Iran and Turkey’s respective economic involvement in the Middle East continues to grow, but as is so often the case in our region, business is becoming mixed up with politics. A good example of this is Tehran’s relations with the United Arab Emirates, home to about half a million Iranians and one of Iran’s largest business partners in the region. Iranian exports to the Emirates increased 50 percent from 2005 to 2009, and at the same rate in the previous five years. Last year, trade between the two countries was worth some $15 billion.
Great, you might think — unless you are the United States, which has been pressing the Emirates to limit business dealings with Iran as Washington continues to place sanctions on the Islamic republic and browbeat others into following suit. Over the past few months, a series of high-ranking US officials have been sent to the emirates in an effort to promote an anti-Iranian line and convince the UAE to restrict profitable centuries-old trade across the Gulf, warning of the consequences of strong economic relations with Tehran.
The UAE is aware of the ‘reputational risk’ run in the US over dealings with the Iranians, and accordingly humors Washington — without taking the matter seriously at a practical level. The American position is that normal consumer goods getting into Iran do not undermine sanctions, but that high tech is another story — the Emiratis, however, continue with business as usual, and despite US pressure, trade volumes between Iran and the UAE look set to continue growing.
Esfandiar Rahim-Mashaei, the head of Iran’s Presidential Office, called for Iran-UAE trade ties to be strengthened on a recent visit to the UAE, stressing that “both countries have a lot to offer as key players in the region’s economy.”
Ultimately, Iran and the emirates have a mutual interest in increasing trade, and so will work to promote business co-operation, irrespective of Washington’s bluster.
The other big economy on the northern border of the Arab Mashreq is Turkey, officials of which have for the past few years crisscrossed the region to open doors for the country’s businesses. Thanks in part to these improved trade links, Turkey has seen a strong recovery after the economic slump of 2009.
Turkey’s youthful profile drives much of its development: over a quarter of the population is under 15 years old, with only 6 percent aged 65 or older. Turkey is notably more youthful than the Eurozone countries, where 18 percent of the population is over 65 and only a sixth younger than 15. With such creaky demographics, Brussels should rush to have Turkey enter the geriatric European Union, yet Turkey’s prospects for admission remain slim.
As the EU snubs Ankara, the Turks have sought friends and business partners elsewhere, including in the Arab world. In the past seven years, while total annual Turkish exports tripled to $102 billion, sales to the Middle East grew twice as fast.
Jordan, for example, saw its imports of Turkish goods jump from $188 million in 2004 to some $386 million last year, a whopping rise, but still way below the rate at which other Middle Eastern states bought Turkey’s products. Another interesting case can be found in Lebanon’s imports from Turkey, which went up 150 percent from 2006 to 2008, though they retreated somewhat in 2009.
Finally, it must be asked if Turkey and Iran are competing economically with each other in the Arab world, especially in places like Iraq — which they both neighbor — or Syria, which shares a long border with Turkey but is politically allied with Tehran. The answer so far seems to be no, with Turkey exporting more manufactured goods while Iran focuses mainly on raw materials. So for the time being at least, Tehran and Ankara’s respective strong economic drives to the south continue, but without mutual competition.
RIAD al-KHOURI is a senior economist at the William Davidson Institute at the University of Michigan in Ann Arbor, and Dean of the Business school at the Lebanese French University in Erbil, Iraq
