Tehran, Ankara forget political disputes for long-awaited $30M trade

Baku, Azerbaijan, March 5

By Umid Niayesh - Trend:

Iran and Turkey, the Middle East's two powerful players, share very close economic ties despite taking part in opposing political blocs.

Tehran and Ankara are already clashing over a number of issues, in particular their supporting opposing sides in the Syrian crisis. However, both sides are determined not to allow the political tensions to affect their economic goals.

The two countries have targeted to increase their trade volume to $30 billion, something that has not been realized so far. They also have signed a preferential trade agreement with a hope to pave way for a hike in bilateral trade.

The trade turnover between the two countries was $13.71 billion in 2014 and $9.76 billion in 2015. Although the trade turnover dropped by 29 percent in 2015 compared to the preceding year, many observers believe that the decline came amid global economic crisis ruling out the role of the political disagreements.

Amid all these developments, Turkish Prime Minister Ahmet Davutoglu visited Tehran March 5 to discuss mutual relations with Iranian officials.

Given that political differences between Tehran and Ankara on regional matters, in particular on Syria and Yemen, are so deep that they can hardly be settled, the economic issues and saving the falling trade turnover should be considered the main purpose of Davutoglu's visit to Tehran.

Davutoglu was accompanied by ministers of economy, customs and trade, energy, transport, communications and development - which is indicative of the economic weight of the visit.

The expected increase in trade volume has failed to come true so far due to sanctions on Tehran and the two parties have postponed the $30 billion trade goal several times.

Iran's First Vice President Eshaq Jahangiri, after his meeting with Davutoglu, outlined a two-year timeframe for upping the trade turnover from its current $10 billion.

While Turkish exporters and industrialists hope that the removal of sanctions on Tehran will contribute to an 8 to 10 percent increase in Turkish exports to Iran in 2016, the latest statistic data by Turkish Statistical Institute indicate that mutual trade in January fell by 44 percent and stood at $624 million.

As Iran exports mainly raw materials to Turkey, including crude oil and gas, sharp fall in oil prices in global markets has led to decrease in trade value.

Non-oil products share less than 20 percent of the Islamic Republic's export to the neighboring country.

Turkey faced substantial losses due to declining exports to Iran during the sanctions period and now is determined to return to Iran's attractive market, to recover the pre-sanctions trade level.

In 2012, when the embargo was imposed against Iran, the volume of trade between Tehran and Ankara was standing at $22 billion, with $9.9 billion in exports and $11.9 billion in imports.

Iranian market promises a huge opportunity to Turkey in various sectors, including tourism, automotive industry, clothing, textiles, machinery, chemistry, petrochemistry and energy industry, as well as banking, telecommunications and transportation.

And apparently Turkey is not going to lose this tempting market for political disputes.

---

Umid Niayesh is Trend Agency's staff journalist, follow him on Twitter: @UmidNiayesh

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