Jun 18, 2014

Iraq is Turkey's potentially most lucrative market in the world. According to data from the Assembly of Exporters, Germany and Iraq occupy the top two slots for consumption of Turkish imports. Last year, Turkey's exports to Germany totaled $13.3 billion, while those to Iraq amounted to $11.9 billion.

It is misleading, however, to look only at export figures. One must also keep an eye on imports. In 2013, Turkey imported $24.1 billion in goods from Germany — that is, twice the amount Turkey sold in Germany. Regarding Iraq, however, Turkey sold $11.9 billion in goods and bought only $200 million. This is why figures point to Iraq as being Turkey's potentially most lucrative and rapidly developing market.

According to the Statistical Institute of Turkey, in 2004 the country's exports to Iraq stood at $1.8 billion, which means that in the last decade Turkish exports to that country increased 6.6 times. That exports in the first quarter of 2014 have already reached $4 billion clearly illlustrates the attractiveness of that market. There are, however, indications of a deterioration in relations in this enticing market because of issues involving oil shipments from Iraqi Kurdistan to Ceyhan in Turkey. Before that issue could be resolved, the Islamic State of Iraq and al-Sham (ISIS) occupied Mosul, delivering a blow to trade between two countries. That said, 65% of Turkish exports go to northern Iraq along a route, through Sulaimaniyah, where there are no troubles, so a sharp drop in exports there is not expected.

Cetin Nuhoglu, president of the International Transporters Association, said trucks from Turkey used to carry their freight to transshipment centers 50 kilometers (31 miles) inside Iraq, and from there the goods were sent on to Baghdad via Mosul and Samarra. “Commerce on that route has ceased. The only route open is via Sulaimaniyah,” he said. Nevaf Kilic, president of the Turkey-Iraq Industrialists and Businessmen Association, confirmed that trucks are now coming back to unload their cargo at their warehouses in Turkey.

After ISIS took control of Mosul and began advancing toward other towns, Turkey’s Foreign Ministry warned hundreds of Turkish companies and thousands of Turkish workers to leave Anbar, Baghdad, Basra, Diyala, Kirkuk, Mosul and Salahuddin. Two major Turkish banks closed their branches in Baghdad. As Turks began the evacuation, the fallout on commerce became alarming. More than 1,500 Turkish companies operate throughout Iraq, and when some of them hastily closed their offices after ISIS went on the attack, more than 2,000 trucks headed to Iraq had to turn back.