Friday, July 23, 2010

Turkey means business in Kurdistan

Turkey means business in Kurdistan
By Justin Vela

ISTANBUL - Take a drive through the Kurdish city of Sulaymaniyah in northern Iraq and it's easily to pick out buildings and shops with Turkish names like Istikbal, Istanbul Bazaar, Dogan and the Ozboy furniture shop. On the main street, two new overpasses were built by Turkish companies, as were the city's international airport and also dormitories at the local university.

This is but a glimpse of the more than 1,000 Turkish companies, including oils firms, that are forging a presence in Kurdish northern Iraq at a breakneck pace. Whatever the project, Turks are building an international reputation for being able to get the job
done with their skilled knowledge base and ability to negotiate the often heavy red tape in the developing or autocratic world.

"For oil exploration, Kurdistan is virtually unexplored," said Erdal Ahiska of Turkish energy company Petoil, which will invest approximately US$50 million in northern Iraq in 2010. "Before there was no big ability for oil business in the Kurdish region. Only two fields were used. Now it is interesting for oil companies to explore and invest in oil and natural gas."

Since 2000, Turkish overseas projects climbed from $750 million to $23.6 billion in 2008. By 2015, the Turkish government hopes to increase international contracts to about $50 billion and Turkish businesses are currently active in more than 80 countries across the Middle East, Central Asia and Africa.

At first glance, their presence raises no questions. However, the business drive is part of Turkish foreign policy stepped up in recent years by the ruling Justice and Development Party (AKP) and is a clear signal that, though the country does not plan on negating its European Union ascension bid, it will not wait for permission to become a globally powerful trading body.

According to Paul Barry of London-based Navigant Consulting, Turkish firms are becoming "very serious" rivals abroad "because they can relate to Muslim cultures and are very competitive".

Yet given the Turkish government's 26-year war with Kurdish separatists in the country's southeast, which has left 40,000 people dead, the heavy presence of Turkish business in Kurdish northern Iraq has a special twist - a dual cause that goes beyond Turkey expanding its ever-growing markets.

The Kurdish Workers' Party (PKK) has long used northern Iraq's Qandil Mountains as a base to plan and carry out attacks inside Turkey. The Turkish military frequently bombs inside northern Iraq and carries out occasional cross-border raids in pursuit of the PKK, which often result in the deaths of Kurdish Iraqi civilians. The Kurdistan Regional Government (KRG) has also clashed with Turkey in the past.

Turkey opposes the oil-rich areas around the cities of Kirkuk and Mosul being added to Iraqi Kurdistan and is concerned about the future of Turkmen as ethnic tensions in these cities continue to rise. "Turkey is not allowed to intervene in the Kirkuk issue and if it does, we will interfere in Diyarbakir's issues and other cities in Turkey," said Massoud Barzani, the president of the de facto Kurdish autonomous region in April 2007. Diyarbakir is the largest city in Turkey's Kurdish-dominated southeast.

Given the stakes involved, the AKP wants to turn the more than $7 billion in trade between Iraqi Kurdistan and Turkey into political leverage to put pressure both on Baghdad and the KRG. Turkey also provides 80% of the food and clothes in northern Iraq. "Trade is the key of politics ... Improving business ties will eradicate the problems between us," said Zafer Caglayan, Turkey's state minister for foreign trade.

The pressure is aimed both at limiting the power and independence of the KRG - which is viewed as the precursor to a future Kurdish state - and at the same time meant to elicit their help in Turkey's long-time fight against the PKK.

In a rare interview in the Qandil Mountains, PKK top commander Murat Karayilan this month told this correspondent, "I cannot evaluate the KRG in the sense of good or bad. We know that the aim of the Turkish state is not only to weaken us, but also to weaken Kurds everywhere. It is a strategic approach. After us the KRG will weaken."

Seemingly having embraced a close relationship with Turkey, the KRG's support for the PKK can be seen as suspect. Barzani even accepted an invitation to Ankara in June this year and met with Turkish Prime Minister Recep Tayyip Erdogan and President Abdullah Gul and other top officials to discuss ties.

"The KRG government gives [Turkish business] a secure place," said one Kurdish Iraqi businessman in Sulaymaniyah. "We need them like they need us. They are near to us in culture. It is easy to cooperate. In politics there is a big problem, but in one way we want to explain by letting them come here that we are not enemies."

There are more Turkish businesses in northern Iraq than from any other country, including neighboring Iran. Turks had been doing business in northern Iraq since before the 2003 US invasion and already had the contacts and presence to become the dominant investors in a region that desperately needs infrastructure.

"They don't produce anything except oil and gas so we have to provide everything," said Galip Ensarioglu of Diyarbakir Trade and Industry Chamber (DTSO). "Water, marble ... everything we produce here we can sell to them." Ensarioglu claimed that 50,000 Turks had gone to northern Iraq to work.

The relationship is based on a strong necessity. Not only is it in the best interests of the United States that Turkey and northern Iraq cooperate in order to ensure the smoothest possible exit of their forces from Iraq, there is also oil involved. The 960-kilometer Kirkuk-Ceyhane pipeline, also known as the Iraq-Turkey Pipeline (ITP), exports 500,000 barrels of crude oil a day, one-fourth of Iraq's total crude exports.

The pipeline began functioning during the 1980-1988 Iran-Iraq war, allowing Iraq an export route without risking tankers in the Gulf being attacked. It was closed during the Iraqi invasion of Kuwait and Gulf War I (1990-1991), reopening for use during the United Nations-sponsored Oil for Food Program. Today, the pipeline is used to export crude from oil fields north of Kirkuk, but needs frequent maintenance because of its age and frequent insurgent attacks.

Most of the attacks are carried out inside Iraq. However on July 4, PKK insurgents bombed the pipeline near the town of Midyat in the southern Mardin province. The attack came after the ending of a year-long non-action period and could be interpreted as a signal to both Turkey and the KRG.

The hope of AKP had been that by exerting economic influence over northern Iraq, they could convince the KRG to pressure the PKK to disarm, block supplies or otherwise uproot them from their Qandil Mountain stronghold.

Even as Turkish business continues to flourish, this does not seem a likely scenario. Perhaps Turkey and the KRG are in fact engaged in a zero-sum game as Turkey wants to be a transit route for energy just as much as northern Iraq wants to export oil and its 6-8 trillion cubic meters in natural gas reserves.

On July 11, the Turkish government sent a list of 248 PKK commanders to the KRG, demanding their immediate arrest and even mooting a joint military action inside Iraq. "The net is tightening," one official said. The KRG response was to claim, "These names are not those of people living officially in the [Kurdistan autonomous] region. They live in Turkey where they undertake their criminal activities."

Having interviewed PKK top commander Murat Karayilan in the Qandil Mountains only the day before the list of names were issued, this reporter was witness to the double game being played by the KRG.

Though he had come down for the interview from a position higher in the mountains and PKK members are not allowed to travel freely through the rest of Iraqi Kurdistan, Karayilan was relaxed meeting in a field off a paved road approximately 10 kilometers from a KRG checkpoint

The PKK, also, maintain a checkpoint on the same road, operating as if Qandil was their legitimate territory.

Neither the Turkish government or the PKK is in a position where they can agree on terms of peace. "It is not very clear, what will happen after this," said Karayilan. "Because AKP is pushing towards the hills. They don't want to stop the military campaign."

Yet the KRG still does have the ability to act as a bridge between the two. The idea is perhaps more welcome than the actors in the conflict would like to see. Though they feel that the continued repression has brought the conflict to a new breaking point, Kurds are eager for peace. As on Kurdish man living in southeast Turkey said, "We can see the first Kurdistan flag in northern Iraq and we are very happy. But it is also important that they have dialogue all the time. I am pleased Barzani comes to Turkey."

The KRG appears more than willing to both foster trade with Turkey and allow the PKK to operate from their territory. Doing so allows them the maximum power as their territory continues to be an investment hotspot. The PKK are only interested in attacking Turkey and investments inside of Iraqi Kurdistan are not threatened by them.

By standing as that bridge, Barzani and the KRG are at the same time furthering the status of Iraqi Kurdistan as an investor hotspot and, also, the cause of Kurdish nationalism which has its uncertain path set in the future of a wealthy yet conflict-ridden Iraq.