Existing obstacles impede its possibility

“Limited” opportunities for the success of the proposed economic bloc between Turkey, Iraq and Iran

  • Davutoglu (left) and Abdollahian agreed to draw up a road map for comprehensive and sustainable cooperation.

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  • The scarcity of water in Iraq's rivers is one of the main reasons for the dispute with Iran and Turkey.

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A spokesman for the Iraqi Ministry of Trade, Muhammad Hanoun, announced that his country’s delegation proposed, during the activities of the Iraqi-Turkish Business Forum for Investment and Contracting in Istanbul, on November 20, 2021, the establishment of a regional economic bloc that includes Iraq, Turkey and Iran, to form a force that would allow it to compete with economic gatherings around the world.

Incentives for potential cooperation:

Iraq’s call to launch this bloc at this time can be explained by several reasons, including:

1- political dimensions

There is no doubt that there are political dimensions to the call for such a bloc at the present time, the most important of which is that the Iraqi government wants to send a message that it seeks to adopt balanced regional policies, and that in parallel with its keenness on openness and cooperation with Arab countries, whether represented by the Gulf Cooperation Council countries, through linking Electricity and other fields, or with Egypt and Jordan through the New Sham project, this will not affect Iraq's desire to strengthen its economic relations with its neighboring countries, specifically Turkey and Iran.

2- Supporting economic growth

The economies of the three countries are suffering economic crises for various reasons. Iran is facing US economic sanctions because of its nuclear program and regional interventions, and it is not expected that its conditions will improve, or it will enter into meaningful economic blocs unless these sanctions are lifted.

Iraq is facing security challenges and political crises that have hampered economic growth opportunities during the last period, and Ankara is also suffering from a significant deterioration in the value of its currency, which has lost about 45% of its value against the dollar since the beginning of this year alone, so this bloc may contribute to promoting economic growth, But on the condition that the internal imbalances in each country are corrected, which are reflected in their economic conditions.

3- Building on previous collaboration

Last August, the Iraqi Minister of Trade, Alaa al-Jubouri, announced that an agreement had been reached with his Turkish counterpart to form joint committees to develop economic relations and increase the volume of trade exchange between the two countries, while the work of the Fourth Joint Committee for Economic Cooperation between Iran and Iraq was launched at the beginning of this year. After stopping for six consecutive years, the committee's talks dealt with developing economic relations, studying ways to develop exports, mutual cooperation, and assessing the market between the two sides.

Turkey, Iraq and Iran are looking to increase the volume of trade exchange between them, as Turkey, which is the second largest exporter to Iraq after China, seeks to increase the value of exchange between it and Iraq to reach 50 billion dollars annually, compared to the current value, which does not exceed 21 billion dollars annually, while The volume of exchange between Iran and Turkey is about $10 billion annually, while the two countries plan to increase its value to $30 billion annually. At the same time, Iran and Iraq also want to double the volume of exchange between them to be $20 billion annually.

4- Investing in Iranian-Turkish cooperation

Prior to the announcement of the bloc, on November 15, Turkish Foreign Minister Mevlut Cavusoglu met his Iranian counterpart, Hossein Amir Abdollahian, and also met with Iranian President Ibrahim Raisi, where the two sides agreed to develop a road map for comprehensive and sustainable cooperation, including trade. And investment and combating terrorism, in preparation for President Erdogan’s upcoming visit to Tehran, before the end of this year, and it is likely that this rapprochement between the two countries will strengthen the planned bloc between them and Iraq.

There are obstacles and crises facing this bloc and standing in the way of its completion and success, the most important of which are:

1- Chronic water problems with Iraq

Relations between the three countries suffer from tensions due to the water crisis and the sharing of international rivers between them. Iraq is facing a crisis of scarcity of water resources, due to Iran’s activity in diverting international river courses into the country, in order to confront the current drought wave, not concerned with the negative repercussions of that on Iraq, The matter is not much different for Turkey, which over the years built several dams on the Tigris and Euphrates rivers, which negatively affected the amount of water flowing into Iraq.

On November 24, the Iraqi Minister of Water Resources announced that Turkey and Iran had violated international conventions regarding Iraq's share of water, stressing that the rates of water releases flowing from Iran to Iraq had reached zero, while the minister confirmed, last July, that his country may resort to society. There is no doubt that the absence of an agreement on sharing international rivers will limit the chances of establishing economic cooperation between the three countries.

2- Possible Turkish-Iranian rivalry:

Turkish and Iranian interests are clearly in conflict, as the core of their regional project is based on an attempt to regional hegemony over their immediate neighbourhood, which is evident in their conflict in Syria, Iraq and Central Asia.

3- Iranian-Turkish competition on the Iraqi market

It is noted that there is fierce competition between the two countries for control of the Iraqi market, as Turkey is Iran's main economic competitor in the Iraqi market, as its exports to Iraq in 2019 exceeded Iran's exports, and Turkish companies invested about $25 billion in 900 construction projects and infrastructure. , in different Iraqi cities, in the fields of energy, water and petrochemical industries, in addition to the increasing competition between them in the production of electricity in Iraq, which was previously dominated by Iranian companies.

4- The growing Arab role

It is noted that Iraq has tended, during the recent period, to strengthen its relations with the Arab countries, as this became evident in the approaching completion of the electrical interconnection project with the Arab Gulf countries, which will limit Iranian exports to Iraq, which, in part, depended on the export of Electricity and natural gas to operate Iraqi power stations, and buying energy from the Arab Gulf states will be cheaper than its Iranian counterpart.

On the other hand, Iraq looks forward to strengthening its cooperation with Egypt and Jordan through the New Levant Project, which aims to achieve economic integration between the three countries in establishing economic projects, as well as electrical interconnection, in addition to completing the construction of the Arab Gas Pipeline, all of which are projects that will allow the development of the economy. Iraq, and crowding out Arab investments for their Turkish and Iranian counterparts.

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A clear vision on the part of Iraq for this proposed economic bloc has not yet crystallized, in addition to the fact that both Iran and Turkey have not yet shown clear positions on such a bloc, and whether they are ready to cooperate through this tripartite framework, or the bilateral framework remains the best way to enhance cooperation economics between them. Even in the event that the three countries tend to activate the Iraqi proposal, it will face competition from Arab countries, which also tend to open up to Baghdad, and strengthen their relations with it politically and economically.

• Turkey, Iraq and Iran are looking to increase the volume of trade exchange between them, as Turkey, which is the second largest exporter to Iraq after China, seeks to increase the exchange value between it and Iraq, to ​​reach 50 billion dollars annually, compared to the current value, which does not exceed 21 billion dollars annually. While the volume of exchange between Iran and Turkey is about $10 billion annually, and the two countries plan to increase its value to $30 billion annually. At the same time, Iran and Iraq also want to double the volume of exchange between them to be $20 billion annually.

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