Iraq crisis hits Turkish economy

Mehmet Cetingulec writes: After ISIS took control of Mosul and began advancing toward other towns, Turkey’s Foreign Ministry warned hundreds of Turkish companies and thousands of Turkish workers to leave Anbar, Baghdad, Basra, Diyala, Kirkuk, Mosul and Salahuddin. Two major Turkish banks closed their branches in Baghdad. As Turks began the evacuation, the fallout on commerce became alarming. More than 1,500 Turkish companies operate throughout Iraq, and when some of them hastily closed their offices after ISIS went on the attack, more than 2,000 trucks headed to Iraq had to turn back.

The surrender of Iraqi towns to ISIS also hit the Turkish markets. The Istanbul stock exchange had climbed to 81,600 points on June 10. After ISIS occupied Mosul, within four days, the index fell to 77,646, a 4,000-point loss. Foreign exchange parity rose, while interest rates and oil prices rose. The worst effect has been the added burden to Turkey’s energy bill.

Minister of Economy Nihat Zeybekci thinks, however, that Mosul will not adversely affect Turkey. In a statement to the daily Milliyet, he said there were no problems in places such as Sulaimaniyah and Erbil, and that events in Mosul were therefore unlikely to have any negative bearing on Turkish exports.

Parts of Zeybekci’s surprising statement also appeared accepting of a fragmentation of Iraq. He said, “Borders that were drawn superficially 60 years ago will be re-demarcated. Parts of the region will find their right places. There is so much diversity, with Arabs, Sunnis, Shiites, Turkmen and Kurds. Then there are plenty of radical groups. They all want to have a say. The region is so sick that all germs freely attack it.”

Although Zeybekci seems relaxed about the current situation, exporters are not. [Continue reading…]

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