Türkiye and Iran’s Pursuit of $30 Billion Trade Partnership: Strengthening Regional Bonds

Türkiye and Iran have embarked on a focused journey to significantly bolster their bilateral trade, aiming to reach an ambitious target of $30 billion annually. This shared goal underscores a commitment to deepen economic ties and foster closer cooperation across various sectors, as highlighted by Turkish Trade Minister Ömer Bolat during his recent visit to Tehran for the 29th Meeting of the Türkiye-Iran Joint Economic Cooperation Commission.

In a meeting with Iranian President Masoud Pezeshkian, Bolat expressed Türkiye’s desire to renew its energy agreements with Iran while enhancing border trade mechanisms. “We are trying to modernize the border gates and open two more crossings with Iran,” Bolat stated, emphasizing the importance of facilitating smoother customs procedures and strengthening local markets. His remarks reflect a broader vision to transform the trade dynamics between the two nations into a robust and seamless exchange of goods and services.

Revitalizing Historical Agreements
Bolat also highlighted Türkiye’s intent to revive the 2015 preferential trade agreement with Iran. This agreement, originally designed to reduce trade barriers and enhance mutual market access, is seen as a critical step toward boosting trade volumes. In addition to trade, the two sides are exploring a comprehensive agreement on tourism, aiming to capitalize on shared cultural and historical connections to drive people-to-people exchanges.

Iranian President Pezeshkian underscored the strategic importance of fostering unity among Islamic nations. “We must address our challenges as brothers and strengthen the power of the Islamic world practically,” he remarked. His vision includes leveraging the economic and infrastructural capacities of Islamic countries, creating synergies in trade markets, transportation routes, and other shared opportunities.

Current Trade Trends
Trade between Iran and Türkiye has shown a mixed trajectory over recent years, marked by periodic fluctuations but consistent efforts to sustain and grow economic exchanges. According to the Turkish Statistical Institute (TurkStat), the two nations exchanged $1.75 billion worth of goods in the first four months of 2024, reflecting a modest 2% growth compared to the $1.72 billion during the same period in 2023.

Türkiye’s exports to Iran during this period reached $1.05 billion, representing a 16% increase from $900 million in the previous year. However, Iran’s exports to Türkiye declined by 14%, amounting to $700 million compared to $820 million during the same timeframe in 2023.

Despite these recent shifts, the long-term trade relationship between the two countries has shown resilience. In 2023, the total trade volume stood at $5.49 billion, albeit a 14% decline from 2022. The previous year, 2022, had witnessed a significant 15% rise in trade compared to 2021, reaching $6.42 billion. Notably, in 2022, Iran’s exports to Türkiye grew by 19%, while Türkiye’s imports from Iran saw an 11% increase, reflecting mutual efforts to enhance economic engagement.

A History of Economic Collaboration
The economic relationship between Türkiye and Iran is rooted in geographical proximity, shared cultural ties, and mutual interests in energy and trade. In July 2023, the two countries held discussions at the Turkish-Iranian High-Level Cooperation Council in Tehran. This meeting, co-chaired by Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan, focused on expanding economic relations alongside strengthening political ties.

A major outcome of these discussions was the negotiation of a 25-year extension to the gas export contract between the two nations. Energy cooperation remains a cornerstone of their relationship, with Iran being a key supplier of natural gas to Türkiye. President Raisi emphasized Tehran’s determination to enhance economic relations with neighboring countries, stating that both nations should implement appropriate policies to achieve the $30 billion trade target.

Strategic Developments in Energy and Infrastructure

Energy remains a pivotal area of collaboration between Türkiye and Iran. In parallel with the broader economic dialogue, Turkish Energy Minister Fatih Dönmez and Iranian Energy Minister Ali-Akbar Mehrabian engaged in detailed discussions on expanding cooperation in the energy sector. These talks reflect the strategic importance of energy security and diversification for both nations.

Türkiye’s interest in renewing its energy agreement with Iran aligns with its broader strategy of ensuring stable and affordable energy supplies. Iran, with its vast reserves of natural gas and oil, serves as a reliable partner in this domain. Additionally, plans to modernize border infrastructure, including the opening of two new border crossings, aim to streamline trade and reduce logistical bottlenecks, thereby boosting the overall volume of bilateral exchanges.

Overcoming Challenges
While the potential for economic growth between Türkiye and Iran is significant, challenges persist. Geopolitical tensions, international sanctions on Iran, and fluctuating trade policies have occasionally hindered the pace of economic engagement. Moreover, the decline in Iran’s exports to Türkiye in 2023 highlights the need for balanced trade relations to achieve sustainable growth.

However, the shared commitment to strengthening ties, as demonstrated by recent high-level meetings and initiatives, suggests a determination to overcome these obstacles. By focusing on infrastructure development, trade facilitation, and energy cooperation, both nations aim to create a resilient economic partnership.

The Road Ahead
Türkiye and Iran’s ambition to reach $30 billion in bilateral trade reflects a vision of deepened economic integration that goes beyond transactional exchanges. It symbolizes a partnership rooted in mutual respect, shared goals, and a strategic understanding of the benefits of regional collaboration.

Reviving the preferential trade agreement and implementing comprehensive tourism initiatives are expected to serve as catalysts for growth. Additionally, modernizing border crossings and expanding transportation routes will facilitate not only trade but also cultural and social exchanges, fostering greater people-to-people connectivity.

In the energy sector, the extension of the gas export contract and discussions on broader cooperation demonstrate a forward-looking approach to ensuring energy security and mutual benefits. As both nations work toward diversifying their economies, energy collaboration will likely play a pivotal role in driving bilateral trade growth.

Conclusion
The economic relationship between Türkiye and Iran is a testament to the potential of regional cooperation in overcoming challenges and achieving shared prosperity. While hurdles remain, the unwavering commitment of both nations to enhance their economic ties offers a promising outlook. With a clear roadmap and strategic initiatives in place, Türkiye and Iran are poised to not only achieve their $30 billion trade target but also set a benchmark for successful economic partnerships in the region.

This evolving partnership is more than just an economic endeavor; it is a step toward building stronger regional ties and reinforcing the collective strength of Islamic nations. As the two countries continue their journey toward greater economic integration, the world will be watching their progress as a model for regional cooperation and mutual development.