Turkish PM May Seek to Renegotiate Gas Export Deal During Iran Visit

Turkish Prime Minister Recep Tayyip Erdogan began a three-day visit to Iran on July 27 that will focus on trade ties. Turkish sources indicate that Erdogan will seek to renegotiate terms of an Iranian gas export deal, though Ankara's bargaining ability may be limited by its desire not to rile the United States.

Erdogan met with Iran's First Vice President Mohammad Reza Aref and Iranian Parliament Speaker Gholam Ali Haddad-Adel on July 28. During those talks, Erdogan praised the rising level of bilateral commerce, expressing hope that trade volume would top USD $5 billion in 2004, Turkey's Anatolia news agency reported.

Iran is Turkey's second biggest gas provider after Russia. Ankara and Tehran signed a 25-year, $30 billion deal in 1996, under which Iran would supply up to 10 billion cubic meters of natural gas annually. In 2001, the two countries opened a pipeline connecting Ankara to the northern Iranian city of Tabriz. Since then, however, exports have experienced interruptions due to disputes over the pricing and quality of the natural gas.

Iran has resisted Turkish efforts to rework the deal. Ankara has offered several times to allow an international arbiter to settle the export dispute, but Iranian authorities have shunned the idea. Turkish observers expect Erdogan to renew the effort to resolve the issue.

EurasiaNet has learned that Tehran is seeking a Turkish commitment to serve as a trans-shipment point for Iranian gas exports destined for the European market, in return for Iran's agreement to the price reduction that Turkey is seeking in the bilateral deal. Erdogan on July 28 confirmed that the natural gas exports would figure prominently in his discussions in Tehran. "Talks have been initiated to transport Iranian natural gas to western countries via Turkey," the Anatolia news agency quoted Erdogan as saying. He added that Turkish Energy Minister Hilmi Guler would hold in-depth talks with Iranian officials about the European export option.

Erdogan appears to be facing a dilemma in Tehran: his desire to ease Ankara's gas price burden appears to be intense. At the same time, any potential Turkish actions to facilitate Iranian gas exports could create problems in Turkish-American relations. The United States maintains economic sanctions against Iran [For additional information see the Eurasia Insight archive], and has strongly discouraged other countries from developing trade links with Tehran. On July 28, the Turkish newspaper Daily Milliyet quoted a senior American diplomat based in Turkey as saying that Washington would consider imposing sanctions against any Turkish entity that helped Iran's energy sector to expand its markets.

Complicating Turkish-Iranian efforts to expand trade relations is an ongoing dispute over Tehran's new Imam Khomeini International Airport. A Turkish firm originally won the tender to manage airport operations, but Iran's Republican Guards shut down the facility in early May, shortly after it opened, citing "strategic concerns." Turkish officials widely believe the airport closure is linked to an ongoing power struggle within Iran's political establishment, which is a complex web of elected institutions and cleric-dominated oversight bodies. Erdogan's Iran visit was originally scheduled for late June. Many observers believe the airport row was the primary reason his visit was postponed.

Beyond economic relations, Erdogan is expected to hold extensive talks in Tehran on regional geopolitical issues. "Iran and Turkey have always had regular consultations on Iraq and Afghanistan and the two countries enjoy a very close stance in this regard," the official Iranian news agency, IRNA, quoted Aref, the vice president, as saying.

Perhaps the most sensitive policy issue on the agenda concerns Iran's nuclear program. Iranian officials insist that the country's nuclear research is designed solely to develop the civilian energy sector. Foreign governments, however, suspect that Tehran is striving to build nuclear weapons. [For additional information see the Eurasia Insight archive]. Prior to Erdogan's departure, the Turkish press was full of speculation over whether the Turkish prime minister would raise the nuclear issue during his visit.

According to July 28 reports, Erdogan in his talks with Aref, urged Iran to cooperate with inspection requests made by the International Atomic Energy Agency. [For background see the Eurasia Insight archive]. Such cooperation would "prevent any speculation" about Iranian efforts to develop nuclear weapons, Erdogan reportedly told the Iranian vice president.