Turkey’s euphoria over Iran nuclear deal

While the Iran nuclear deal sparked optimism around the world, Turkey appears to be the one country where both the enthusiasm and expectations related to this new era with Iran are the highest.

Iran President Hassan Rouhani (left) meets Turkey President Recep Tayyip Erdogan in this file photo

Iran President Hassan Rouhani (left) greets Turkey President Recep Tayyip Erdogan in this file photo

The overall mood in Ankara is positive, and as evident in the remarks made by policy makers after the conclusion of the agreement between the P5+1 and Iran in Vienna, the deal is deemed first and foremost to be an economic opportunity of historic proportions, which will bring benefits for Turkey through increased trade, investments and energy flows.

There remain reservations about Iran’s possible intentions to increase its influence over the Middle East and establish some form of hegemony over the region’s affairs. However, for the Turkish government as well as the country’s business community, post-sanctions Iran means primarily a trading partner offering profound economic prospects.

It makes sense for Turkish policy makers to underscore the economic promises that the deal brings. In the period after the Arab uprisings with the entire Middle East sliding into sectarian conflicts, Turkey’s foreign policy towards the region has descended into incoherence and despair, which has cost the country dearly in terms of both eroding reputation and lost commercial markets.

Turkey needs to reformulate its Middle East policy, and the rational way to do so is by refraining from taking sides in sectarian divisions and playing different political actors against each other, while at the same time placing the emphasis on sustainable economic linkages over the long term.

If there is going to be a Turkish foreign policy reset in the Middle East, it will have to prioritize economic relations with neighboring countries, and the deal with Iran offers a window of opportunity in this respect because with Iraq and Syria in chaos, and relations with Egypt at an all-time low, it is Iran where the first bricks for such a new foreign policy approach can be laid.

Turkey’s keenness on economic prospects in post-deal Iran is remarkable. Several cabinet ministers have emphasized the possible positive impact of a normalized Iran on the regional economy and the direct gains that Turkey is likely to reap.

The trade volume between the two countries, which totaled $13.7 billion in 2014, is announced to be targeting $35 billion by the end of 2016. Turkey has a trade deficit with Iran, a $6 billion last year, which is related to imports of natural gas. Iran is Turkey’s second largest supplier of gas after Russia, providing 20 percent of the gas consumed within Turkey (Russia provides 57 percent).

More trade with Iran means more gas imports for Turkey in a sense. However, Turkey expects to have greater market access in this country and increase its export volume as well now that the sanctions are lifted. The preferential trade agreement signed between the two countries in 2014 will have a positive effect to that end, and Turkish companies are actively looking forward for the opportunities that arise in Iran.

To cite but a few examples, Istanbul Chamber of Industry reported on Iran’s large population and related opportunities in the consumer products sector; Istanbul Chamber of Trade is already preparing for the Expo Turkey in Iran that will be held in January next year; and the Association of Iranian Businessmen and Industrialists in Turkey is drawing Turkish companies’ attention to opportunities in mining, construction and tourism.

For many in Turkey, Iran after the sanctions may well be the new El Dorado.

This enthusiasm is not totally ungrounded, but the initial euphoria can easily turn sour depending on, first, how and to what extent the two countries’ political and economic interests will align in the near future, and second, how well Turkey can manage increasing competition in Iran.

To start with the first point, Ankara and Tehran have irreconcilable differences over the Syria issue, and a rapprochement does not seem likely in the near future. Despite these differences, the two countries have closely worked together in the economic realm, but whether this will still be the case is questionable.

Being freed from sanctions and becoming a ‘normal’ player in global markets, Iran has now less need for Turkey, which has over the past years helped Tehran to skirt international sanctions by swapping gold in exchange for the gas it has purchased.

David Goldman recently wrote in Asia Times about how “a resurgent Iran, confident in the acquiescence of the United States and flush with money, may turn Turkey into an enemy”. This is indeed a possibility that cannot be ruled out, especially given the fact that Iran is now less reliant on Turkey to generate cash flows.

However, not only has Tehran nothing to gain from making enemies with Turkey — the world’s seventeenth largest economy with the second largest army in NATO — but also new dependencies are likely to form in this new period between the two countries, such as Iran relying more and more on neighboring Turkey as a provider of construction services, consumer goods, transit routes for its hydrocarbons and other products, and so on.

Another, and much more favorable, scenario is therefore for these two countries to do more business with each other, without having to resort to gold-sale schemes or the like anymore, while at the same time keeping differences over Syria at a manageable level. For Turkey, this can be a main pillar for the much needed reset of the country’s Middle East policy.

In the meantime, Turkey, and particularly its business community, must take into consideration that there will be fierce competition in post-sanctions Iran. For sure, there will be greater business opportunities in this country, but the number of actors who want to have their share of the cake is already increasing at a higher rate.

Western companies that had to put their investment projects in Iran on hold due to sanctions are now back in the game, and so are the financially powerful Chinese state-owned enterprises, which have never been extremely concerned about the sanctions in the first place.

Turkey on the other hand has the advantage of sharing a land border with Iran and will have to better capitalize on this to stand out against increased competition.

The Iran nuclear deal heralds a new era for the Middle East where the Turkish-Iran relationship will remain one of the main axes. It remains to be seen how Iran’s “normalization” will impact this relationship and whether Turkey’s present euphoria can translate into actual results, but in any case the optimist scenario with increased economic ties ushering in positive spill-over effects on the region’s politics is not just wishful thinking.

Dr Altay Atlı is a research fellow at the Asian Studies Center of Boğaziçi University in Istanbul, and a lecturer at the Asian Studies graduate program of the same university.

(Copyright 2015 Asia Times Holdings Limited, a duly registered Hong Kong company. All rights reserved. Please contact us about sales, syndication and republishing.)

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  • Fool on the Hill

    With respect to the Sunni vs Shia civil war touted in the American MSM, I don’t understand the enmity described above between predominantly Sunni Turkey and Sunni Egypt, and the rapprochement between Turkey and mostly Shia Iran. This doesn’t sound like sectarian war but rather “win-win” economic alliances forming and re-forming. Any insight?

  • Jack Temujin

    Turkey’s the fifth column for Israel and NATO, yet, they rejoice over Iranian deal? How shameless of them.

  • Martin Zimmermann

    I can’t speak for the others (House of Saud, Golf Monarhies…etc.) but I was always suspicious about the sectrarinism in Turkey’s moves in the past few years….it’s all about Money, Power, Geopolitics..etc. I even doubt that Erdogan is a true islamist:

    He wrote this to WSJ in 2003
    “We further hope and pray that the brave young men and women return home with the lowest possible casualties, and that the suffering in Iraq ends as soon as possible”


  • Lion Heart

    You need to go long way to understand the meaning of “fifth column”.

    The Israeli firsters like Jonathan Pollard are fifth column.

  • Lion Heart

    Iran, Turkey, Russia and US all want a MODERATE Sunni regime to be installed in Syria.

    Once nuclear deal is done….Arab media predicted “it would help Assad regime”…their analysis is completely wrong……

    a confident Iran will compromise on Syria to reach an understanding with Turkey—–and will get a MODERATE Sunni (from Baathist party) regime installed in Syria

    and it will be another win-win situation for Iran and Tukey….

    and it will happen within 1 year
    once again everyone will be happy except Netanyahu—who will keep on provide trainng to Al Nusra terrorists to destablise neighbours

  • Maria

    http://www.theguardian.com/world/2014/jun/04/bashar-al-assad-winds-reelection-in-landslide-victory . Russia & Iran support the democratically-elected President al-Assad in Syria, so, your comment is false (what planet do you live on, btw?). Those attempting to overthrow the legitimate al-Assad government are terrorists, and so, the USA, Turkey, and Saudi Arabia support terrorists.

  • Che Guvera

    Iranians are pragmatists and masters of diplomacy. The nuclear deal which was agreed with the sole hyper-power was negotiated from a position of weakness not strength by Iranians. Iranians will now try to consolidate their economy and would not do any mis-adventurism. This will be good for the region and good for Iran.

  • Bianca

    What I believe Lion Heart is trying to say is that the geopolitical winds have changed. Iran did not succeed all by its lonely self to make US back down from regime change agenda, and to have to end the farce of “nuclear issue”. Behind Iran is the long-term Eurasian alliance forged between Russia and China for the last 15 years. If you look at the results of the last SCO conference in Ufa, Russia — it becomes clearer that the Organization is now moving more confidently forward in its “new world order” ideas. With the changing winds, it will be possible to address many problems — the most important one — IS terrorism.
    But I do not put much faith in the capabilities of US diplomats and politicians to adjust to the new reality. They will fight it tooth and nail, and will not explore political possibilities Thus, I expect US businesses will have harder time to gain foothold in Iran — only some will be successful to please US. But it will soon become obvious that yesterday’s regime changers will not find it easy. It will soon become obvious to everyone but Spengler (i.e. Goldman) that ties that bind countries that supported Iran through thick and thin — are strong. After Ufa, countries of Eurasia are moving to the issues of border defense, joint security, issues such as drafting a Treaty on Extremism, and with new permanent member-candidates India and Pakistan, they are primed to tackle Afghanistan. It seems everyone forgets that besides China and Russia, all Central Asian countries, with the exception of Turkmenistan, are permanent members of SCO. Turkmenistan is entirely economically dependent on China and Russia for sale of bulk of its energy. It also must have escaped attention that Iran and Turkey are — on different levels — members of SCO, and the religion is not the issue between them. What binds them are OBLIGATIONS THEY SIGNED UP TO when joining SCO, such as mutual assistance and consultation to insure that each member does not hurt the interest of another member. That is ironclad rule.
    How did it escape attention that after July 10, new partners became Azerbaijan, Armenia, Cambodia and Nepal. They join current partner list — Sri Lanka and Turkey. Belorussia was promoted to observer. What it means is the following. All these countries have now for years — away from prying eyes, worked on solving their differences with the help of good offices that membership provides. That goes primarily for India and Pakistan. Now, Turkey, Armenia and Azerbaijan are getting the benefit of same — to quietly work on solving issues such as Nagorno Karabakh, or the issue of Turkish-Armenian contested view of Armenian pogroms from Turkey at the end of WWI. Without inflammatory and politicized context, many such problems can find acceptable solutions for nations to move forward together and with the help of the organization. It is possible for Spengler to muse about possible rivalry between Turkey and Iran, or perhaps, his wishful thinking. Does anyone believe that SCO will allow for any major rift, other then some theatrical acrimony, so necessary in the world of daily political grind? What do you think — where will Iran’s gas and oil flow? To Pakistan and India, of course. The countries with enormous potential have been held back by mutual (externally stimulated) conflict and suspicions. Within SCO — given what they have signed up to in Ufa, their policies will be consolidated towards common goals and economic development priorities.
    This is why Afghanistan is for years member of SCO, and why SCO Is supporting efforts of government to establish peace and deal with drugs-funded and externally protected extremism. And this will be tacked now more overtly, as China and SCO will contribute to the training of military, negotiations with all Afghan factions — except armed extremists, as well as administrative capacity building. And this is why Nepal has become a member, to insure joint project initiatives such as economic development corridor between India and China that includes Nepal, is successful.
    No doubt, there will be many obstacles to the determined push towards development within SCO framework, including the approval and synchronization within SCO of such Chinese initiatives such as Silk Road economic belt, and Russian-led Eurasian Economic Union. Such initiatives had received a lots of scorn in the western press, ridiculing one or the other, and speculating on the competition between Russia and China over Central Asia. These speculations are delusions and wishful thinking — as the explicit decisions of Ufa summit confirms and puts such theories to rest.
    Besides very concrete decisions and agreements, there was much more to Ufa then funds and infrastructure plans. SCO Charter, usually not given any mention in public, has been put front and center — and branded “Shanghai Spirit”. The short version of it defines the objective as the community of nations with shared destiny based on equality, respect for cultural diversity, mutual trust, and commitment to mutual interest. So in addition to AIIB and BRICKS Bank, a new proposed SCO Bank will support wider Eurasian projects, which includes countries that are now on the periphery of EU — economically devastated Balkans.
    Syria will not be an exception. The elected government there that has the support of people of all three religions, and incredibly, after all this time, the support of Army that consist of majority Sunni soldiers — will with the engagement of Iran, Turkey and SCO, find a way to politically solve problems. But not before terrorism is tackled. For as long as ISIL is financed, armed and given a great deal political cover in the west, needs to be defanged. That will be — from my perspective — the hardest test of stronger SCO. That is not going to be easy. But for US and Saudi Arabia it is not going to be easy to continue defying reality. They could not form even an illusion of Syrian government in exile. And, as the battle against ISIS is going on without any meaningful results — with ISIS owning hundreds of Twitter accounts, web sites, shiny artillery mounted Toyotas, satellite communications, and having access to medical services by — of all things Israel. As US does not seem to be noticing such discrepancies, the crack in US perception is widening and becoming as ominous as a crack in space-time continuum. Credibility is on the line — globally. Now, to dig in the heels, or not — that is the question.
    While Europe is taking it on the chin. It has to put up with endless cold-war rhetoric from US against Russia, while simultaneously having to pretend not to notice US reoccupation of Europe. It has to contain financial crisis in eurozone, and now the influx of hundreds of thousands of refugees, from Middle East, North and Central Africa.
    The sea of humanity has stretched across Mediterranean, across Greek Isles, Balkans — and are trying to reach European core, while the periphery like Hungary is erecting barbed wire fences.

    Consequences of senseless foreign policy choices are here. US is — despite its weakening positions world-wide, determined to hang on to them. Europe, confused, with bureaucratic leaders unprepared to lead in times of crisis. In the light of this, results of the SCO conference in Ufa should make everyone think. And take notes.

  • Jack Temujin

    No you muffinhead, you need to learn a new vocabulary or semantics correctly. A fifth column simply means any small group working for a larger group. Learn it. Know it. Live it.

  • originalone

    Google the term, scroll through the meanings, then speak your piece, but keep in mind, that your use of names lessens/belittles your position. Of course, if you’re only out to show your own lack of knowledge or manners, but then, that’s another matter entirely.

  • Jack Temujin

    Your points are well taken, but you and lion heart must be senior citizens who were English majors who act like you know it all.