Turkish Sanctions Against Iraq Exact Heavy Price
TURKEY'S decision to join the economic boycott of Iraq by cutting Baghdad's oil shipments and severing trade links ``means major economic sacrifice for Turkey,'' says a high-ranking Turkish official. When Ankara adopted the world's sanctions against Iraq last week, it lost an important source of foreign exchange and a nearby outlet for its goods and services. Turkey is an important Iraqi trading partner, second only to Japan.
The two neighbors have enjoyed more than 15 years of lucrative trade, says Riad Ajami, a professor at Ohio University specializing in Turkey and Iraq.
Iraq's demand for Turkish products emerged in the late 1970s and early 1980s, Mr. Ajami says, when the Iraqi diet ``showed a movement away from basic cereals and grains. A higher standard of living and a growing Iraqi middle class created a demand for Turkish exports,'' he says, including meat, eggs, textiles, and assembled goods. ``During the Iran-Iraq war, Saddam Hussein had to show, if nothing else, that Iraqis were well-fed and consumer products were available.'' Since 1987, Iraq has paid for Turkish products largely with oil under barter deals.
Over the years, Turkey has been a key supplier of Iraq's foodstuffs, construction materials, and petrochemicals. Iraq's military vehicles - cars, trucks, and buses - have been almost entirely reliant upon Turkish spare parts and tires. One Turkish trader reports that his lucrative spare parts contracts in Baghdad and Mosul (in northern Iraq) may now turn into a liability. He is currently owed hundreds of thousands of dollars.
Official Turkish government exposure in Iraq - credits for Turkish goods, ranging from foodstuffs to construction materials - is between $3.8 billion and $4.2 billion, Ajami says. The amount that Iraq owes to Turkey's private traders, who have negotiated their own supply arrangements, pushes Iraq's overall debt to Turkey to more than $6 billion. Turks in both the public and private sectors question whether these debts will ever be repaid.
In addition to losing the Iraqi export market, Turkey will lose an important source of oil, income, and jobs.
Sixty percent of all of Turkey's imported oil came from the Iraqi pipeline. ``Now, of course, we have to look for alternate sources,'' the Turkish official says. He adds that Ankara's average annual income from the transport of Iraqi oil through the pipeline is $350 million, revenue the Turkish treasury will sorely miss.
The Turkish official expects the country's 15 percent unemployment to increase because of the loss of jobs in the transportation sector. ``Over 100,000 people who work at harbors and in the trucking industry will lose work due to the boycott,'' he says.
The government official and private traders in Istanbul and Izmir say that there was a broad consensus for Turkey to join the sanctions against Iraq. ``We've done this without asking for anything in return,'' says the Turkish official. ``This proves our orientation as a Western country.''
Nevertheless, experts expect holes to open up in Ankara's boycott of Iraq. ``Turkey will of course continue to supply foodstuffs to Iraq, in order to help fulfill its basic necessities,'' says Ajami. ``But the Turks cannot totally play into the hands of the boycott - the economic costs to Turkey are too great. I expect some cheating in oil. Crude will still arrive from Iraq in trucks.''
John Parker, agricultural economist for the Middle East and North Africa at the United States Department of Agriculture, says that Turkey is now getting offers from other markets to absorb some of its ``unmet demand'' now that trade with Iraq has been severed. ``OECD [Organization for Economic Cooperation and Development] groups would give credits to needy countries, such as Egypt, to import agricultural products from Turkey that would have otherwise been exported to Iraq.''