Turkey plays down Iraqi blow to business amid political tensions

Yet political concerns over worsening political ties between Ankara and Baghdad may have played a role in the Iraqi Trade Ministry's Thursday decision, sources also emphasized.

Ercüment Aksoy, chairman of the Turkish-Iraqi Business Council at the Foreign Economic Relations Board (DEİK), concedes that the move may also have a political side to it, but he believes it to be essentially a commercial step.

Aksoy noted that companies already registered in Iraq are not to be adversely affected by the new regulation, which will apply only to newly applying firms that want to get established in Iraq. “The regulation covers all foreign firms, and not only Turkish ones,” he told Today's Zaman.

But the simple fact that a great deal of foreign firms operating in Iraq are Turkish makes it difficult to discount the prevailing impression that there may be a political motive behind the decision.

Turkey is most affected by Iraq's new step, because Iraq is Turkey's second-biggest export market after Germany, with Turkey's exports having amounted to $8.3 billion in 2011. And tense political relations between Turkey and Iraq have seemingly paved the way for the step to be interpreted as Iraq's reaction to Turkey, which has recently refused to send Tariq al-Hashimi, fugitive Iraqi vice president who was sentenced to death in absentia, back to Iraq.

Speaking to Today's Zaman about Turkey's political relations with Iraq, Yalçın Akdoğan, chairman of the Turkey-Iraq Parliamentary Friendship Group, has emphasized that Turkey wants better relations with its southern neighbor.

Akdoğan is concerned that the friendship group is not able to carry out the role it would normally be expected to assume, as the Iraqi Parliament is yet to establish a friendship group for Turkey. Noting that relations between Turkey and Iraq are multi-dimensional and historical, he stated, “The relations between the two countries wouldn't be adversely affected in a major way by parties holding power at a certain time.”

Stressing that Turkey wants good relations with its southern neighbor, he added, “Turkey has always championed Iraq's territorial integrity, political unity and stood by its people.”

According to one official, who wishes to remain anonymous, from the Turkish Ministry of Foreign Affairs, there is little reason to interpret Iraq's step as an act against Turkish firms. But the official also admitted that psychologically, it may be to be so. “The regulation is not against Turkish companies, but psychologically it may be perceived as such, as Turkey has some problems with Iraq on the political front,” he told Today's Zaman.

Effects of the regulation will be most strongly felt by Turkish companies, because a great majority of foreign companies active in Iraq hail from Turkey, with the total number of Turkish firms registered with the Iraqi Trade Ministry being 366 at present. “Nearly 90 percent of the foreign firms in Iraq are Turkish, and perhaps companies presently waiting to be registered are also all Turkish,” the Turkish official said.

Few foreign countries demonstrate interest in becoming established in Iraq due to security problems in the country, while Turkish companies are usually well-received by local people. “Turkey doesn't have a hidden agenda regarding Iraq. That's why Turkish companies can move around more freely [in Iraq],” the official commented. Iraq's decision may also be viewed in the context of Iraq's efforts to enter the World Trade Organization (WTO), according to the official.

Turkish Finance Minister Zafer Çağlayan said in a written statement released on Thursday that the new regulation would cover all foreign firms, not just Turkish ones. He also emphasized that the regulation, which is to be in force only temporarily, would only be applicable to firms newly applying for registration. “This has been confirmed by the Iraqi Trade Ministry,” Çağlayan noted. And Aksoy is hopeful the issue will be settled within a month or so at the latest.

In recent times, similar regulations have come into effect, generally presented as measures against Turkey. In July, the Iraqi Civilian Aviation Center, which is subordinated to the central government, closed its air space to all flights due to a radar failure, and three Turkish Airlines (THY) aircraft were grounded at Arbil airport for some time. According to the Turkish official from the Foreign Ministry, it was because Turkish airline companies fly most frequently to Iraq, with THY flying to six destinations in Iraq, that the measure was perceived as one aimed at Turkey.

In another case, in May, Iraq brought into effect a regulation requiring that all imported goods be supervised while being transported to the country. With Turkish firms providing around 25 percent of Iraq's total imports, this had an adverse effect on Turkish firms.

Parliamentary friendship groups could potentially play the role of mediator to mend the tense political relations between Turkey and Iraq, but only the Turkish Parliament has such a group. In the Iraqi Parliament a group is yet to be formed. Ali Özgündüz, deputy from the Republican People's Party (CHP), and member of the Turkey-Iraq Parliamentary Friendship Group, believes parliamentary friendship groups may be of great use in times of tension between countries. Noting that the Turkish people have strong historical relations with the Iraqi people, he called on the Iraqi parliament to work harder to form a friendship group.

But Mehmet Şandır, Nationalist Movement Party (MHP) Deputy Chairman and a member of the Turkey-Iraq Parliamentary Friendship Group, thinks the role of friendship groups in parliaments should be to boost friendships between nations, and not to boost intergovernmental relations. He noted that intergovernmental relations are liable to become strained at various points in time while the friendship between two peoples remained the same, “So it would be a historic fault to try to make use of parliamentary friendship groups in domestic policy,” he commented to Today's Zaman.