Industry observers estimate that the illegal trade of goods between the two countries has increased from $1 billion in 2009 to $3 or $4 billion now. Though most illegal trade comprises items that were not on the list of banned materials, such as tobacco and oil, other items, such as dual-use materials, may be finding their way to Iran.
The UN Security Council imposed a new round of sanctions on Iran in June 2010 to force it to comply with demands over its controversial nuclear program. Iran, hard-pressed by the embargo, seems to be trying to break the sanctions through Turkey, the United Arab Emirates and other neighboring countries.
Özcan Alaş, president of the Iran and Middle East Trade Development Association, founded in 2009, estimates that unofficial trade between Iran and Turkey has risen to almost $4 billion. He told Today's Zaman that his information on the figure comes from Iranians with whom he has been dealing.
All sorts of goods are being transported unofficially, says Alaş, who has been doing business with Iran for more than 15 years. Textile products, machinery and parts, spare automobile parts and food are all part of the illegal trade allegedly carried out by buses, trucks and other means of transport over the mountains. Talking about the difficulties in which the Iranians find themselves, Alaş says: “They get what they need from Turkey because their other neighbors don't have what they need. You even see big factories having to stop production due to a lack of spare parts, which causes people to suffer.”
Alaş also says Iran bypasses embargos over financial transactions. Iranian businessmen do their money transfers the old way, he claims, saying that huge amounts of money are being transferred “a la Grand Bazaar” with money physically moved from the buyer to the seller. “Sometimes a money transfer of $500 million is performed in just one go. The buying party makes the payment to an intermediary with a commission of 1 or 2 percent and gets the money out of the country,” he adds.
Another Turkish businessman who declined to be named told Today's Zaman that there are also goods restricted by the UN embargo being sold in unofficial transactions, which means that the Iranians manage to bypass the embargo through Turkish companies. “Turkish companies do the buying and get the machinery or whatever into Turkey, and then send it to Iran,” he adds.
Meanwhile, in the wake of an alleged plot by Iran -- which Iran dismissed as “American propaganda” -- to assassinate the Saudi ambassador to the United States, a senior State Department official said Tuesday that the US is going to be looking for countries to enforce existing sanctions, implement new ones and cut ties with the Iranian Revolutionary Guard Corps, to basically match what the United States has already done. “We are continuing to look for additional ways to apply financial sanctions on Iran. We are very much in the business of increasing pressure on Iran through sanctions, so Iran understands they have a clear choice to be made between coming to the table seriously [and] meaningfully, and facing further isolation and sanctions,” the same US State Department official was quoted as saying by CNN on Oct. 11.
Four previous rounds of sanctions the United Nations has imposed on Iran have blocked trade in sensitive nuclear material, frozen the financial assets of those involved in nuclear activities, banned Iran's arms exports and encouraged scrutiny of the dealings of Iranian banks.
According to the officials in the Turkish government, there are also difficulties regarding the items with double uses that fall under the embargo. While Turkey prohibits the exportation of such items in compliance with UN resolutions, European companies could sell them to Iran, an official from the government says. The reason is that sometimes dual-use items may fall into a gray area, and it is difficult to ascertain whether they are in the banned category or not.
“We have witnessed many times that some of these items were being sold to Iran by European companies, while we decided to not sell similar items, thinking that it violates UN sanctions,” an official told Today's Zaman on the condition of anonymity. “This creates unfair competition,” he noted.
Iran and Turkey have a trade volume of nearly $11 billion, which they hope to bring to $30 billion. With a young population of over 70 million, Iran has great business potential for Turkey's rapidly growing economy, but because of the sanctions Turkish companies are reluctant to make any major investment in Iran. The reason is, as Alaş clearly states, that they are asking themselves if Iran might be like Egypt and Syria. Still, in an effort to increase trade with each other, the two neighbors are planning to open another customs point at Dilucu-Maku.
Turkey to open nine new border gates in South, East
Customs and Trade Minister Hayati Yazıcı said over the weekend that Turkey has started work on opening nine new border gates to facilitate increasing trade with its southern and eastern neighbors.
In remarks to the Anatolia news agency, Yazıcı said the country will have four new border gates each opened with Iraq and Georgia and the remaining one with Iran in the next two years. The gates with Georgia will be opened in the northeastern provinces of Ardahan and Iğdır, while those with Iraq will be established in the southwestern provinces of Şırnak and Hakkari. The one with Iran will be located in the eastern province of Iğdır.
If everything goes as planned, Turkey will have more than doubled the number of border gates it has with these three neighbors before 2014. Currently, Turkey has three border gates with Iran, two with Georgia and only one with Iraq.
Turkey has seen its trade volume expand rapidly in the past decade in parallel to its economy's growing competitiveness, but also thanks to its “zero problems and maximum trade with neighbors” foreign policy widely lauded both in and outside the country. It did roughly $20 billion of its over $300 billion in trade with Georgia, Iraq and Iran last year.