms to sell their goods – particularly basic staples and household goods – across the border once more. Interestingly, the opening of the Kurdish region in the north, and its relative stability, has paid off; Turkish exports to it are lively. Last year Turkish-Iraqi business volume, which includes construction and other services, was estimated at around $7 billion, which Turkey is looking to increase to $10 billion; bilateral trade overall is worth around $4 billion. The bulk of the business volume is Turkish activity in the three northern provinces of Iraq. While the saber-rattlers in the military and the nationalist opposition in Turkey have urged that the army press further into Iraq, the government assuredly sees the need to keep relations with the autonomous northern region at least cordial, and economic disruption to an absolute minimum. The feeling both sides of the border seems to be that, once the necessary damage is adjudged to have been done to the PKK’s infrastructure in Northern Iraq, business as normal can resume. In short, where business is concerned concepts of friends and enemies take on an altogether different hue.
Peter Grimsditch is editorial director at the Oxford Business Group.
