Of the 30 billion dollar Iraqi exports, a third is from Turkey. Gaziantep alone provides around a fifth of Iraq’s imports. So Iraq by itself is important for Turkey. Now two things are happening at once. First of all, it is getting harder and harder to send trucks down to Iraq. Secondly, Iraqi import demand is declining rather rapidly as Iraq transforms into a war zone. The decline in Iraqi orders has now reached 40 percent, and doesn’t seem like it will stop there. Declining orders and no transport corridor to send the goods. Bad for Turkey. Especially bad for provinces neighboring Iraq and Syria.

Turkish firms are getting shut out of the Iraqi market. That is also bad. Have you ever compared the goods Turkey sells to the West and to Iraq? One thing stands out clearly: Exports to the West are more sophisticated than exports to Iraq. We sell just cement as construction material to Iraq. Food industry exports are mainly comprised of flour. No large market for Turkish made cars or washing machines in Iraq yet either. There are no roads, no highways and of course no reliable source of electricity. I first learned about the concept of neighborhood electricity generator in Erbil. You come together with your neighbors and set up an electricity generator for your own use. A sharing economy has developed in Iraq out of necessity. Some Turkish towns were like that 50 years ago. That is life as usual now in Iraq. I remember a Turkish generator manufacturing company operating in Iraq, mostly in the North. The company grew considerably due to the Iraqi market, I have to confess. However, generators seem to be the most sophisticated item Turkey has been selling to Iraq. In a country like Iraq, you can only sell the basics. Iranian industry is a competitor for Turkish industrial products in the case of Iraq. So if your company cannot deliver for sometime then trade can easily be diverted to Iran. The longer ISIS led deterioration in Iraq continues, the harder it gets for Turkish companies to keep their relevance in the Iraqi market. And the current situation seems to take longer than everyone expected. If Iraq starts dissolving, then this process will probably take even longer.

I am not discussing about how the transport corridor down to the Gulf is also closed due to ISIS activity in the region. Nor am I talking about the construction contracts won by Turkish companies that are unable to deliver their promises due to ISIS activity in the region. I am not taking into account the lost business of Turkish truckers in Antakya. Nor am I taking into account more than one million Syrian refugees in Turkey who may soon be joined by their Iraqi brethren. The cost of integrating them into Turkish society is going to be exorbitant and we are still not accepting structured international donations. Nor do we have any means to integrate them to the Turkish society. So many costly items, I have to say.

Best case scenario for Turkey in Iraq is obvious. First, the sooner the ISIS is wiped out from the region it infested, the better for Turkish business interests. Short lived instability is best instability. Second, a unified Iraq is definitely better than a divided Iraq for Turkey. I am not saying this due to prospects of Kurdish independence or some other political considerations, it is due to the fact that division in Iraq means more and longer instability in Iraq. Bad for Turkey. Third, there is also a political cost. “Turkey is Sunni. Terrorists are Sunni. So Turkey is obviously supportive of terrorists’’ type of simplistic  parallelisms are abound, I have to say.

This commentary was published in Hürriyet Daily News on 12.07.2014