New Chapter in Iran-Turkey Ties
Iran’s President Hassan Rouhani made a state visit to Turkey, the first by an Iranian head of state after eighteen years. The visit is expected to turn the page in Iran-Turkey relations.
Relations have improved between Iran and Turkey over the past six months. Rouhani’s visit to Turkey following Turkish Prime Minister Recep Tayyip Erdogan’s visit to Iran is proof of the willingness of the two countries to broaden their cooperation.
Iran and Turkey are long-time neighbors and such visits by top officials would definitely affect the future of their ties.
Energy was the main topic of talks between Iranian and Turkish officials during Rouhani’s visit. Iran is a major source of energy while Turkey increasingly needs energy due to its economic growth and industrial development.
Russia is currently a main supplier of energy to Turkey, but Ankara plans to diversify its energy sources so that it would not be dependent on a single country.
Turkey is currently importing oil and gas from Iran.
10 MoUs
During President Rouhani’s two-day visit on June 9 and 10, Iran and Turkey signed ten memorandums of understanding with Turkish President Abdullah Gul.
The 10 cooperation pacts signed between Iran and Turkey included agreement on joint film production, agreement on cultural, scientific and educational exchanges, tourism cooperation programs, cultural heritage program, cooperation between the two countries' post organizations and cooperation between the two countries' standard institutes.
During his two-day visit to Turkey, the Iranian president was accompanied by Foreign Minister Mohammad Javad Zarif, Road and Urbanization Minister Abbas Akhoundi, Peroleum Minister Bijan Namdar Zangeneh, Communications and Information Technology Minister Mahmoud Vaezi, Interior Minister Abdolreza Rahmani Fazli, Culture and Islamic Guidance Minister Ali Jannati, Economy Minister Ali Tayyebnia and Governor of the Central Bank of Iran Valiollah Seif.
After the signature of the agreements, Rouhani said at a joint news conference with Gul that Tehran and Ankara take steps in the interests of better ties between the two nations.
Rouhani said his administration is willing to “promote relations with friendly countries, particularly neighbors”, adding that Turkey enjoys a special status among Iran’s neighbors.
He underscored the significance of specific geopolitical position of Iran and Turkey in the region, adding that he and Gul have agreed on doubling Tehran-Ankara trade to 30 billion dollars a year. “Calculations of both sides show that this objective is achievable,” Rouhani said.
He also said that the two countries have reached agreement on expanding communications infrastructure, particularly railroad construction, through Bazargan border point in order to link the Persian Gulf and the Sea of Oman to the Black Sea and the Mediterranean.
Rouhani said the two countries also agreed to facilitate the activities of each other’s private sectors.
The Iranian president also said Iran and Turkey have agreed to broaden scientific, cultural and tourism cooperation.
Rouhani said Iran is open to Turkish investors for financing the construction of hotels.
He said Iran and Turkey have also agreed to expand banking transactions.
Gul said Iran and Turkey are determined to deepen relations in all areas.
He called Rouhani’s visit to Turkey of ‘historic significance’.
“Iran and Turkey enjoy historical and deep-rooted relations as two big regional countries,” Gul said.
Gul said he had ‘useful’ talks with Rouhani, adding they had conferred on different issues including, politics, economy, culture and so on.
The Turkish president predicted cooperation between private sectors of Iran and Turkey will witness further growth and underlined that expansion of ties between the two big regional countries will help restore peace, stability and welfare to the region. Regarding Tehran’s nuclear program, Gul noted Turkey has always wanted the issue to be resolved through ‘political means’.
He said his country wants the Middle East region to be rid of weapons of mass destruction, but he noted no country should be deprived of its right to use nuclear energy for peaceful purposes.
Gul said Turkey hopes that all anti-Iran sanctions would be lifted soon.
He said the signature of ten MoUs between Iran and Turkey indicates the seriousness of the two countries to improve their ties.
The Turkish president said Iran-Turkey relations are not limited to ties between two countries, adding that further cooperation between these two influential countries will bring about stability and security as well as economic welfare for the entire region.
Gul said Iran and Turkey should follow the model of France-Germany cooperation in order to increase their transactions.
He said that since the time President Rouhani came to power of, Iran has cleared the way for more activities by the private sector.
Strategic Council
During Rouhani’s visit, Iran and Turkey established a high council for strategic cooperation for the first time in the history of mutual relations.
“Different topics pertaining to mutual issues were raised at the meeting of the High Council for Strategic Cooperation,” Rouhani told reporters.
After the victory of the Islamic Revolution in Iran in 1979, Tehran has always maintained good relations with Turkey as a strong neighboring Muslim country, “which is very important to us,” he added.
“The Islamic Republic of Iran and Turkey share common views on bilateral issues as well as other regional and international questions,” the Iranian president pointed out.
A joint Tehran-Ankara meeting, held in the Turkish capital, was presided by Iranian President Hassan Rouhani and Turkish Prime Minister Recep Tayyip Erdogan. At the meeting, the two sides outlined their future cooperation in a final statement.
In the statement, the two sides laid emphasis on their determination to strengthen their bilateral relations based on international law and good neighborly relations and on issues of mutual interest.
Iran and Turkey also reiterated improvement of economic and commercial relations, saying it will result in the prosperity of the two nations and help regional stability.
The two sides also agreed to study ways to strengthen the two countries' relations in the banking sector.
Tehran and Ankara also agreed to deepen their cooperation in the energy sector.
The two sides also reiterated their support for the activities of the Economic Cooperation Organization (ECO) and laid emphasis on deepening cooperation among the member-states through ECO Trade Agreement.
Rouhani said a growing number of world states are willing to increase investment in Iran, but investment by the Turkish nationals is Tehran's priority.
"Iran is one of the most secure regional states for investment and the trend of investment in Iran will further grow in coming years; in this line Iran gives the priority to the Turkish investors, while the Iranian private sector is also ready for reciprocal investments (in Turkey)," Rouhani said.
He also underlined the necessity for increased activity by the two countries' economic cooperation commissions to boost Iran-Turkey's trade balance to $30bln.
Rouhani referred to other fields of cooperation between Tehran and Ankara, and said, "We are ready for the transfer of the experiences of Iranian and Turkish companies in tourism and the two sides' investment in this sector."
He also called for removing certain banking problems in a bid to facilitate financial exchanges between the two sides.
Iran and Turkey have in recent years increased their cooperation in all the various fields of economy, security, trade, education, energy and culture.
The two sides have exchanged several politico-economic delegations during the last few months.
According to the figures released by the Turkish Statistical Institute (TurkStat), the Iran-Turkey trade turnover stood at $3.256 billion in the first quarter of 2014. The two countries are determined to increase their trade volume to $30 billion by 2015.
President Rouhani further said Tehran and Ankara have a common stance on the nuclear issue.
“The two countries see eye to eye on the fight against violence and extremism as well as [efforts] to rid the [Middle East] region of weapons of mass destruction because this issue is important not only at a regional level but at an international level,” he added.
He noted that Iran and Turkey share common goals on regional issues but have different views on certain topics and have agreed to resolve them.
A preferential trade agreement signed between Iran and Turkey will raise the two country’s trade exchanges by three to four billion dollars.
Gas Price
President Rouhani said Tehran and Ankara are in talks about the price of natural gas which Iran pumps to its neighbor.
“Views were exchanged about this issue. Iran’s petroleum minister and Turkish energy minister are to continue these talks to reach agreement,” Rouhani said in a joint press conference with Erdogan.
“Of course, the gas price depends on a variety of factors. All aspects of the issue must be taken into consideration before setting the price,” said Rouhani.
He said Iran and Turkey, two strategic partners, are determined to broaden their energy cooperation.
On January 23, Turkish Minister of Energy and Natural Resources Taner Yildiz said Turkey imported more than seven billion dollars worth of Iranian natural gas and crude oil in 2013.
Iran’s natural gas is of crucial importance to Turkey as the energy-hungry country uses a significant portion of imported Iranian gas to generate electricity.
Iran and Turkey held several rounds of talks about settling differences about gas price.
Turkey laid a formal complaint against Iran with the International Court of Arbitration in regards to the price of gas in March 2012.
Iran reportedly charges Turkey $490 for every 1,000 cubic meters of natural gas it exports to its western neighbor. This is while Turkey claims that the Republic of Azerbaijan and Russia supply gas to Turkey at $335 and $425 per 1,000 cubic meters, respectively.
Iranian Deputy Petroleum Minister for International Affairs and Commerce Ali Majedi said recently that negotiations about an increase in gas exports to Turkey and a possible price revision are ongoing.
He stated that Iran wants to have a share equal to Russia’s in the Turkish gas market.
Iran owns the world’s largest natural gas reserves after Russia, and is also Turkey’s second biggest gas supplier after Russia.
Private Sectors
President Rouhani said Tehran and Ankara can achieve their targeted $30 billion annual trade only through increased activity and stronger role of the two countries' private sectors.
"Targeting $30 billion of annual trade balance requires increased activity of the private sector," President Rouhani said addressing a meeting with Iranian expatriates and businessmen in Turkey.
The Iranian president explained that the time has arrived for the states to further cede their economic affairs to the private sectors, and said, "Today the Turkish economy is moving in the right direction by ceding economic affairs to the private sector and Iran's private sector should also feel responsible and step onto the scene of action in a proper way."
After Rouhani’s visit to Turkey, over 800 companies and business firms filed for registration in the country.
Rouhani and Head of Iran’s Chamber of Commerce, Shafei, discussed economic issues with Turkish counterparts in Ankara.
Iran and Turkey’s heads of Chambers of Commerce emphasized upon improving the current level of economic cooperation through exploiting every opportunity between the two countries.
The meeting was held after eighteen years between Iran and Turkey and both sides emphasized on more cooperation in the private sectors.
Gholam-Hossein Shafei said that relations between Iran and Turkey should be on higher level and dubbed Turkey as Iran’s historical friend and said that the 11th cabinet sought better relations with neighbors and Muslim countries, especially Turkey. “The private sector is important for us, and barriers should be eliminated in the business between the two countries,” he added.
He pointed to the potentials of both countries such as Iran geographical position which make it the best option for transiting Turkish goods to Far East market and Turkey’s geographical condition as the best route for Iran’s goods to the Europe.
Head of Turkey’s Chamber of Commerce Rifat Hisarciklioglu also pointed to the geographical position of both countries and political conditions of the region, adding that Iran and Turkey cooperation could provide better access to the world markets.
He emphasized upon Iran’s progress in defense industries, petrochemical, oil and gas industries and also Turkey’s progress in construction and tourism industries and asserted that bilateral investments in such projects would be important step to increase cooperation between both countries.
Hisarciklioglu said that more than 800 new Iranian companies of private sectors registered in Turkey and added that businessmen of both countries with their unity should show ‘cooperation and development’ to the whole world.
According to the Turkish Statistical Institute, Iran was Turkey's third-largest goods export market in 2012. Turkish goods exports to Iran in 2012 were $9.9 billion, up 176 percent ($3.5 billion) from 2011, and up 2,652 percent from 2001. The top export categories for 2012 were: gold and golden plated silver ($6.528 billion), iron and steel ($629 million), textile yarn, fabrics ($226 million), land transportation vehicles ($209 million) and electrical machinery, apparatus and appliances ($171 million).
Iran was Turkey's sixth-largest supplier of goods imports in 2012. Turkey imported $11.4 billion worth of goods from Iran in 2012, up 1.324 percent from 2001. The top 5 imports categories for 2012 were, coal and raw petroleum materials, natural gas, plastics in primary forms ($456 million), metals other than iron ($432 million) and organic chemicals ($103 million).
Turkey was the sixth-leading trading partner of Iran in the previous Iranian calendar year, which ended on 20March 2014, according to the Iranian Customs Administration.
Annual non-oil trade between Iran and Turkey amounted to $5.286 billion in the previous Iranian calendar year. Turkey exported $3.646 billion of non-oil goods to Iran and imported $1.64 billion of nonoil goods from the country in Iranian year 1392 (March 2013-March 2014). On April 15, Tehran and Ankara set an annual trade target of $30 billion at the 24th meeting of the Iran-Turkey Joint Economic Commission, which was held in Tehran. In January, Iran and Turkey signed a preferential trade agreement, with the goal of boosting bilateral trade. The agreement was signed during Erdogan's visit to Iran.