Turkey’s diplomatic efforts for a peaceful resolution of the Iraqi crisis received widespread praise this week, though a meeting of regional foreign ministers in Istanbul had less impact on events than many in Ankara had hoped.
Coming hard on the heels of Prime Minister Abdullah Gul’s tour of regional countries early January, the foreign ministers’ meeting broke up late with a joint declaration calling on Iraq to comply with UN resolutions and co-operate fully with UN weapons inspections.
The statement, issued on behalf of Turkey, Syria, Jordan, Saudi Arabia, Iran and Egypt, also called on the government in Baghdad to democratise further. It then mentioned the need for all weapons of mass destruction in the region to be removed – a veiled reference to Israeli nuclear and chemical warfare programmes. It also stressed that the six countries "remain committed to the peaceful solution of the Palestinian issue".
However, there were clear disagreements to begin with over whether the declaration should also make demands on the US, while earlier versions of the draft obtained by the Turkish press reportedly demonstrated that Syria had wished for a much weaker call on Iraq.
It had also been expected that the meeting would announce a full, heads of state summit in Damascus for next week, but in the event, no date was fixed.
Beforehand, the summit had been welcomed by many, including the European Union. EU term president Greece issued a statement through Foreign Minister George Papandreou, who said the union "and its member states support all efforts aimed at breaking the deadlock, particularly those involving countries in the region."
EU Ambassador to Turkey Hans Joerg Krestschmer had meanwhile spoken the day before the meeting to the Turkish TV network NTV. On air he had warned that a war in Iraq might also jeopardise Turkey’s chances of accession to the union.
"An operation against Iraq would have a negative impact on the Turkish economy, politics and other fields," he said. "This would slow down the reform process… [and] may result in losing the August 2004 date," referring to the schedule for an EU decision on Turkey’s accession talks.
German Foreign Minister Joshka Fischer also attended the Istanbul meeting, with his government one of the strongest international advocates of a non-military solution.
The economic impact of a possible war in Iraq has already been felt throughout the Turkish economy.
The day after the meeting, market analyst Erden Resneli from brokers Dis Yatirim told the Turkish financial newspaper Dunya, "The Iraqi issue is having an increasing impact on the agenda - it looks like a basic factor preventing improvements in the stock market."
The prospect of a conflict is unnerving investors, who are well aware of the tightrope the economy is walking on its way toward recovery. Increasing oil prices will likely hit Turkey’s financials badly, while the uncertainty may be holding back potential investors.
The scenario seems worrisome enough to the influential Turkish Industrialists' and Businessmen's Association (TUSIAD), particularly alongside increasing doubts within the business community over the government’s progress.
TUSIAD chief Tuncay Ozilhan said January 22nd that the structural reform process had not been completed and urged the government to stick closely to the demands of the IMF-backed economic programme, Reuters reported.
At the same time, TUSIAD also released its 2003 forecast for the economy. There were two predictions. First, a 2003 year end primary surplus of 5.5%, and second, year-end Consumer Price Index (CPI) inflation of either 20% or 30%.
Prime Minister Gul responded by saying that the government was still determined to achieve its 6.5% primary surplus target and would do so by observing strict fiscal discipline. This was not the first time the prime minister had said as much, nor did it seem likely to be the last, yet there seemed no escaping the overall market feeling of unease over future trends.
Meanwhile, the fact that Iraq was once one of Turkey’s major trading partners was also re-highlighted during the week. Ali Neyzi, the chairman of the Turkish-Iraqi Business Council, held a press conference January 22nd to explain the recent controversial visit by his organisation to Baghdad, a trip led by Trade Minister Kursat Tuzman.
"We went there for business," he said, "and signed $750m in business contracts. Iraq is a neighbour of Turkey and will always be."
Reuters reported Neyzi as then answering a question as to whether any of these contracts would still be valid if there was a government change in Iraq.
"It is possible that contracts may be invalid when the government changes," he answered, "but Turkish products and services have been in Iraq for three years. Iraqi businessmen and public know Turkish products and even if the government changes in the future, consumers will prefer Turkish products."
Neyzi’s optimism then continued to a prediction that Turkey would achieve a $50bn total export target "within three years" with Iraqi trade – and trade with other Middle Eastern countries – an important part of this.
Currently’ total Turkish exports to Iraq are less than $1m, Neyzi said. "Turkey’s goal for exports to Iraq is $1.5bn at first and $3bn in the midterm’" he added.