The Forum for Partners in Iran's Marketplace

September 2004 / No. 31

Trade & Business

Neighborly Ties

Iran and Turkey have consulted each other for a Free Trade Agreement to be implemented in stages.

The recent state visit of Turkish Prime Minister Recep Tayyip Erdogan has served to bring attention to the ties between Iran and Turkey, and how these relations have been improving during the past few years. Both sides believe that, despite some uneasy disagreements, these relations are in a very good situation at the moment and developing each day. The two countries have deep and sincere cooperation in almost every field and we have succeeded to have a real relation based on mutual confidence, security and thoughts of cooperation. It is believed that Turkey and Iran as neighbors will always have good relations because we are now living in a world where cooperation, coexistence, peace, stability and prosperity rather than conflicts, disputes and disagreements play the leading role for nations. One of the major achievements of the last couple of years in the history of Turkish-Iranian relations has been that the two sides have learned to solve their disagreements through dialogue, and have learned to share their interests. They have learned that there are no black and white solutions. One of the most remarkable points which can be highlighted to demonstrate the importance of these relationships is the number of high level visits between the Presidents, Prime Ministers and Ministers of Foreign Affairs of the two countries over the past couple of years, which is a relatively short time in international relations.

Turkey itself is an important energy consumer and is also an energy hub, which makes it a very important center for the distribution of energy resources.

Iran-Turkey Gas Link: The construction of the Iran-Turkey gas pipeline is considered to be an important development in the region and a vital factor to tie the two countries together. In this regard, Turkish Ambassador to Tehran, Selahattin Alpar, has said: “I think the developments in the gas pipeline originating from Iran to Turkey and its possible extension to Western or Central Europe are very important projects which Turkey supports wholeheartedly. We have been interested in these projects since the early 1980s and I was working on these projects even at that time, 25 years ago. I am particularly glad to see that now the gas starts flowing in this pipeline and that Iran is one of the main gas suppliers in the region.”

Turkey itself is an important energy consumer country on the one hand and is also an energy hub on the other, which makes it a very important center for the distribution of energy resources, be it natural gas or oil, in other directions. This fact has gained additional significance in the contemporary world as natural gas is becoming more and more important as a primary source of energy and therefore the flow of natural gas from Turkey to Western Europe has become highly significant. However Turkey has made statements along the lines that Iran should invest more in its gas fields to extract more gas to export and the pricing will also need to be competitive and unified all around the world.

Currently Turkey enjoys relations with Greece and other EU countries involved in this project, which are said to brighten the prospects for the successful completion of the Iran-Europe gas pipeline through Turkey. The Iran-Turkey gas pipeline is being extended towards Western Europe through two main arteries: one through Romania, Bulgaria, Austria and Hungry and the other through Greece and Italy. It is believed that the more European countries get involved in this project, the higher its likelihood success.

The flow of Iranian gas to Western Europe is in the best interest of many European nations because it not only diversifies their sources of energy but also opens their market to competition.

Turkey is a candidate to the European Union and as such it has already started to implement the rules and standards of the European Union in privatizing its energy markets and therefore any source of energy project, if feasible, shall be implemented. Secondly the flow of Iranian gas to Western European markets is in the best interest of many European nations because it not only diversifies their sources of energy but it also opens their market into competition from various energy sources. Therefore Western European countries and Greece are all interested in buying Iranian gas which constitutes a fundamental for the success of the project. Besides there are some project support from the European Union Funds in finalizing this pipeline which further reinforces the success of the project. Of course the Iranian oil and gas authorities are also very much interested in accomplishing this project. We should remember that feasibility, transport fees, cost of gas and its end use are various aspects which need to be studied very carefully in detail.

Bilateral Free Trade: There has always been wide scope of economic and trade cooperation between Iran and Turkey. Last year the two states signed an important agreement to harmonize their standards. Turkey has long been a member of the European Union Standards. Now the same could be adopted by Iran facilitating trade exchanges and also custom operations.

Iran and Turkey have consulted each other for a Free Trade Agreement to be implemented in stages, with both governments believing that free trade is an essential service that governments provide for their people. It is said to be the natural right of the consumers to pay less for the things that they consume. Therefore, taxes, custom duties and other levies imposed on trade should be reduced to lowest amount possible. Iran and Turkey are now bilaterally discussing more liberal tax free regime of many goods and services. Once they finalize these discussions the people of both countries will benefit much from this agreement.

Iran and Turkey are now discussing a more liberal tax regime. Once they finalize these discussions the people of both countries will benefit much from this agreement.

Turkey in the Region: Turkey is following a very pro-active economic policy both in CIS and in Caucasian region as it believes the two regions are complementary to each other. Turkey has excellent relations with Georgia and also with Azerbaijan. Similarly it enjoys very good relations with the Central Asian Republics. This underlines the Eurasia terminology, which means that this route through Turkey links Europe to Central Asia. Therefore any economic activity within that region can be done through Turkey and Iran. Like the East-West and North-South transport corridors, or like many ports which are in Turkey’s Black Sea and in the Persian Gulf, which complement each other. Both Turkey and Iran are said to have important roles to play in the civil and economic development of these countries.

Also, Turkey and Iran are both active members of the Economic Cooperation Organization (ECO). ECO is a very important regional organization where Turkey has vital interests. Therefore ECO constitutes a high priority on the Turkish agenda as well as in the program of the 59th Government of the Republic of Turkey. Turkey aims to accelerate and develop cooperation with ECO in many fields of priority such as transportation, energy, trade, environment, industry and agriculture. Turkey has repeated said it would like to see the impediments to the development of good cooperation removed. The joint understanding which exists between Turkey, Iran and Pakistan is said to help a lot in this matter.

Turkey & Iraq: On the Iraqi situation, there has been talk that the occupying forces are contemplating to slice Iraq into mini states including the creation of a Kurdish state in the North. This is while Turkey identifies Iraq as an important neighborly country. Turkey has always had close relations with Iraq in many fields, political and economic. Anything that happens in Iraq has a potential to have its repercussions in Turkey and many other neighboring countries like Iran as well. Therefore, Turkey would like to see unity among the people of Iraq. Turkey would like to see a sovereign Iraq with territorial integrity. Turkey would like to see political unity, peace and prosperity flourishing in Iraq. Turkey would like to have a stable neighbor. These are values that are also shared by people of Iran as well.

Therefore the whole region would like to see Iraq genuinely deciding on its future. The whole of the Iraqi people should decide, rather than one or two groups deciding what Iraq will become in the future. Therefore Turkey has joined those countries or groups in Iraq who advocate that each single citizen of Iraq should have a say. This is the way to do it, rather than any solution being imposed from outside on the Iraqi people. These sorts of unilateral approaches cannot have sound and universal bases. There are many examples of such kind of approaches in international policies. Therefore it is hoped that in the near future the Iraqi people will vote for a constituent assembly in which the future constitution of Iraq will be formed and the model of the future government and state will be established through the direct votes of Iraqi citizens. Then free elections can be held to have a new government in Iraq. Turkey will support this process as much as it is desired and appreciated by Iraqi people.

Turkey’s EU Membership: Due to the fact that Turkey already has a Custom Union with the European Union, many question what it will gain from become a full EU member. To this Turkish officials have said that Turkey’s joining of the European Union is merely a political project, a philosophy. It is not an economic project. Turkey considers itself a part of Europe. Historically, its social developments have always been, they claim, achieved through Western European standards. Therefore they believe Turkey’s joining the EU can only be considered as the completion of a project which started many years ago. From that point of view Turkey is thought to have quite an important task to achieve politically, socially, and legally. Because EU membership is not only conditional on trade agreements but also requires implementing certain standards on daily social, political and legal life. Therefore Turkey is trying to act in harmony with Western Europe. They have already adopted the same values and systems which are being put into practice in most Western European countries.

Although a factor of religious differences will always stay, Turkey doesn’t see this as an impediment to its union with the EU. The EU has always talked about the rich mosaic of cultures within the European countries such as the Greek, the Spanish, the German, and the Danish cultures. There are different sects of the same religion present now in the Union. The European Union as such was established on the foundation of differences of cultures. The nice part of it is to preserve these differences in harmony. When Turkey becomes a member of the EU, it will also preserve its culture and religious beliefs and by so doing it will also add to this rich mosaic of togetherness.


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  Sep.  2004 / No. 31