Political conditionality of economic relations between paternalist states: Turkey's interaction with Iran, Iraq, and Syria.

AuthorAydin, Mustafa


IT IS OFTEN ARGUED THAT INTERDEPENDENT economic relations between countries could create a favorable atmosphere to the solution of political problems, thus enhancing peace and security. It has almost become a truism to cite Franco-German relations, and in a wider scale the development of the European Union, as ample examples of this argument. (1) The proof is clearly there: Further interdependence among the western European countries through economic integration led to the emergence of, first, a core 'zone of peace', and then gradually a continent-wide "security community." (2) Along the way, how this integration process started among the European states (the fact that it was almost forced upon them) is conveniently forgotten and the exogenous variables that affected its development over the years are less easily discernable.

Clearly, the European states, before the creation of the rudimentary precursors of the EU back in early 1950s, were not known for their ability of peaceful co-existence. Nor were they noted for their ability in conflict management/resolution. However, it does not automatically follow that the emergence of an economic community and integration brought peaceful qualities to the "old continent." It is without doubt that economic interdependence, after a certain level of interaction between member states, has enhanced peaceful ways of problem solving.

Even though the economic factors and cooperation within the EU have attained prominence vis-a-vis politics, involving "negotiations" and "bargaining" (economic terminology) rather than "threats" and "warnings" (political terminology), it was clearly "high political" concerns that forced Germany and France (the core and motor of European integration) in the first place to cooperate on their coal and steel production. (3) This is not to argue that today's EU moves with the same considerations as Europe had done 50 years ago. While today's EU has become too "complex" and overly "interdependent" to be governed simply by political considerations, it is clear, as argued by the neo-functionalists, that the decision to embark on this road was taken by the political elites with emphasis on the political. (4) It has become increasingly commonplace after the initial political impetus that further trade and economic cooperation eased the way for further political rapprochement and integration. Nevertheless, it was the original political (not economic) willingness that had opened the way for political (and economic) cooperation.

In an age where the merits of "globalization" and its companion "regionalization" are much cherished and seen as ultimate cures for "old" style political problems associated with the "high politics" of the realist paradigm of a bygone era, it is difficult (or at least problematic) to assert the primacy of politics over economics. What is more difficult in today's increasingly interdependent world is to find proofs of clearly politically driven economic relations. Nevertheless, the argument of this article is that in the proto-capitalist states with authoritarian regimes (incidentally both go hand in hand (5)), it is political logic that determines economic activity. Similarly, economic relations between such states or with such states are also primarily determined by the political perceptions of the ruling elite in a given country and the nature of the political relations with such a country (exogenous variable) where the "greater good for the greater number" does not necessarily become a factor that determines policy.

In any political system, economic needs and pressures have important bearing on the formulation and substance of foreign policy, though the extent and nature of this influence varies between parliamentary democracies, guided democracies, authoritarian governments, and totalitarian regimes. (6) At another level, history shows that choices between economic systems for a country or development strategies pursued by governments, generally reflect a given country's political system and the perceptions and aspirations of its elites about their country's rightful place in the world. (7) The connection between foreign policy and the economy is clearly important for bilateral relations between countries, economic systems and blocs. Disagreements on the economic front can cause political tension and problems, while political tension between states would also result in creating unfavorable situations for bilateral economic relations and for world trade in general.

In this context, this article presupposes that the nature of political ties between states has primacy in the Middle East in determining the course of economic relations. The main reason for this is to be found in the authoritarian character of most of the existing regimes in the region. In such an environment, even market-oriented democratic (or quasi-democratic) countries have to accept the primacy of political-strategic relations when dealing with such states. This study aims to demonstrate the primacy of political relations in determining the level of economic interaction by examining the interrelated fluctuation of trade and political tensions between Turkey and its immediate Middle Eastern neighbors--Iran, Iraq, and Syria.

Accordingly, this article first focuses on the political determinants, which affect the trade links between Turkey, on one hand and Iran, Iraq, Syria on another, and then examines the trade relations between them. In relation to the political determinants, the article also discusses the role of the US as an independent variable in determining the ties among the countries of the region. Finally, possible effects of the recent emergence of the proto-Islamist Justice and Development Party (Adalet ve Kalkinma Partisi--AKP) government in Turkey after the November 2002 elections on the country's political and economic relations with its Middle Eastern neighbors will also be discussed.


On 24 January 1980, Turkey opted for an export-led growth policy over its long favored import-substitution policy. This decision ended the state-protectionist policies and the Turkish economy was open to integration with the global market. The decision was taken after lengthy debates about Turkey's future political and economic place in the world, especially its connection with the West. Thus, the final move to adopt the 24 January austerity measures that the International Monetary Fund and the World Bank were asking for was a result of political considerations as much as economic necessities. (8)

Whatever the main reason behind Turkey's move towards a market economy, once implemented, it placed a certain set of demands on Turkish foreign policy. In addition to domestic measures, the economic strategy of the "January 24th Decisions" called for greater reliance on foreign trade, international borrowing and direct foreign investment. Consequently, Turkey's economic targets became heavily connected with international economic developments and with other states' willingness to buy Turkish products, to lend money to or invest in Turkey. (9)

One of the tools of the new economic strategy was to improve the country's export-import balance. However, unfavorable international economic conditions for export expansion (for example, rising protectionism in world trade and hints of international trade wars) were causing tensions with Turkey's traditional trade partners, the European states. (10) Moreover, Turkish-European economic relations were also affected by the political problems during the military regime in Turkey. A decline in the volume of trade and postponement of economic aid were the consequences of, among other things, continuing political tension between Turkey and Western Europe. In contrast to this, Turkey's export markets rapidly grew during the early 1980s throughout the Middle East and North Africa. This development was a result of not only expansion in the markets of oil-exporting countries but also Turkey's renewed political efforts in the region because of its political isolation in the West. The net result was that by 1982, the Middle East and North Africa replaced Europe as Turkey's main trading outlet and Iraq displaced West Germany as its main trading partner. (11)

Turkey's neutrality in the war between Iran and Iraq helped to increase its commercial links with both countries. Bilateral trade with Iran, for example, grew to $2.3 billion in 1983-1984 and continued to rise, reflecting an interdependence that was not easily reversed. This interdependence caused occasional strains in the foreign ministry's attempts to balance Turkey's security concerns with its economic gains. In return for increasing export markets, Turkey had to tolerate the growth of a large Iranian exile community (upwards of half-a-million) and the occasional lapses of Iranian officials who sought to promote Islamic perceptions in their host's secular system. (12)

During the war, both Iran and Iraq depended heavily on Turkey as the only secure transit route, which allowed Turkey to capture a major share of the rapidly expanding transit market of the region. (13) Moreover, the war, which also created an important market for Turkish manufactured goods in the two belligerent countries, became the predominant source of expansion for exports to the Middle East. Iran and Iraq's combined share in total Turkish exports increased from 5.5% in 1980 to 26% in 1985, but eventually declined to 15% in 1986 as a result of falling oil prices. Although it is difficult to assess the precise effect each factor had on any country's export performance, Rodrik calculated that $1.9 billion or 42% worth of total Turkish exports between 1979 and 1984 were due to the Iran-Iraq war and other non-economic (political) changes after 1981. (14) His calculations, rough as they are, highlight the critical role played by...

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