Sunday, December 19, 2010

Turkey Doing Business In Iraq

Since the sectarian civil war ended in Iraq in 2007, Baghdad has actively been seeking foreign investment and better trade agreements to rebuild the country. One of those success stories is Turkey.

The Turkish presence in Iraq is large and growing. Recently, an economic adviser to the government said that there were more Turkish companies in Iraq than from any other country. In Kurdistan alone, 60% of the foreign businesses there, roughly 730, were from Turkey. In 2009 the two countries conducted $9 billion worth of trade. That was up from almost $0 before 2003. By 2007 that had grown to $3.7 billion, then $6 billion in 2008. Turkey also has $8 billion invested in Iraq. Most Turkish businesses are involved in construction, electricity, and commerce.

There are a few complaints about the Turkish economic presence in Iraq. In Kurdistan for example, many of the Turkish firms are contractors dealing with trade. There, the Investment Board has said that most of the Turkish companies are not investing enough, and are only there for short-term profits. Kurdish businesses are pushing the regional government to make Turkey form more joint ventures as a result. Another major issue is that Turks tend to employ Turks, instead of Iraqis. They’re said to do so for ease of operation and because Turks have more experience. Again, in Kurdistan, locals are demanding that the Turks hire more locals.

Turkey has become a major player in Iraq’s economy. Outside of oil, they have more business with Iraq than any other country. Hundreds of Turkish companies have set up shop in Iraq. There is some debate about how much they actually contribute to the country however. Nonetheless, Baghdad has been eager to sign agreements with Ankara, and see the relationship between the two grow even more. That will only increase the amount of trade and investment between them. Both sides are attempting to benefit from this situation. Ankara sees its growing economic ties as a means to gain influence in Iraq, especially with the Kurds, who they shunned before 2003. Baghdad wants foreign businesses to come to the country to help revive the economy after years of sanctions and wars. While Turkey appears to have the upper hand for now, hopefully when Iraq recovers it will be able to set more equal terms.


Agence France Presse, “Iraq-Turkey trade up 50 percent in past year,” 4/10/10

AK News, “Investment in Kurdistan reached almost $14 billion in five years,” 8/6/10
- “Turkish companies asset in Kurdistan over US$ 621 million,” 7/21/10

Aswat al-Iraq, “Turkish and French Companies Most Active in Iraq,” Iraq Business News, 12/4/10

Kimball, Jack and Aqrawi, Shamal, “Iraqi Kurdistan attracts $12 bln over 3-1/2 yrs-board,” Reuters, 2/15/10

Nordland, Rod, “Rebuilding Its Economy, Iraq Shuns U.S. Businesses,” New York Times, 11/13/09

Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/10


amagi said...

This is actually one of the big reasons that I'm optimistic about a positive outcome on the Kirkuk issue. There is now a very healthy economic interdependence between Kurdistan and Turkey, trying to gain independence would require severing those ties.

I think that the Kurds will ultimately demand, and accept, some kind of symbolic victory, retain their federal control and remain part of the Iraqi state.

That's not to say that all Kurds will be satisfied with this outcome. The PKK, for instance, probably isn't going anywhere...

Joel Wing said...


I wish I could be as optimistic. I don't think the Kurds want independence, but as for resolving Kirkuk??? They may push hard on it this time thinking that they have more pull than they actually do. I can't see them compromising on the issue either right now. Especially if the census goes ahead and there's a Kurdish majority in the province, which is the likely result.