Turkey not bound to bilateral EU, US sanctions on Iran

Pressure by the US and some EU-member states on Turkey has increased in the past »»
Pressure by the US and some EU-member states on Turkey has increased in the past few weeks, as unilateral sanctions imposed by the EU and the US in addition to those endorsed by the United Nations Security Council blacklist a large number of Iranian banks. Turkey says it is bound to honor only the Security Council resolution and does not have to comply with individual sanctions adopted by individual states. Experts say that although sanctions are on companies, not states, the spillover of the crisis onto a political stage is likely and will widen the political rift.

The Reuters news agency reported on Monday that an examination of classified reports and interviews with Western diplomats, government and intelligence officials emphasize that Turkey and others have resisted international pressure to make it harder for Iran to finance its uranium enrichment program.

“Turkey’s blossoming financial-economic relationship with Iran provides Iran with a gateway to the entire European financial system,” Reuters quoted an intelligence report on Turkey and Iran as saying, noting that report was provided by a diplomat.

“The fact that Turkey is allowing itself to be used as a conduit for Iranian activity via Turkish banks and the Turkish lira is making it possible for Iranian funds in Turkish guise to make their way into Europe,” the same report was quoted as saying.

Bayram Sinkaya, a prominent expert on relations between Iran and Turkey with particular emphasis on the banking system, said Turkey and Iran expanded their banking system after Western governments embraced large-scale economic sanctions to constrict the Iranian banking system. According to experts, many foreign European banks are slowly departing Iran, leaving Iran’s economy in dire straits. He said that is the reason why Iranians are very eager to cooperate financially with Turkey.

Trade between Turkey and Iran amounted to more than $10 billion last year, and officials aim to triple this figure in the next five years through bilateral energy deals. The two economies are among the largest in the region, and they possess huge potential to reinforce each other.

Turkey has stressed that it is the only country represented in the UN Security Council that shares a border with the Islamic republic. Foreign Affairs Minister Ahmet Davutoğlu has repeatedly argued in his various speeches that this fact should be considered when urging Turkey to embrace sanctions.

Turkey, obviously, does not have to comply with bilateral and individual sanctions adopted by the US and some EU member states. Sinkaya said it is true that the Turkish banking industry is dealing with Iran’s financial institutions that are blacklisted in the EU and US but noted that they are not included in the list of the UN Security Council resolution that was adopted on June 12. The fourth and latest round of economic sanctions is not a crippling one, which China and Russia opposed at the time, but they are the harshest economic sanctions since 2006.

In an interview with renowned Foreign Policy journal Turtle Bay blog, Davutoğlu said Turkey will continue to expand its economic relations with Iran.

“Nobody can ask us to cut our economic ties with Iran,” Davutoğlu said on Wednesday. He said Turkey will maintain these ties because it is in Turkey’s national interest. The US claims Turkey’s dealings with Iran undermine its efforts to employ sanctions against Iran as a tool – as opposed to an end unto themselves -- with the goal of persuading Iran to relinquish its suspected nuclear program.

In his interview with Foreign Policy, Davutoğlu lauded Turkey’s financial dealings with Iran, claiming that Ankara has no legal obligation to comply with US or European sanctions against Iranian banks. “We are bound only by UN Security Council resolutions. Bilateral sanctions [do] not bind anyone except those who have declared it,” the Turkish foreign minister said.

Celalettin Yavuz, an analyst at the Turkish Center for International Relations and Strategic Analysis (TÜRKSAM), said individual sanctions are not binding on Turkey. “Turkey has to obey UN sanctions and avoid making financial dealings in this respect,” Yavuz said. But the expert dismissed the US claims that Turkey is breaching any laws or norms. According to the Yavuz, China has nearly $100 billion in trade volume with Iran, and the US is unable to convince China to halt its trade with the Islamic republic.

Yavuz said it is very normal for a country to develop trade and economic relations with a neighboring country and noted that the largest trade volumes tend to occur among countries in close proximity to each other. The TÜRKSAM expert said that although Turkey does not want Iran to acquire nuclear weapons, it also is willing to coexist with a nuclear Iran. Noting that the two countries have many national interests in common, ranging from stability in northern Iraq to the sale of Iranian gas to Europe through Turkey, Yavuz said the Western countries must not press Turkey to halt its economic dealings with Iran.