Turkey's Alignment with the U.S. on Sanctions Against Iran

The return of sanctions against Iran may cause significant and even irreparable damage to Turkey's economy in many cases. Accordingly, many experts believe that Turkey should not align with the United States in imposing unilateral economic sanctions against Iran. Although the U.S. government had implicitly requested Turkey to reduce its trade level with Iran before sending a delegation of experts and representatives from the U.S. Treasury and State Department, former Turkish Economy Minister Nihat Zeybekci and Foreign Minister Mevlüt Çavuşoğlu had explicitly stated that it was not possible for the Turkish government to cooperate with the U.S. in this regard. However, after the visit of the U.S. delegations, President Recep Tayyip Erdoğan explicitly opposed the sanctions on the eve of his trip to the BRICS summit in South Africa, calling Iran a neighbor and strategic partner, and stating that they primarily meet their trade and energy needs from Iran, thus rejecting the U.S. request. The question now is what reasons have led Turkey to dismiss U.S. demands? Is Turkey's emphasis on continuing trade with Iran solely economic, or could alignment with the U.S. create opportunities for a political-security crisis alongside an economic crisis for Turkey in the region? U.S. sanctions against Iran are set to begin on August 6 and November 4. Turkey is resisting increased U.S. pressure, but according to an assessment published by the Turkish Renewable Energy Organization, the Tupras company, as Turkey's largest refinery, imported 187,196 barrels of crude oil from Iran daily in the first four months of 2018, which increased to over 240,000 barrels per day in April. However, this company began to reduce its purchases from Iran in May when Donald Trump announced the sanctions and penalties for companies, with imports dropping to about 130,000 barrels in May and June. In July, approximately 100,000 barrels were exported in three shipments. Every day, the U.S. intensifies its activities regarding the decision to sanction Iran. Sending various advisors from the State and Treasury Departments to countries that trade with Iran and explaining that failure to comply with U.S. trade sanctions will result in penalties has caused some major investors in Iran to cease their activities or suspend their economic operations with Iran. Turkey is also one of Iran's most important trading partners, considered a political-military ally by the U.S., which is trying to compel Turkish officials to cooperate. However, evidence suggests that the U.S. does not seem to be very successful in achieving its goals in Turkey. The losses that Turkey would incur from sanctions are significant. Turkey has a trade volume of $10.7 billion with Iran, aiming to reach $30 billion. Naturally, if Turkey aligns with U.S. sanctions and takes measures to reduce or limit its trade volume, it would incur annual losses exceeding $10 billion from exports and imports. In 2017, Turkey's industrial and manufacturing exports to Iran amounted to $3.2 billion. Meanwhile, according to Anadolu Agency, Turkey's crude oil purchases from Iran in the first half of this year were about 2.1 million and 77 thousand tons, which can be said to cover nearly half of its needs. Turkey's energy imports from Iran, which are vital and strategic after Russia and Azerbaijan, are crucial as Turkey's economic development is taking shape, and the increase in welfare and consumption levels, alongside population growth, indicates a surge in Turkey's consumption and imports of fossil energy and natural gas. Economic experts believe that if the government aligns with U.S. demands, its imports from Iran would also suffer a loss of nearly $7 billion. Currently, Turkey has a budget deficit, and due to the impact of variable factors on exchange rates and the depreciation of the lira against other currencies, the Turkish government is facing serious problems in many infrastructure, development, and industrial projects. If fuel price increases due to the lack of purchases from Iran are added, the cost of goods and services will also contribute to inflation. Economic experts believe that Turkey and Iran have complementary economies and have helped each other in periods of rapid economic development. After achieving a political understanding regarding Syria, both countries were able to expand economic development pathways under the umbrella of political cooperation. Just as during the sanctions from 2000 to 2008, Turkey was able to serve as a bridge and meet Iran's needs, in the event of serious sanctions imposed by the U.S. and other countries, Turkey will again be a reliable passage and intermediary for Iran, reaping significant commercial benefits. The importance of transportation is also notable, as Iran is a focal point in the land route between Turkey and Central Asian countries. In 2017, about 49,800 vehicles entered Iran, with approximately 45,000 of them transiting to third countries. Meanwhile, the number of trucks dispatched from Iran to other destinations that passed through Turkey was about 35,048. Deteriorating relations with Iran will significantly impact land transportation, and in addition to increasing costs, Turkey's exports to Central Asian republics will also suffer major losses. Despite all this, close economic and commercial cooperation between the two countries based on strategic goals and aligned with the Economic Cooperation Organization's objectives will lead Turkey to utilize Iran as the most important and cost-effective route for transit goods to Central Asia and the Far East. Although the rail Silk Road passing over the Caspian Sea provides Turkey with a special advantage to reach the Far East, the security of transportation and the shortness of routes between origins and destinations are other priority considerations that Turkey cannot overlook. Regarding exports and imports, preliminary studies indicate that the current export volume of Turkey, targeted between $3.2 billion and $4.6 billion, will stagnate if sanctions against Iran are implemented. In terms of imports, Iran is considered one of the richest countries in hydrocarbon reserves globally, alongside having chromium, copper, iron ore, lead, manganese, and zinc mines, making it one of the major producers in the world, and Turkey purchases from these resources in addition to oil. Furthermore, if we consider the volume of suitcase trade and border exchanges between Turkey and Iran, which is significant both economically and for job creation, even if illegal for border residents and land travelers, it seems evident that Turkey cannot afford to overlook trade with Iran. Foreign investment and the importance of tourism are also significant, as Turkish investor companies are present in major cities such as Tabriz, Tehran, Qazvin, Isfahan, and even Mashhad, with their number exceeding 200 according to the Iranian Ministry of Economic Affairs and Finance's Foreign Investments Organization. These companies invest in construction, industrial production, chemicals, food, and packaging, and naturally, severing trade relations between Iran and Turkey would create numerous problems for these companies, similar to the tensions witnessed between Turkey and Russia, which Turkey is unwilling to repeat. Additionally, the presence of Iranian tourists should not be overlooked. From January to May 2018, nearly 980,000 people traveled to Turkey, and it is expected that the number of Iranian tourists to Turkey will exceed 3 million by the end of the year. Alongside this, the purchase of real estate and specific investments, including Iranian deposits in banks, are other significant economic resources for Turkey. In conclusion, as Recep Tayyip Erdoğan considers Iran a strategic partner, he pays special attention to these matters, believing that Iran's political-security stability is crucial for stabilizing Turkey's own security and political structure.