In addition to being an alternative route in global trade, the new trade route will both accelerate and increase Turkey’s exports to the $800 billion Gulf market. A new era is also beginning with Iraq, Turkey’s third largest export market.
Developments in trade corridors continue to directly affect global trade in 2024. The International Monetary Fund (IMF) announced that trade volume in the Suez Canal decreased by 50 percent in the first two months of the year compared to the same period last year due to attacks in the Red Sea. The IMF also pointed out that the trade volume in the Cape of Good Hope is estimated to have increased by 74 percent in the same period. The International Energy Agency (IEA) announced that global oil demand increased by 1 million 700 thousand barrels per day in the first quarter of the year. The rise in oil demand was also attributed to the fact that the diversion of ships to the Cape of Good Hope to avoid the risk in the Red Sea increased fuel consumption.
The fact that shipments currently take about 45 days from the Cape of Good Hope and 35 days from the Red Sea strengthens the projects to establish new routes. If the Development Road Project between Turkey and Iraq is realized, this time will be reduced to 25 days. On the Iraqi side of the project, the Grand Fav Port in the Persian Gulf will be connected to Turkey via Ovaköy via a 1200-kilometer railway and highway. The 1200-kilometer-long railway and highways that will connect the Grand Fav Port, which is planned to be the largest port in the Middle East and planned to be completed in 2025, to the Turkish border are expected to cost 17 billion dollars. The Development Road Project, which will reach the Turkish border from the Greater Fav Port, is one of the alternative routes in case of possible conflict and war since China’s Silk Road does not pass directly through Iraq. It is also said to be more feasible than the India-Middle East-Europe Economic Corridor (IMEC) project, which was brought up at the G20 summit in September 2023.
DIPLOMATIC TRAFFIC INCREASES
About the latest situation in the Development Road Project, Iraqi Minister of Transportation Rezzak Muheybes al-Sadawi made the following statement during his visit to Turkey: “In the Development Road Project, the Great Fav Port is 85 percent, railways are 55 percent, and highways are 35 percent completed. Financial and economic issues continue. Our survey studies are also ongoing. We have agreed that the two countries will open offices related to this project. We will also meet with Turkish companies on railways and ports, and we would like to benefit from their experience.” Following Sadavi’s visit to Turkey, another important development took place on March 14, when Foreign Minister Hakan Fidan, Minister of National Defense Yaşar Güler and Head of National Intelligence Organization (MİT) İbrahim Kalın went to Iraq for talks on cooperation in the fight against terrorism. They discussed what the two countries could do against the terrorist threat. In April, it was announced that President Recep Tayyip Erdoğan would visit Iraq. Among the priority agenda items is the Development Road.
THIRD IN TURKEY’S EXPORTS
Iraq is also an important export market in Turkey’s foreign trade. Last year, Turkey exported 255 billion 777 million dollars worth of goods, with Iraq ranking among the top five countries. According to foreign trade data, Germany ranked first with 21 billion 92 million dollars. Germany was followed by the USA with 14 billion 826 million dollars, Iraq with 12 billion 786 million dollars, the United Kingdom with 12 billion 468 million dollars and Italy with 12 billion 381 million dollars. Iraq’s share in Turkey’s exports amounted to 5 percent in 2023. It is noted that the increase in exports to Iraq from 1.8 billion dollars in 2004 to 12.7 billion dollars is also meaningful for the future. Iraq is an important market not only for goods exporters but also for service exporters.
Turkish contracting companies have undertaken 1100 projects worth 34 billion dollars in Iraq so far. This figure has made Iraq the 3rd country in the world where the highest number of projects are undertaken by Turkish companies.
MARKET WILL EXPAND
An important advantage of the Development Road Project for Turkey will be the possibility of using it as a reverse route. In other words, Turkey’s exports to the countries on the opposite shore of the Persian Gulf will become easier along with the Gulf countries. The support of the United Arab Emirates (UAE), Qatar and Saudi Arabia for the project is also an important advantage. Another step that will strengthen the route will be the activation of the Arar Border Gate in Saudi Arabia. In this context, negotiations between Turkey and Saudi Arabia are reportedly underway. Turkey,
In 2023, Turkey exported $8 billion 593 million to the United Arab Emirates, $2 billion 620 million to Saudi Arabia and $791 million to Qatar. The Development Road Project will increase Turkey’s current exports to the region, which are worth about 26 billion dollars annually, when other Gulf countries; Kuwait, Oman, Bahrain are included. It will also accelerate Turkey’s exports to the $800 billion Gulf market.
SECURITY WILL ALSO ENSURE TRADE
Stating that Turkey is the country that will benefit the most from the Development Road Project after Iraq, International Relations Expert Assoc. Prof. Dr. İbrahim Karataş made the following evaluations to Istanbul Ticaret: “We can also call the Development Road Turkey’s project. Being an alternative transit route between Europe and Far East countries has many benefits. However, when the reverse route, i.e. from Turkey to the Gulf, is considered, it will provide the opportunity to export more to Iraq and other Gulf countries and to transport their goods faster. The India-Middle East-Europe Economic Corridor (IMEC) project is not a practical route like the Development Road. Therefore, Saudi Arabia and the United Arab Emirates will also benefit from the Development Road. The Iranian factor must also be taken into account here. The removal of the terror barrier is also important for the project. The visit of Foreign Minister Hakan Fidan, Minister of National Defense Yaşar Güler and Head of National Intelligence Organization Ibrahim Kalın to Iraq should be viewed from this perspective. Because trade will ensure security and security will ensure trade. We can say that the Iraqi administration is also aware that the removal of the PKK from Iraq is necessary for the Development Road.”
IS A CUSTOMS UNION POSSIBLE IN THE FUTURE?
Stating that ensuring regional stability is also important for the economy, Assoc. Prof. Dr. İbrahim Karataş said, “For example, there was instability after the Russia-Ukraine war. Germany, the locomotive of the European economy, shrank by 0.3 percent in 2023. Iraq is among the top five countries in the world in oil reserves. However, due to the instability in the region, it could not benefit from this wealth like other Gulf countries. Iraq is demonstrating a will with the Development Road Project. If it is continued, it will provide stability and somehow lead Iraq to fight against terrorism. If the process concludes successfully, Iraq will of course reap the economic fruits. A positive outcome may also lead to greater results. In the future, why not a cooperation such as a customs union between the participants of the Development Road?” Pointing out that Turkey’s transportation infrastructure also provides an advantage in this process, Assoc. Prof. Dr. İbrahim Karataş said, “Gulf countries do not have a terrestrial connection with Europe except Turkey. Every step taken to improve the transportation infrastructure is important. At this point, there is an issue I would like to draw attention to. The railway connection of Yavuz Sultan Selim Bridge should be realized urgently and freight trains should be provided without waiting.”
TRANSPORTATION MINISTRIES OPEN MUTUAL OFFICES
A bilateral office will be opened between Turkey and Iraq to further enhance cooperation in the field of transportation and to follow up the Development Road Project. The Ministry of Transport and Infrastructure of the Republic of Turkey has planned 615 kilometers of new lines for the 2,88-kilometer railway connection passing through the country and 320 kilometers of new highway investment for the 1912-kilometer highway corridor. The planned railway network is between Gaziantep and Ovaköy.
An investment of 5.8 billion dollars will be made for this railroad. The planned highway between Şanlıurfa and Ovaköy is estimated to cost $2 billion.
