A Turkish Raid into Iraq Could Have Significant Economic Ramifications for Ankara

Turkey's parliament, by a 507-19 vote on October 17, authorized a military raid into Iraq in an attempt to eliminate bases used by Kurdish militants. Officials in Ankara stressed Turkish military units would not immediately move across the frontier, thus leaving time for a compromise that could assuage Turkish anger – not only over Kurdish militant activity, but also over the possible US congressional recognition of the Armenian genocide. It would also give Turkish political and business leaders additional time to ponder the economic implications of a cross-border raid.

The threat of military action has tended to overshadow the fact that economic ties between Turks and Kurds have been growing at a strong pace of late. Turkish companies, workers and goods have been flocking to a market enriched by 17 percent of Iraq's oil revenues.

Stocked almost entirely with Turkish brands, up-scale Iraqi Kurdish supermarkets only differ from their counterparts north of the border in their taste for gaudy decoration. Once the preserve of two-storey family houses, the suburbs of Iraqi Kurdish cities are increasingly home to the high-rise blocks characteristic of Turkey.

"Turkey is by far and away our most important trading partner", says Aziz Ibrahim Abdo, general director at the Ministry of Trade in the Iraqi Kurdish capital Erbil. "You can see that by looking around you."

The statistics back him up too. In Erbil, 380 out of 500 foreign companies are Turkish. In Dohuk, a city further west, 65 percent of contracts worth US$350 million so far this year have gone to Turkish companies.

Worth $350 million and $300 million respectively, the brand new airports in Erbil and Suleimaniyah are Turkish work. Another Turkish company won a $260 million bid to build a new university campus in Suleimaniyah. "The quality of Turkish work is good, and they're much more trustworthy than the Iranians", shrugs Ibrahim Sofy, deputy head of Erbil's Chamber of Commerce.

Judging by the smart new customs post it has built at Silopi on the Iraqi border, it's a relationship Turkey's government wants to build on. When chaos in Baghdad prevented the Iraqi government from holding its first post-Saddam international fair last May, Ankara lobbied hard and successfully to host proceedings in its southern city of Gaziantep.

Turkish trade with Iraq reached $3 billion in 2006 and "could top $5 billion this year," Turkey's trade minister Kursad Tuzmen told around 500 Turkish and Iraqi businessmen at Gaziantep's second Iraqi fair.

Much of that money is flowing to Turkey's mainly Kurdish southeast, a region impoverished by two decades of warfare against separatist Kurds. "This border is our lifeline", says Abdulkadir Sir, a taxi driver who used to make a living as a smuggler. Like many of his colleagues, Sir swapped his locally-produced Toros for a Renault Megane, a small family car, two years ago.

A builder from the Turkish Kurdish town of Bitlis, now in Erbil, Faysal Ozdemir is another one whose bank account has benefited. "Back home, I'd be lucky to earn 600 YTL ($460) a month", he says. Here, he earns $2,000. Qualified Turkish engineers, meanwhile, can expect salaries of at least $5,000, over twice as much as they would earn in Turkey.

"It's hard being away from home, but the money makes it worthwhile", says Seyhmus Gurbuz, a waiter at one of the Turkish-run restaurants that have revolutionized a local cuisine painfully attached to "mrishk u brinch" – chicken and rice. He's one of an estimated 15,000 Turkish citizens – most of them Kurds – working in Iraqi Kurdistan.

Not everything about the new Turkish-Kurdish relationship is rosy. Kurds complain about waiting weeks for Turkish visas that cost $500. Turks express horror at local levels of graft.

Where both sides agree is that the threat of Turkish military intervention risks ending a lucrative relationship. "We don't want Turkey as an adversary", says Safeen Dizai, foreign relations head for one of the two parties controlling Iraqi Kurdistan. "Cooperation is in the interests of both of us."

Resident in Erbil for three years, meanwhile, Faysal Ozdemir reckons at least 10 percent of Turkish companies have left northern Iraq in recent weeks. "All this talk of invasions scared them away", he says.