Trade between Turkey, Armenia goes on amid legal woes
YEREVAN -- A widespread belief that money recognizes no borders is just the case for business contacts between Turkey and Armenia, two neighbors whose relations are strained over multiple political disputes.
“When I first took the plane to Armenia I had the feeling that Armenian partners are trustworthy and professional. My hopes came true: I realized that they are active and often successful due to a good awareness of business practices.” This recognition came from Tuncay Özen, on the sidelines of the Armenian-Turkish business conference, held Nov. 22-23, under the USAID-funded Armenia-Turkey Rapprochement Project, arranged by partnering NGOs in Armenia and Turkey.
Businesses in the two countries have had a long history of partnership on their own, even in a strained atmosphere of uneven political dialogue between the two countries. That partnership is visible to every resident of Yerevan, where the “Made in Turkey” label can be found in any garment shop. Turkish exports are not limited to textiles -- they include construction materials, wooden articles (including furniture), paper and chemical products, among which are licensed production of Western brands. Another important item on the list is metal tubing and sheets. Development is reflected in a growing trade turnover. Twelve years ago it was $41 million, five years ago $98 million and last year it reached $198 million. “These are the most prudent estimates,” says the coordinator of the business component of the event, Arthur Ghazaryan. “A portion of goods goes unregistered, being transported by shuttle traders,” he adds. For him, total turnover may be as high as $300 million. This is a considerable amount for a small country like Armenia with an equally small population. Either way Turkish exports are dominant in the two countries’ trade with each other. Exports from Armenia in 2010 accounted for just over $1 million and consisted only of raw tobacco and leather, as well as synthetic rubber. The main channel for commerce is certainly Georgia. But, apart from the closed border, there are extra barriers for goods of Armenian origin in Turkey, which partially explains a low volume of Armenian imports. Businessmen state there is a silent ban on “Made in Armenia” products -- even if the indication is only in the invoice and remains invisible to customers.
This unwelcome attitude to Armenian trade suggests Turkish businessmen play it safe and do not sign any legal documents with their Armenian counterparts. One of the leaders of the Armenian textile industry, Suren Bekirski, CEO of Tosp OJSC, imports raw cotton from Turkey. “The Turkish side generally views us as short-term partners. One can only build lasting business relations upon personal contacts. They are not ready to sign contracts, and such an agreement will not be protected by law should the case arise,” he says.
Limitations on contracts extend beyond freight forwarding to passenger transportation. However, as for large trucks, which had absolutely no chance of entering Turkey in the past, this year the situation has been somewhat eased. Under the framework of a standard bilateral agreement between members of the TIR convention, Turkey in July agreed to 200 transit entries of TIR-compliant trucks yearly. “But the agreement has apparently not yet been enforced,” says Gagik Aghadjanyan, CEO of Armenian Apaven freight forwarder, an old-timer in Turkey. “When we sent two trucks for recognition about two months ago, their way was barred at customs.”
Turkish exports to Armenia face some difficulties, too, but are nevertheless feasible. The main obstacle is an exclusion of Armenia from Turkey’s export destinations. To overcome this, Turkish drivers travel with two invoices. The first is for a third country (usually Georgia), to move the cargo out, and the second is for the actual destination, Armenia. It is plain to everybody, but the solution seems mutually acceptable. “Sure I know about some difficulties. To get over them, papers are modified in some way in Georgia. But Turkish entrepreneurs are trying to influence their government to facilitate business with Armenia,” says İhsan Oğurlu, co-owner of Bistex, an underwear producer from Diyarbakır.
Observers have noticed that among businessmen in Turkey a focus on Armenia is geographically dependant: The farther to the east, the bigger the interest they have in doing business with the country. It’s not surprising that the majority of Turkish participants came to the forum from eastern Anatolia. Özen was one of the few to come from İstanbul and can be truly called one of the pioneers in bilateral business activity: He has been working in Armenia for 14 years. But business is not about primacy; it’s about participation. Businessmen are very conscious of that on both sides of the border.