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Iraq viewed by Ankara as ‘natural extension’ for business
09 May 2013 09:01 AM Updated : 09 May 2013 09:01 AM
After seizing the opportunity of the 1980s Iran-Iraq war to increase exports to both countries, Turkey was barred from the Iraqi market by 1990s sanctions, about which Turkish officials still complain.
To an extent, the post-2003 surge in exports simply restores Turkey to the path it was on before. But it has also served as both cause and consequence of a big geopolitical shift: Ankara’s blossoming relationship with the autonomous Kurdish Regional Government, or KRG, of northern Iraq.
Overall, some 70 per cent of Turkey’s exports to Iraq go to the KRG, with anything between a third to a half of that total sold on to the south.
If many Turkish groups’ relationship with southern Iraq is at arm’s length, the reverse is true for the KRG, where some 1,000 Turkish companies are active. They account for about half of all foreign groups on the territory.
This phenomenon – the emergence of northern Iraq or what Ali Babacan, Turkey’s deputy prime minister, describes as “economically, a natural extension of Turkey” – is now a key component of Ankara’s thinking.
Before, it was virtually routine for Turkish troops to cross over the border in operations against the fighters of the outlawed Kurdistan Workers Party or PKK. Now, Ankara regards Massoud Barzani, KRG president, as a key regional ally and is in peace talks with the PKK, which is pulling its fighters out of Turkey and back to bases in Iraq.
One consequence may be to increase exports to Iraq from Turkish Kurdish centres such as Diyarbakir, which has profited less from trade to date than has Gaziantep, despite being closer to the border and having stronger cultural links.
Bigger economic stakes are also in play, notably energy-hungry Turkey’s interest in KRG’s oil and gas resources.
Turkish officials say a framework deal has been struck between Turkish state-owned groups and the KRG to take stakes in the Kurdish oil and gas sector. To date, there has been no official announcement, because of the sensitivity of the issue.
Nouri al-Maliki, Iraq’s prime minister, says an agreement is unconstitutional without Baghdad’s backing and the US has publicly warned Ankara that it could contribute to the further break-up of Iraq.
Tensions have already flared between Sunni-majority Turkey and Mr Maliki’s Shia-led government in a Middle East increasingly characterised by rivalry between Turkey and Iraq’s ally, Iran.
One casualty may be Turkish contractors, who worked on some $3.5bn worth of projects in Iraq last year.
Officials in Ankara acknowledge that Turkish groups are now effectively barred from larger contracts in the south of the country.
Mr Maliki’s government formally removed TPAO, the Turkish state oil company, from an exploration deal last year.
Nonetheless, for now at least, Turkish confidence remains almost impossible to dent.
“As Turkish entrepreneurs perform well in Iraq”, says Husnu Ozyegin, one of Turkey’s leading business figures, “the Iraqis will have more confidence in Turkish contractors than in some European company they do not know.
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09 May 2013 09:01 AM Updated : 09 May 2013 09:01 AM
After seizing the opportunity of the 1980s Iran-Iraq war to increase exports to both countries, Turkey was barred from the Iraqi market by 1990s sanctions, about which Turkish officials still complain.
To an extent, the post-2003 surge in exports simply restores Turkey to the path it was on before. But it has also served as both cause and consequence of a big geopolitical shift: Ankara’s blossoming relationship with the autonomous Kurdish Regional Government, or KRG, of northern Iraq.
Overall, some 70 per cent of Turkey’s exports to Iraq go to the KRG, with anything between a third to a half of that total sold on to the south.
If many Turkish groups’ relationship with southern Iraq is at arm’s length, the reverse is true for the KRG, where some 1,000 Turkish companies are active. They account for about half of all foreign groups on the territory.
This phenomenon – the emergence of northern Iraq or what Ali Babacan, Turkey’s deputy prime minister, describes as “economically, a natural extension of Turkey” – is now a key component of Ankara’s thinking.
Before, it was virtually routine for Turkish troops to cross over the border in operations against the fighters of the outlawed Kurdistan Workers Party or PKK. Now, Ankara regards Massoud Barzani, KRG president, as a key regional ally and is in peace talks with the PKK, which is pulling its fighters out of Turkey and back to bases in Iraq.
One consequence may be to increase exports to Iraq from Turkish Kurdish centres such as Diyarbakir, which has profited less from trade to date than has Gaziantep, despite being closer to the border and having stronger cultural links.
Bigger economic stakes are also in play, notably energy-hungry Turkey’s interest in KRG’s oil and gas resources.
Turkish officials say a framework deal has been struck between Turkish state-owned groups and the KRG to take stakes in the Kurdish oil and gas sector. To date, there has been no official announcement, because of the sensitivity of the issue.
Nouri al-Maliki, Iraq’s prime minister, says an agreement is unconstitutional without Baghdad’s backing and the US has publicly warned Ankara that it could contribute to the further break-up of Iraq.
Tensions have already flared between Sunni-majority Turkey and Mr Maliki’s Shia-led government in a Middle East increasingly characterised by rivalry between Turkey and Iraq’s ally, Iran.
One casualty may be Turkish contractors, who worked on some $3.5bn worth of projects in Iraq last year.
Officials in Ankara acknowledge that Turkish groups are now effectively barred from larger contracts in the south of the country.
Mr Maliki’s government formally removed TPAO, the Turkish state oil company, from an exploration deal last year.
Nonetheless, for now at least, Turkish confidence remains almost impossible to dent.
“As Turkish entrepreneurs perform well in Iraq”, says Husnu Ozyegin, one of Turkey’s leading business figures, “the Iraqis will have more confidence in Turkish contractors than in some European company they do not know.
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