The Iranian connection in Turkey’s corruption scandal

Iran Matters, Harvard Kennedy School, Belfer Center for Science and International Affairs - January 6, 2014

Prof. Nader Habibi is the Henry J. Leir professor of the economics of the Middle East at the Crown Center

The recent corruption scandal in Turkey has exposed a hidden dimension of the complex economic and commercial relationship between Iran and Turkey. In an attempt to overcome its trade isolation and international sanctions, the government of Iran deliberately and strategically expanded its economic relations with Turkey over the last decade and positioned itself as the second leading supplier of natural gas to that country. Bilateral trade relations between the two countries have experienced many ups and downs as a result of geopolitical differences and U.S. pressure on the Turkish government, but until 2011 they enjoyed a general uptrend.

During March–November 2013, Turkey was the fifth largest exporter to Iran after China, Iraq, UAE, and India. Turkey exported $2.56 billion in merchandise goods to Iran. At the same time, Turkey is also the largest importer of natural gas from Iran. An earlier statistical report shows that during January–September 2013, the volume of Iran’s exports to and imports from Turkey stood at $8.0 billion and $3.4 billion, respectively. As large as these figures are, they point to a 39% decline in volume of bilateral trade between the two countries in comparison to the January–September interval in 2012. This decline is a direct result of sanctions and the pressure that Western nations have put on Turkey to curtail its economic ties with Iran. ...