Violence and hostage-taking in northern Iraq is leading Turkish logistic operators to warn that economic ties with its troubled neighbor are under threat.
By Burcu Ozer / ISTANBUL
Turkish logistics firms eyeing the escalating turmoil in Iraq are not ready to withdraw their operations but some are now warning that conflict and kidnappings are threatening to damage revived business ties between Ankara and its troubled eastern neighbor.
Some 49 members of Turkey’s Mosul consulate and 31 Turkish truck drivers were kidnapped by the Islamic State of Iraq and the Levant-led militants after ISIL seized the northern Iraqi city on June 9. ISIL has extended its reach into the country since, taking near-complete control of Tikrit.
At the forefront of foreign trade and logistics activities between Turkey and Iraq, many firms are saying the hostage crisis is threatening Turkey’s economy due to its close trade links, business ties and dependency on low oil prices from the unstable country.
The Iraq-Turkey head of the Foreign Economic Relations Board, Ercument Aksoy, told Anadolu Agency that he knows of just a few Turkish firms which have evacuated their personnel from Mosul, adding that he did not expect the crisis to spread across all of northern Iraq.
“No regional power has an interest in letting a terrorist organization stoke tension in this part of Iraq," said Aksoy. "I think Turkish firms in the north should not panic, but if the crisis spreads then all the business connections of Turkey with the Arab countries will come to a full stop."
Stating that Turkish businessmen have invested in many areas such as education, construction and energy, Aksoy said: "The majority of the investments are located in the north of Iraq, mostly in the cities of Erbil, Suleymaniyah and Dohuk. Turkish investors are generally afraid of taking any risk in Mosul but it is one of the key routes for Turkish logistics."
Some companies have suspended work in Mosul and the nearby provinces. Turkey annually sells goods worth US$12 billion to Iraq, and dozens of Turkish firms have investments in the country’s Kurdish region.
However, the Baghdad central government hardly allows Turkish direct investment in the south due to strained political relations over Syria's domestic war.
"The latest incidents in Iraq can bring to a halt to the Turkish logistic sector in the country" said Taner Ankara, CEO of Istanbul-based Batu Logistics.
Claiming that there were over 1.5 million transports from Turkey to other countries in 2013 – more than 620,000 of them to Iraq – Ankara said: "It means that almost half of the transportation figures have flown to Iraq."
Ankara says the Turkish logistics sector orientated itself towards Iraq after the Syrian civil war began, adding: "The region was safe for a long time and the war-torn trade volume was getting repaired in Iraq; however, the latest incidents can leave the logistic firms in a very difficult situation."
Mehmet Simsek, Turkey's Finance Minister has said that Iraq’s ongoing conflict with ISIL poses a risk for the current account deficit. He described the situation as “an external shock”.
“Developments in Iraq will affect our current account deficit. If this situation is not brought under control, unfortunately it will be an unlucky event.” Simsek has said.
According to Iraq-Logistic, an Iraq-based company, the political and security situation has dramatically deteriorated in Nineveh province, the Mosul area, Tikrit and Kirkuk.
"All southbound transportation from the north of Iraq, including the KRG region, is totally stopped until further notice" said the company, "For the time being, the flow of cargo via Trebil, on the Iraq-Jordan border, has not been effected and the Basra region to Baghdad and surrounding areas is also running as usual."