Iran and Turkey share many cultural, historical and religious commonalities that have brought the two sides closer to one another despite having differences at times.
The strategic positions of the two countries act as a gate for reaching the markets in the East and the West. Given the favorable conditions mentioned above, the officials of the two sides have decided to increase the annual volume of bilateral trade to $30 billion.
To get more information about the current situation of trade between Iran and Turkey Iran Daily conducted an exclusive interview with Seyyed Jalal Ebrahimi, the secretary general of Iran-Turkey Joint Chamber of Commerce.
Excerpts from the interview follow:
IRAN DAILY: Could you please explain the importance of Iran-Turkey trade ties?
SEYYED JALAL EBRAHIMI: The history of Iran-Turkey trade ties dates back to old ages when the two countries were linked via the Silk Road and transported one another’s goods to other countries using the historic route.
The two sides’ trade ties have seen many ups and downs in recent years but have never been severed as Iran and Turkey need each other and also use one another to transit their goods to the East and the West.
Currently, Egypt has restricted the transit route of Turkey’s goods via the Red Sea due to political reasons, meaning Turks cannot now dispatch their freighters via Red Sea and must transit their goods using trucks via Iran’s soil.
At present, 500 to 700 Turkish trucks enter Iran – mainly used as a transit route – on a daily basis. In practice, Iran is the gate for Turkey and European countries’ goods to the East.
It is not only Iran that uses Turkey as a transit route, but the Turkish side uses Iran’s roads as well. This route has always remained open throughout the history and all nations are aware of the fact that the two countries need to have relations and cooperation with one another.
Another matter is the 85-million population of both countries, creating a 170-million market that is more than the market and population of several European countries combined. Iran-Turkey market is potentially a big one.
How can this economic potential be utilized properly?
We can create a regional market just like the European common market. This regional market can act as an economic shield and a production center so that we can trade our goods with regional countries and then gradually reduce the tariffs to finally establish a common market. Of course, this plan will take time and requires knowledge of the regional markets, goods, economic viability, data, trade windows and consultation with experts.
After the US withdrawal from the 2015 Iran nuclear deal in May, the Americans tried to cut Iran’s oil and gas exports to other countries, including Turkey, to zero. Can they really do that?
We are the biggest exporter of oil and gas to Turkey and this country really needs Iran for meeting its energy demands. During their negotiations with US officials, Turks asked the US whether it could provide Turkey with oil and gas instead of those of Iran at the same level and price. They asked this because they knew the US was unable to do that.
In addition. It would take Turkey a great deal of time to redirect its gas pipelines channeling Iran’s gas. The Turks have also repeatedly announced that when it comes to Iran sanctions, they would only follow those of the UN Security Council and not the ones imposed by the US.
When I was studying in Ankara in 1974, Turkey did not have a good economy. The city’s pollution as a result of burning coal was so much that the sky had turned dark blue. The Turks did not have any other source of energy but low quality coal. It was Iran’s gas that gifted clean air back to Turkey.
Iran’s gas is running through all gas pipelines of Turkey and its people appreciate this.
Iran’s competitor to provide gas to Turkey is Russia and I believe that Turks cannot rely on Russia in this regard because the country was even, at times, considering stopping gas import to Europe. In fact, Russia is looking at its gas and oil as a diplomatic tool.
So Turkey constantly needs Iran’s gas and Iran is selling its gas cheaper to Turkey to observe good neighborliness.
Erdogan, the Turkish president and the leader of AK Party, has said he will not cut the main supply of gas and oil to Turkey because it is the economic lifeline for the country. If it had not been for Iran’s gas, the activity of industries and factories would have decreased and the country’s economic growth suffered.
Could you explain the currency swap and using the two sides’ national currencies?
We have currency swap with Turkey and our traders can use currency swap for their purchases. In addition, according to the contracts signed between the two countries we can use currency swap. Turkey uses currency swap with a number of countries, including China, Russia and Iran.
I made a suggestion a while ago that was also covered in Turkish media. I suggested that the regional countries need to come up with a platform to use their own currencies in trade. Of course, the ground for this first needs to be prepared, in particular, in banking sector.
To operationalize this plan, a fund needs to be established and countries need to invest in it. As a result, this platform can act like the SWIFT and countries joining this plan can use their own currencies for trade.
In addition to currency swap, Iranian traders in Turkey can make their purchases, even big ones, using rial or lira. We can even pay for Turkish products in rial, even when the purchase is made inside Iran. This is legal and has been approved in the two sides’ trade commission.
There has been some news about a joint bank, can you talk about it?
Iran and Turkey both had trade councils. It has been a year since we have upgraded this council to a chamber of commerce, but Turkey still has the council. The Turkish council is part of Union of Chambers and Commodity Exchanges of Turkey (TOBB) and has a lot of power and is higher than the trade chambers because it has control over exchanges as well. The council determines Turkey’s policy in economy.
The head of Turkish council announced a while ago, that Turkey is willing to establish a joint bank with Iran. I proposed that first we create a joint fund and credits gets deposited by the two sides. Should this fund get established, it would act based on electronic trade rules. It can clear the amount of money after the goods have been delivered.
The two sides are negotiating in this regard and I cannot talk about it more. I can only say that the trades and chambers of commerce of the two countries are determined to create this fund. The creation of this fund will not be subject to sanctions and can be a breakthrough in the two sides’ level of trade.
How is the situation of the tourism between the two countries?
Turkey had 32 million tourists last year and Istanbul has 500,000 tourists that are staying in the city every day. Each tourist brings in between $1,000 and $1500 to the visiting country. There were 800,000 Iranian tourists visiting Turkey in the last eight months, which is a big number.
The number of Turkish tourists visiting Iran, however, is not too many. This is while Iran has many tourist attractions.