Turkey-Iran economic relations to pickup following Trump 180 degrees

Published 04.10.2017 19:51

Despite months of speculation over whether U.S. President Donald Trump's administration would scuttle the Iranian nuclear deal, on Tuesday, Trump officials seemingly endorsed its continuation. "Iran is not in material breach of the agreement and I do believe the agreement to date has delayed the development of a nuclear capability by Iran," said Gen. Joseph Dunford, the chairman of the Joint Chiefs of Staff, testifying in front of a Senate committee. With that, Iran's future economic development seems nearly guaranteed and President Recep Tayyip Erdogan's visit to Iran Wednesday could not have been timelier.

Turkey's relationship with Iran is one fraught with dichotomies. Turkey is at times the best of friends with Iran and only months later finds itself on opposing sides of a proxy war. The current economic reality is that Turkey and Iran need each other. Iran is rich in natural resources, oil and natural gas, yet because of years of sanctions and political uncertainty, it is a country in desperate need of development. Turkey is a country with the knowhow and ability to help Iran with its development and is in desperate need of energy. A marriage of convenience would be the logical conclusion, but a comprehensive union has yet to come to fruition. With the Turkish delegation in Iran, both countries are looking to reset already damaged relations by the continued conflict in Syria.

There are two major issues of contention between Iran and Turkey. Turkey's friendship with the Kurdistan Regional Government (KRG) is a major concern for Tehran while Iran's support for Bashar Assad, Hezbollah and Kurdish paramilitary groups aligned with the PKK terrorist organization are all major concerns for Ankara. While Turkey opposed the KRG's independence referendum, it has said economic ties will continue as usual. This is a problem for Iran, as it has, following the second Gulf War, nearly completely taken over Iraq. The vacuum formed after Saddam Hussein's regime was toppled led to Shiite militias at first taking over the southern parts of the country followed by their political victory in taking over the government of Iraq. The government of former Prime Minister Nouri al-Maliki was very closely allied with Tehran and Iran has nearly completely taken over the Iraqi federal government apparatus ever since. Losing northern Iraq to the KRG would mean losing both important land corridors as well as billions of dollars in oil revenues.

Turkey's support for moderate factions in Syria that are fighting both Assad and Daesh is a problem for Iran. While Russia has entered the conflict on the side of Iran and the Syrian regime, the U.S. had been all but silent throughout former U.S. President Barack Obama's administration. Obama's neglect of the region is what allowed Daesh to flourish and his hesitance at removing Assad allowed Assad to stay in power. Now it seems that Assad is here to stay and the PKK's offshoots will continue to ethnically cleanse the land they are driving Daesh from. This will result in a terrorist organization on Turkey's border, which is a redline for Ankara.

Erdoğan and Iranian President Hassan Rouhani will attempt to find common ground in resolving these issues as Turkey's economic ties to neighboring Iran can hardly be overstated. The country is Turkey's third-largest energy supplier with nearly 22 percent of all crude oil imports and over 16 percent of all natural gas coming from Iran. Turkey is currently Iran's fourth-largest export market and its third-largest import market. Iran is currently Turkey's ninth largest export market and its 11th-largest import market. Current trade between the countries is half what it was in 2012, leaving much room to grow.

Following Gen. Dunford's remarks, U.S> Defense Secretary James Mattis commented positively on the deal, one that Trump has called "the worst deal ever." "If we can confirm that Iran is living by the agreement, if we can determine that this is in our best interest, then clearly we should stay with it," Mattis told the Senate Foreign Relations Committee Tuesday. "I believe, absent indications to the contrary, it is something that the president should consider staying with," Mattis said. He also added the deal was in the U.S.'s national security interest, saying: "Yes, senator, I do" to a question inquiring about Mattis's take on that component.

With the green light from the Trump administration, Turkey will ramp up economic cooperation with Iran which will benefit both countries in the near term. Look for Turkish retailers to continue their push into Iranians malls and construction companies to help rebuild infrastructure in the country.

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