Will the Turkiye-Iraq ‘Silk Road’ transform Iraq into a regional transport hub?

The new ‘Silk Road’

According to Turkey’s President Recep Tayyip Erdogan, a transportation corridor for land and railroad will be constructed between the Turkish border and the Iraqi province of Basra.

During a joint press conference with Iraqi Prime Minister Mohammed Shia’ al-Sudani on Tuesday, Erdogan announced that the Development Road Project will be materialized by the country’s ministerial team.

Erdogan expressed his belief that this project will transform the Development Road into the new Silk Road of the region.

Furthermore, Turkey has also agreed to increase the amount of water released from the Tigris river to aid Iraq’s water scarcity issue. Xinhua news agency reported that Baghdad has been urging Turkey to secure Iraq’s water share from the Tigris and Euphrates rivers, which originate from Turkey.

Iraq’s complex but developing relationship with Turkiye

Despite the presence of several important issues that need to be resolved, relations between Iraq and Turkiye have advanced rapidly in recent years, as their security and economic interests increasingly align.

During a joint news conference in Ankara, Turkish President Recep Tayyip Erdogan and Iraq’s Prime Minister Mohammed Shia al-Sudani reaffirmed their commitment to fighting against terrorism in all its forms. Erdogan emphasized that terrorist organizations like the PKK, Daesh/ISIS, and FETO pose a threat to both Turkey and Iraq. He urged the Iraqi government to designate the PKK as a terrorist group and clear its territory of the organization.

The PKK has hideouts in northern Iraq, which it uses to plan attacks on Turkey. Erdogan praised Turkey’s efforts to combat terrorism and reaffirmed its commitment to Iraq’s political unity and territorial integrity. Despite any differences in understanding that may arise between neighbors, Turkey and Iraq have always shown a determination to solve issues in line with neighborhood law.

Erdogan also expressed his gratitude to the Iraqi government and people for their solidarity after the earthquakes that hit Turkey’s southern regions on February 6. He noted that increasing bilateral trade is a shared priority for both countries, and they discussed solutions to problems faced by businesses and citizens.

On the water issue between Turkey and Iraq, Erdogan emphasized that it should be viewed as an area of cooperation that serves their common interests, rather than a conflict. He announced that Turkey has decided to increase the volume of water released from the Tigris River for one month to help alleviate Iraq’s water scarcity problem. Al-Sudani expressed his appreciation for Turkey’s decision to increase the water supply.

Although Turkiye’s relationship with the Kurdistan Regional Government (KRG) has caused some issues in their ties with Iraq in recent years, the recent ruling by the International Court of Arbitration on Thursday, which found that Turkey violated its contract by directly trading oil with the KRG starting in 2013 and ordered Ankara to pay $1.4 billion, has been portrayed by Baghdad as a victory. The Iraqi oil ministry released a statement praising the court, and Iraqi officials quickly conveyed their talking points to the media. Turkiye, on the other hand, suspended the flow of Iraqi crude oil through Ceyhan on Saturday, which accounts for 0.5% of global oil supply.

However, some western and Turkish sources familiar with the case claim that Baghdad is downplaying the extent of the ruling on the Iraq-Turkey Pipeline (ITP) agreement, signed in 1973, which governs the export of Iraqi oil to Turkiye via the port of Ceyhan. The sources assert that the court case is a legal challenge that intersects a commercial dispute with national and international politics, as Iraq contends that the KRG does not have the legal authority to sell oil directly through the pipeline and keep the profits, as agreed to by Ankara and Erbil in 2013. The court only granted Iraq’s claim for loading, out of the five categories of breach of contract claimed by Baghdad. One western source familiar with the case referred to it as a “botched job” by Iraq’s lawyers.

While the matter has indisputably caused a strain in the relationship between Turkiye and Iraq, it is essential to note that the recent court ruling has resolved the issue. Moreover, the long-term benefits and mutual interests for both nations to maintain and strengthen their diplomatic and economic ties far surpass any setbacks that may have arisen.

Can Iraq become a transport hub?

With the establishment of the trade route with Turkiye as well as several other transport and trade projects, Iraq could be on track to becoming a regional trade hub, connecting Asia, Europe and the Gulf.

The newly-launched India-Saudi-Iraq (ISI) shipping service by Singapore-based feeder operator Bengal Tiger Line (BTL) has included King Abdulaziz Port, as announced by the Saudi Ports Authority (Mawani). This move is aimed at providing importers and exporters with top-notch services and enhancing the kingdom’s maritime connectivity.

The National Transport and Logistics Strategy (NTLS) aligns with this objective of making the kingdom the world’s leading logistics destination. The ISI service links Mundra port in India and Umm Qasr port in Iraq to the Dammam-based hub through a 929-TEU vessel. The statement from Mawani added that Jeddah Islamic Port, King Abdulaziz Port, and Jubail Commercial Port have included five cargo services that link Saudi Arabia to 43 global hubs.

King Abdulaziz Port is a world-class trade hub with modern infrastructure spanning 19 sq. km., integrated logistics capabilities, and was ranked fourteenth in the Container Port Performance Index for 2021 by the World Bank.

During the 85th ITC meetings of the UN held in Geneva, Switzerland last week, Iraq’s Minister of Transport, His Excellency Razak Muhaibes Ajimi, engaged in high-level discussions with IRU’s Secretary General, Umberto de Pretto, regarding his country’s ambitious economic and trade goals. Ajimi sees Iraq’s accession to TIR as a crucial step towards developing non-oil sectors and establishing the country as a regional trade hub.

De Pretto expressed his belief that Iraq’s participation in the TIR Convention would be a powerful statement to the world, indicating that the country is now open for business. The TIR system will significantly boost Iraq’s role as a transit hub between Europe and Asia by streamlining the movement of goods in a secure and efficient manner.

De Pretto added that TIR has had a tremendous impact on trade facilitation and economic growth in neighboring countries, and there’s no reason why Iraq can’t experience the same benefits, given its strategic location. Notably, Iraq is the only country in the region that has yet to join the TIR system. The TIR mechanism provides an expedited border crossing process, enhances trade security, and ensures the timely payment of customs duties and taxes through a robust guarantee system.