x Abu Dhabi, UAEWednesday 26 July 2017

Turkish traders cash in on Iraq while the politicians squabble

Turkey's leaders and Iraq's central government are hardly on speaking terms - but for Turkish businessmen, money talks. Thomas Seibert reports from Istanbul

ISTANBUL // Ten years after the US-led invasion of Iraq, Turkey's leaders and Iraq's central government are hardly on speaking terms - but for Turkish businessmen, money is talking all the louder.

Experts predict that Iraq, which has become the second-biggest market for Turkish exports, will soon surpass Germany to reach the top spot.

"It is going up day by day," Saim Yavas of Taha Group, an Istanbul-based logistics company specialising in Iraq, said this month about his firm's business with their south-eastern neighbour.

He said demand was so high at times that Taha had to rent additional vehicles to cope.

Meanwhile, the Turkish construction industry said it was aiming for foreign projects worth US$30billion (Dh110bn) this year, a record high it hopes to reach with the help of ventures in Iraq.

The Turks have penetrated Iraqi markets to the extent that in 2011, a company from Istanbul landed a contract to collect rubbish from households in Baghdad and keep half a dozen important religious sites in the Iraqi capital clean.

Mehmet Sahin, a Middle East specialist at Ankara's Gazi University, said one of the reasons behind the success of Turkish companies was the fact that Turkey was the only country in Iraq's vicinity with enough economic power, know-how and regional knowledge to provide the kind of services and investments needed to rebuild the country.

"With the civil war going on in Syria, Turkey is the only source" for many goods that are in short supply in Iraq, Mr Sahin said.

The boom stands in stark contrast to the political tensions between Recep Tayyip Erdogan, the Turkish prime minister, and Nouri Al Maliki, his Iraqi counterpart.

While Turkey's ties with the Kurdish-ruled north of Iraq have been improving in recent years, its relations with Baghdad have suffered.

Turkey has accused Mr Al Maliki, a Shiite, of trying to centralise power in his hands.

In turn, the Iraqi leader has said that predominantly Sunni Turkey was meddling in Iraq's internal affairs and had become a "hostile state".

But despite the political crisis, Turkish companies flood the neighbouring country with everything from food and clothes to television sets and industrial goods.

Last year, Iraq received Turkish goods worth about $10.8bn, up from $8.3bn in 2011.

In the same period, Turkey's exports to Germany fell from $13.9bn to $12.9bn.

Oil-rich northern Iraq is the main destination for Turkish exports and investments in the country. Hundreds of Turkish entrepreneurs have set up shop in the area of the Kurdish Regional Government (KRG) in northern Iraq, said Nevaf Kilic, the president of the Association of Turkish-Iraqi Industrialists and Businessmen (Tisiad), this month.

Northern Iraq accounted for 90 per cent of Turkey's total trade with Iraq, he said. Two new border crossings, in addition to an existing one at Habur, were needed to make trade flow more quickly, he added.

While machines and consumer goods from Turkey cross the border into Iraq, the KRG was exporting oil to Turkey.

"We want to overtake Germany" to make Iraq Turkey's top trading partner, said Mr Kilic. "There is a huge interest [from the Turkish] business world in Iraq, because it is a big and virgin market."

The export of Turkish goods to Iraq is followed by workers. Of the roughly 60,000 Turkish workers who left the country last year for jobs abroad, about 10,600 went to Iraq, according to figures of the Turkish Employment Organisation (ISKUR), the state employment agency.

An estimated 12,000 Turks were working in the KRG area alone, according to Mr Kilic, adding that many of them work for Turkish construction companies.

But other sectors have sent representatives to Iraq, as well. Taha Group, the logistics company, has expanded to open 20 offices in Iraq.

Given the booming trade with Iraq, Turkey's leaders have been trying to contain the political tensions with Baghdad.

"Baghdad is important for us," Abdullah Gul, Turkey's president, said last month.

Ankara's close ties with Kurdish authorities in northern Iraq did not contradict Turkey's commitment to Iraq's territorial integrity, he insisted.

Mr Sahin, the Iraq expert in Ankara, said that Iraq was also keen to limit the effects of the political tensions on trade relations, because the government in Baghdad needed Turkish companies operating in the country.

If they withdrew and the Iraqi people suffered, "the Al Maliki government would be hurting itself," Mr Sahin said.

foreign.desk@thenational.ae