As Iran and the U.S. talk, Turkey’s stock rises again

Ceylan Ozbudak
Ceylan Ozbudak
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We know they say politics is like playing chess. Even though it is a cliché, it is not completely wrong. How? Like chess, and politics, you have an infinite number of possibilities, but only certain moves can be made. You have to move the bishop diagonally and the castle straight. But what gives you the checkmate is your ability to make an unexpected move and gain advantage over your opponent. To be able to do that, you have to have a reasonable and sensible approach to issues, not an emotional one.

This ability has helped AK Party government, who are novices in foreign policy but experts in individual relationships. Prime Minister Erdoğan started the peace process negotiations with İmralı, while less than a year before that, they were retaliating against PKK attacks with the same intensity and determination.

A similar unexpected move came from the U.S. when American diplomats started a new process to resolve a decades long problem with Iran. Alright, maybe not so unexpected after the U.S. burned its bridges with the other Middle Eastern nations through high-involvement - or at times non-involvement. In the Middle East we say Iran’s problem with America started in 1957, but America’s real problem with Iran started in 1979. Hopefully in the near future we will be able to put an end date to this, say, starting from this week. The deal between the P5+1 (the five permanent members of the Security Council of U.N., plus Germany) with Iran over its nuclear program was welcomed this week in all these countries and in Turkey. Not only because Turkey never cut ties with Iran, but also because Turkey is going to benefit from this nuclear deal more than any of the other countries involved .

I interviewed Professor Dr. Bulent Aras this week, Former Chairman of the Center of Strategic Research (SAM) at the Ministry of Foreign Affairs, lecturer at Sabancı University. He said to me about the outcome of negotiations: “Iran’s reconciliation with the West will reveal a more Westernized Iran. It will experience moderation in its internal affairs. As far as Turkey-Iran bilateral relations go, this will bring about benefits such as economic relations, energy relations and some others.”

When I asked Mr. Aras if this is going to affect the Turkey – Israel relationship, Mr. Aras said, “I don’t think already bitter Turkey-Israeli relations will be affected by such factor. But this will affect the Israeli-American relationship. We can feel a new design to soften American-Iranian relations to solve the problems coming from Iran’s Islamic revolution. America is taking steps forward to solve the problems, starting from the most important problem, the nuclear issue.”

Let’s see how Turkey is going to benefit this new deal:

Turkey and Iran may be divided on a number of regional issues, but economic relations between the two have been strong and offset some of the tensions over geopolitical differences. Economic relations between Turkey and Iran have undergone a significant expansion in the last decade. Trade between Turkey and Iran rose from $1 billion in 2000 to $10 billion in 2010; the two sides plan to triple the volume of trade to $30 billion. Energy has been an important driver of the expansion of economic ties with Tehran. Iran is the second-largest supplier of natural gas to Turkey, behind Russia. Iran also provides close to 40 percent of Turkey’s imports for crude oil. Ankara imports nearly 60 percent of its natural gas from Russia: Along with Azerbaijan, Iran represents one of the few alternatives available for reducing this dependence. The desire to reduce this dependence on Russian energy and diversify supply sources has been an important driver behind the close economic ties that have developed with Iran in the last decade.

As a member of the Shanghai Cooperation Organization, if Iran really decided to carry out a nuclear attack on any country, it could obtain nuclear weapons from another member country and do it covertly

Ceylan Ozbudak

In addition to oil and gas, Iran exports industrial products to Turkey. According to Iran’s Trade Promotion Organization, Turkey is the fifth biggest destination for Iran’s non-oil exports. Turkey, in return, exports up to $3 billion of goods to Iran, including agricultural products, automobiles, and machine parts. Turkish companies have also made substantial investments in non-energy sectors of the Iranian economy, including real estate.

However, Iran’s closed economy poses significant difficulties for Turkish exporters. These problems include high tariffs on consumer goods, frequent changes in tariff rates, delays in import permits, overpriced fuel during transport, and prolonged delays at customs gates.

Under pressure from the Obama administration, Turkey reduced its imports of oil from Iran in 2012; at the same time, Ankara began selling gold to Iran to circumvent the difficulties associated with payments in dollars. According to data from the Turkish Statistical Institute (TurkStat), Turkish gold exports to Iran skyrocketed to $ 6 billion in the first seven months of 2012, making up 75 percent of the total value of Turkish exports to Tehran.

In addition to these, the recent nuclear deal was welcomed enthusiastically by the Turkish markets. Both oil prices and gold dropped while the Istanbul stock exchange rose by 1.18 percent the first day as the U.S. Dollar plunged. Energy Minister Taner Yıldız said: “The daily oil purchase from Iran is expected to rise from 105 thousand barrels to 140 thousand barrels. Previously, due to the European and U.S. sanctions against Iran, the export of the country had dropped from 2.5 million barrels a day to 1 million barrels. With this deal, oil supply to the market will increase, lowering the prices of oil and its derivatives.” Furthermore, with the deal, the price per barrel of oil dropped by 1.23 percent to $109.24 and the price per ounce of gold declined by 0.56 percent to $1.236. Iran will probably choose to use this opportunity first to improve its infrastructure and then move on to its industries. It will also not be surprising that the country chooses to use this new financial opportunity on direct investments, which means Turkish companies will find many business opportunities in Iran, like they did in Iraq.

Bilateral relations

Although the relations between Iran and Turkey have been generally peaceful since the Ottoman Empire, this relationship is best defined as a fragile peace. Common wisdom suggests that peace between Iran and Turkey is in fact maintained by both military and political equilibrium. Both states have traditionally seen each other as status- quo powers. Pre-revolutionary Iran had much in common with the secular, modernizing, Western-oriented society in Turkey. However, this relationship was occasionally strained by various issues after the revolution in Iran. After adopting a modernized and secular state policy, Turkey has always sought ways to improve ties with Western society, despite being a Muslim majority nation. In this manner, it was the first nation in the Middle East to recognize the State of Israel; such an act was unacceptable to Iran. On the other hand, Iran was believed to be pursuing exploitation of Sunni-Shiite differences and dominating the fundamentalist Islamic organizations within Turkey. Turkey’s main instability concerns are formed around Islamic fundamentalism, a Sunni-Shia conflict within its borders, and separatist Kurdish movements in Northern Iraq. Turkey’s relatively stable relations with Iran slowly started to change after the Iranian revolution; but we will no doubt be seeing a new shift on this axis as Erdoğan lands in Tehran as scheduled in the coming weeks. As Bülent Aras stated, we will be seeing a much more moderate Iran - including its domestic policy - which will in return bring Iran closer to Turkey, a Sunni majority country without sectarian biases. With this new balance in the Middle East, we can expect a wind of moderation also in other countries. As the two countries agreed in principle to help end the Syrian conflict, the upcoming Geneva II initiative will also help Iran and Turkey work together on regional peace.

So... now Iran will not have nuclear weapons?

Yes and no. As a member of the Shanghai Cooperation Organization, if Iran really decided to carry out a nuclear attack on any country, it could obtain nuclear weapons from another member country such as Russia or China and do it covertly. From the very beginning, Iran wanted the nuclear weapon only as a threat or deterrent. In its recent history, Iran never wanted to come face to face with another country, and has always dealt with other countries through its proxy groups and in any showdown, Iran has always been the side to take a step back. For instance in 1998, Iranian diplomats and journalists were killed in Afghanistan’s Mezari Sharif. This led Iran to come to border with its military but ended up doing nothing. We can all remember the Mavi Marmara incident. Many Iranians insisted on going to Gaza and fighting against Israel alongside the Palestinians. Large numbers of Iranian activists even camped out next to airport in Tehran and asked for permission to go to Gaza. The supreme leader however ordered all of them to go back and keep calm. Therefore, we can safely say Iran has never been an offensive country in its recent history. But (and there is a but) just because Iran was not a belligerent nation yesterday, it does not mean Iran will avoid war tomorrow.

As I wrote before, Turkey never agreed to cut ties with Iran and stayed the only country to give Iranian citizens a visa-free pass. Turkey’s approach to other nations is usually shaped by a broader understanding of the region, taking into account more than just the status quo. This new design opportunity for the Middle East has proven Turkey to be on a right and wise path. After a decade of refusing the various incoherent Middle East strategies of the U.S., Turkey once again rises as the biggest benefactor of the Iran nuclear deal.


Ceylan Ozbudak is a Turkish political analyst, television presenter, and executive director of Building Bridges, an Istanbul-based NGO. She can be followed on Twitter via @ceylanozbudak

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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