ISTANBUL, (Reuters) – Turkey wants to triple its trade volume with Iran within five years, Turkey’s prime minister told businessmen on Thursday, at a time when sanctions are scaring off Western investors from the Islamic Republic.
Prime Minister Tayyip Erdogan and Iranian First Vice President Mohammad Reza Rahimi oversaw the meeting which brought together over a hundred businessmen, including Turkish investors eager to buy into Iran’s mostly government-owned textile, machinery and automotive industries.
“Our bilateral trade ties have reached $10 billion … When we take away the barriers to trade between ourselves, when we complete our preferential trade agreement we can reach a bilateral trade volume of $30 billion in five years,” Erdogan told the businessmen from Turkey and Iran.
Numerous rounds of sanctions on Iran by the United Nations, the United States and the European Union have hit the Islamic Republic, discouraging investment in its huge natural gas reserves as well as its banking sector. Meantime, Turkey, which took over the presidency of the Security Council this month, has fostered diplomatic and business ties with Tehran. A trade agreement between the two countries is set to expand business ties even further.
Analysts say Turkey is seeking to capitalise on the diplomatic risks it has taken in backing Iran while the West piled on sanctions.
Erdogan and Brazilian President Luiz Inacio Lula da Silva brokered a uranium swap deal earlier in the year that they hoped would stave off sanctions and ease fears in the
West that Iran’s nuclear programme was a front for creating weapons.
But it was not enough to stop the United Nations, EU and Washington from imposing new sanctions on Iran.
At a joint news conference held later, Erdogan said the earlier swap agreement should provide a base for further talks to find a diplomatic solution.
INTEREST IN IRANIAN PRIVATISATIONS
Some Turkish businessmen were hoping Erdogan could help them forge stronger ties with Iran, when others were backing away.
“This is a big opportunity for Turkey,” said Mehmet Koca, member of the executive board of the Turkey-Iran business group.
“Finance and trade that was carried out by Dubai and the United Arab Emirates before the sanctions can be taken over by Turkey,” said Koca, who is also the general manager of Turkish fertiliser company Gubretas.
He said Iran remained very closed to foreigners and needed to be convinced to open up to foreign investment. His own company bought a majority stake in Iranian Razi
Petrochemical in 2008, according to information on its website.
Turkish companies were expected to buy stakes when Iran begins a privatisation programme, expected early next year, or form joint ventures with Iranian businesses.
“Turkey’s private sector is more forward looking and more experienced than ours,” said Iran’s Rahimi.
Iranian carmaker Iran Khodro and Turkey’s Hema Endustri are set to sign a deal worth 200 million euro ($262 million) to build two automotive factories, company officials told Reuters.
They said the memorandum of agreement could be signed in Iran in two weeks. One factory would make brakes and the other steering wheels and they would be built in a free-trade zone on the Iranian border.
Turkey and Iran shared a bilateral trade volume of nearly $10 billion in 2008, 80 percent of which were Iranian exports to Turkey, mostly in the form of natural gas. Iran supplies Turkey with one third of its gas needs.