News / Middle East

Iraq Crisis Weighs on Turkey's Economy

Turkish truck drivers captured earlier by militants in northern Iraq at an airport in Irbil, Iraq, July 3, 2014.
Turkish truck drivers captured earlier by militants in northern Iraq at an airport in Irbil, Iraq, July 3, 2014.
Dorian Jones

With the escalating crisis in Iraq, concerns are growing in Turkey over the economic fall out.  Iraq is Turkey's second largest trading partner, with Turkish companies exporting roughly $14 billion a year.  

With the radical Islamist group ISIL scoring major military gains in Iraq, concerns are growing about the economic impact for Turkey.  

Sinan Ulgen is a visiting scholar for Carnegie Institute in Brussels.

"Turkey’s export to the countries in the region have been affected on two grounds.  One because of the instability of course, but the other one is because of the land routes to other markets in the Middle East have been blocked by the instability in Iraq and Syria," said Ulgen.

But analysts say the impact on Turkish exports to Iraq could have been worse, because around 75 percent of those exports are to the relative stable Iraqi Kurdish region, which has largely escaped the impact of ISIL.

Turkish transit trade to the lucrative Gulf markets is another story, says political consultant Atilla Yesilada of Global Source Partners.

He says the Iraq crisis coincides with rising diplomatic tensions between Cairo and Ankara.

"The Egyptian authorities have started causing troubles for our trucks and ferries.  [About] 30,000 lorries, trucks, had been traveling to Iraq before the crisis and now that the number has dropped to say 5,000," said Yesilada.

Turkish economic woes could yet worsen, with ISIL continuing to threaten regional stability.

One area of concern, analyst Yesilada warns, is rising oil prices that will bring new costs, if not in the near future in the medium term for energy importer Turkey.  
"It could expand over time.  The most obvious example is the price of oil.  Every $10 jump in Brent oil adds $4 billion to our energy deficit, and 50 basis points to the CPI inflation," he said.

Analyst Ulgen says that situation is likely to depend on whether the threat of ISIL can be contained.  He says if the situation deteriorates, so will the economic pain for Turkey.

"The most important, whether, if, the situation continues to worsen, then Turkey’s [international] risk perception can be affected, which will raise the cost of capital for Turkey and Turkish companies, that will be even more crucial for the Turkish economy," he said.

Observers point out, stellar growth underpinned the first decade of the AK Party’s rule.  But growth in the past few years has markedly slowed.  

With Prime Minister Recep Tayyip Erdogan running for the presidency in August elections and a general election in June 2015, observers say keeping the economy running could prove to be Erdogan’s greatest test.  


You May Like

Video In US, Columbus Day Still Generates Controversy

Holiday marks date Columbus discovered Americas, but some are offended by legacy because he enslaved many natives he encountered More

Video Through Sports, Austria Tries to Give Migrants Traction

With 85,000 people expected to claim asylum in Austria this year, its government has made integration through joint physical activities a key objective More

Video Kickboxing Champion Shares Sport With Young Migrants

Pouring into Europe by hundreds of thousands, some migrants, especially youngsters, are finding sports a way to integrate into new host countries More

This forum has been closed.
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs