ANKARA: Iranian President Hassan Rouhani’s upcoming visit to Turkey next Monday is expected to lay a foundation for the future recovery of bilateral trade and economic cooperation that withered substantially last year.
Trade volume between Turkey and Iran was 21.9 billion U.S. dollars in 2012. It dropped to 14.6 billion dollars a year later, a decline of 33 percent. And the downward trend continued throughout the first four months of this year. “The huge distortion in the trade volume partially came from gold-for-gas scheme through which Iran, pressured under the unilateral financial sanctions by Western powers, was purchasing lots of gold from Turkey to circumvent sanctions,” Mesut Cevikalp, Ankara-based analyst told Xinhua.
“What we see now is the return of trade volume figures to a more realistic level which is still short of what we should see given the size of economies of both countries,” he added. Previously, both sides announced that they agreed to bring the annual two-way trade volume up to 30 billion dollars in 2015. Though the ambitious target seems unlikely against the backdrop of sharp trade regress, Rouhani’s maiden Turkey visit, which were delayed several times since taking office last summer, may provide a breakthrough in boosting their economic ties.
According to Turkish media reports, both sides are expected to convene their first High-Level Strategic Cooperation Council during the visit. The Council is a kind of inter-governmental conference, which is participated by cabinet ministers and hosted by heads of governments, so as to fast-track talks, and cut bureaucratic red- tape. A high-level delegation is going to accompany the Iranian leader, whose members includes several ministers. Rouhani will meet both Turkish President Abdullah Gul and Prime Minister Recep Tayyip Erdogan during his tour.
In Tehran this January, Erdogan and Rouhani witnessed the signing of a preferential trade agreement finally reached between the two sides after years of talks. Several agreements on trade, culture, tourism and education are expected to be inked during the Iranian president’s visit, according to some Turkish media reports. Rouhani’s visit will be first official state visit to Ankara since then President Hashemi Rafsanjani visited Turkey in 1996. Former President Mahmoud Ahmadinejad only visited Istanbul twice. One was a working visit in 2008, while the other was because of his participation of an international conference in 2009.
Chief among the disputed issues between the two countries is the pricing of natural gas Turkey imports from Iran. In 2012, Ankara took Tehran to an international court of arbitration over prices and quality of imported natural gas. Turkey later won the arbitration. Much of the problem in the gas trade between Tehran and Ankara derives from a “take or pay” condition that requires Turkey to import pre-determined amounts of natural gas, which is 10 billion cubic meters per year, according to a gas deal signed in August, 1996 with a 25-years-validity.
Turkish Energy and Natural Resources Minister Taner Yildiz recently said his country will most likely receive more than 2 billion dollars from the lawsuit filed against Iran over gas pricing. The pricing issue is expected to come up during a discussion between Rohani and Erdogan.
via Iran president’s maiden Turkey visit to benefit declining trade cooperation.