Omid Shokri Kaleshar
Senior Energy Security Analyst, Washington, specifically for Eurasia Diary
Yesterday Turkish President Recep Erdogan negotiated on the regional crisis with the Iranian President Hassan Ruhani and, in particular, a referendum on Syria and Iraq with Iranian officials. Turkey suffered more from the Syrian crisis and presented about 3 million Syrian refugees living there. By October 2017, Turkey donated about $ 30 million to Syrian refugees. Iran and Turkey together with Russia have the potential to solve the Syrian problem, but they also need to cooperate with the US on this issue.
The Iranian and Iraqi forces conducted trainings near the border with the autonomous region of Kurdistan in Iraq, especially after tension raised after the referendum on independence. Last week, the head of the Turkish military headquarters, General Hulusi Akar, visited Tehran for talks with the leading military and political figures of Iran, who are expected to deal with border security and the fight against terrorism, along with regional problems.
Turkey and Iran agreed to strengthen military ties after referendum in Iraqi Kurdistan, where more than 90% of population voted for independence. Iran with Iraq and Turkey can expand military cooperation and conduct military exercises near the borders of Iraq in order to effectively counter regional instability.
There is a Kurdish minority lives in both of countries and they want to create a Kurdish state that directly affects national security, and it is expected that they will apply the same policy in this matter. Energy-intensive Turkey imports large volumes of natural gas from Iran. Both countries are seeking to enhance banking and trade ties in order to triple bilateral trade to $ 30 billion a year in the coming years after the lifting of international sanctions against Tehran.
The preferential trade agreement between Turkey and Iran turned out to be a huge disappointment during the first two years, when bilateral trade lagged behind the $ 35 billion target that the deal was supposed to reach. The agreement, which entered into force on January 1, 2015, aimed at reducing tariffs for about 300 products in order to triple the volume of trade. The results, however, were far from ideal, not even reaching one-third of the goal. While the Iranian market caused the appetite of the world’s trading giants, Turkey showed itself in a very favorable position, being the closest neighbor with already existing tariffs. Nevertheless, there were many disappointments. Despite the lifting of sanctions, Turkish-Iranian trade in 2016 was 100 million fewer than in the previous year, which meant the collapse of the preferential trade deal in just two years.
Starting from the first year, the deal resulted in an unexpected result: instead of growth, the volume of trade between the two neighbors declined. Turkish-Iranian trade amounted to 9.76 billion dollars at the end of 2015 dollars. Not only at 25 billion dollars smaller than the target, but also by $ 4 billion below the level of 2014 in the amount of 13.7 billion dollars. In 2016, Turkey’s exports to Iran amounted to 4.97 billion dollars. compared with 3.66 billion dollars. in the previous year, while imports from Iran, including natural gas, amounted to 4.7 billion dollars., compared with 6.1 billion dollars. in 2015.
Turkey had a positive balance of trade with Iran for the first time in 16 years. Even if this is a small surplus (only about $ 270 million), the fact that the balance is changing in favor of Turkey is a noteworthy development, the result of a steady trend over the past four years. Considering the instability in Iraq and the referendum in Iraqi Kurdistan, Iran has the potential to supply oil and gas to Turkey.
Iran and Turkey should prepare a joint plan, which take into account their national interests regard to the regional crisis, especially in Iraq and Syria. Instability in the region does not benefit the regional states, and it should be noted that both countries are neighbors. The regional crisis requires regional cooperation, and also with the main actors in the region, no country in itself has the capacity to address the regional crisis.
In summary, Iran and Turkey have their own interests in the region, and in some circumstances there is a clash of interests, but by 2017, after the Syrian crisis and after the referendum in Iraqi Kurdistan, both countries, cooperating with Iraq on the issue of Iraqi Kurdistan, and with Russia, and with the United States in the Syrian crisis, should play a more active role. Instability and chaos in these regions directly affect the stability and security of Iran and Turkey. Regional cooperation and large entities in the region are needed to solve the regional crisis.