Despite Turkey’s recent corruption scandal and international sanctions on Iran, diplomatic ties between the two countries remain amicable. The regional neighbors also appear to have recovered nicely from their disagreements over the crisis in Syria. During several recent official visits, both Iranian and Turkish delegations expressed optimism about the future expansion of trade, particularly the establishment of joint ventures to restrict the impact of sanctions on Iran’s economy.

On May 18, 2014, an Iranian trade delegation headed by Yahya Al-e Eshaagh, the CEO of the Tehran Chamber of Commerce, travelled to Turkey. Several weeks prior to his visit, a delegation from the Izmir Chamber of Commerce visited Tehran to discuss the current status of trade between the two countries and examine the potential for boosting trade volume up to 30 billion dollars.

Given Turkey’s deep interest in Iran’s energy sector, the delegation visited Iranian oil fields in the southern part of the country. In a recent interview, the Turkish Ambassador to Iran, Emit Yardim, emphasized Turkey’s interest in investing in Iran’s oil and gas industry.

In the past, Turkey imported gas from Iran, until Turkish officials complained about Iran’s high prices. In fact, Turkey’s newfound interest in investing in Iran’s oil and gas industries coincides with an on-going dispute between the two countries over the price of gas. The disagreement led to Turkey’s recent lawsuit against Iran in the International Court of Arbitration, about Iran’s gas-pricing practices.  Although Iran and Turkey have not reached an agreement on the issue, Yardim reassured Iran that there is consensus between the Turkish government and the private sector in Turkey to tap into Iran’s energy sector.

Behind this shuttle diplomacy between Tehran and Ankara are Turkey’s growing energy demands. Iran’s dismissal of Chinese contractors from the South Pars and Azadegan oil fields has also left a gap, in terms of investors capable of developing Iranian oil fields. Iranian oil ministry officials have frequently expressed frustration over China’s failure to finish oil and gas projects in a timely manner.

In light of these and other events, Turkey’s timing could not be better. If and when sanctions are lifted, Turkey will be well placed to enter the Iranian market ahead of other competitors. In an interview with Tejarat Farda, an Iranian trade magazine, Akram Demirtas, the CEO of the Izmir Chamber of Commerce, urged Iran to remove all barriers to trade, including implementing tariffs to improve the quality of domestic products. In the 1980s, Turkey used similar liberalization measures to make its economy more competitive. Demirtas added that the Izmir port could also act as a bridge to facilitate trade between Iran and Europe.

 

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