CEFTUS Insights – Behind the Headlines
The crisis in Mosul, due to its strategic, economic and political significance for Turkey, is representative of the numerous issues that Turkey is facing. Even after the Turkish diplomatic personnel are freed from the Islamic State of Iraq and the Levant (ISIL, or ISIS), this assault will continue to highlight certain themes in Turkey’s foreign policy;
- The threat of conflicts becoming more sectarian around Turkey’s borders,
- The Turkish government’s sensitivity against rising Kurdish power near its borders (thus, directly or indirectly balancing power via other groups)
- The vital importance of trade – and its fragility with neighbouring countries for Turkey
- The delicate balance of different actors in the Middle East (Turkey’s contradictory relations with the Syrian, Iranian and Iraqi governments have disrupted the balance during this crisis, and may continue to do so)
Why does Mosul matter for Turkey?
On Wednesday June 11th, The Islamic State of Iraq and Levant (ISIL, or ISIS) initiated a large operation in Mosul, took control of the Turkish general consulate in the city and kidnapped 49 people, including the Consul himself.
31 Turkish truck drivers were kidnapped a day before. As Turkey awaited news of their safety, the only foreign consulate in Mosul, the Turkish general consulate, was taken under siege.
At time of time of writing this piece (June 12th), negotiations have been continuing to have 31 truck drivers and the diplomatic personnel be freed. It has been reported that truck drivers have been released, however, there has not been an official confirmation.
Meanwhile, ISIL has also taken control of Tikrit, getting closer to the capital Baghdad.
High-level Turkish officials, politicians as well as army generals in an urgent meeting considered diplomatic as well as military intervention into Iraq.
In the midst of all the diplomatic and strategic chaos, we shall take a step back and look at why Mosul matters for Turkey.
Strategic – Security Concerns
The following are some of the security concerns for Turkey;
- The safety of its citizens and the security of its borders
- The rise in the power of Kurdish factions in the scenario that Iraq is divided, or in the case of a void of power as the Iraqi central government is losing ground in the area
- The strengthening of ISIL or similar organisations demanding a Sunni Islamist government in the area. A stronger ISIL will mean an armed Islamist organisation will be present near Turkey’s borders, which do not necessarily share political, ideological and strategic interests of Turkey.
- The consolidation of ISIL power may also lead to the intensification of sectarian identities, risking Turkey’s relations with Iran, the Iraqi central government and minorities within and outside Turkey’s borders.
The Iraq bill that was extended further in 2013, the Syria bill that was passed in parliament in late 2013 and the Ankara Agreement (especially the 6th clause) signed in 1926 grant Turkey vague legal rights to intervene in both countries.
ISIL, a Sunni Islamist organisation, has been gaining ground in Syria and Iraq in the past few months. Its anti-Shiite stance underlying its protest against the Maliki government in Iraq and the Assad government in Syria has injected a sectarian element to the conflict. News of Iran possibly assisting the Iraqi central government has also raised concerns of rising sectarian conflict in the region. Turkey will need to make sure that the conflict remains a strictly security and stability concern rather than a sectarian one.
The insecurity of Mosul, caused by ISIL also meant that allegations against the AKP government of having supported the Islamist insurgents in Syria resurfaced. Opposition politicians and numerous journalists have reverted to their claims that Turkey either directly supported or indirectly allowed for the Islamist insurgents to foster in Syria. The repercussions of such policies are being questioned publicly in Turkey. Foreign Minister Davutoglu had announced on June 10th that they were aware and in control of the developments in its southern borders. The escalation of events right after this announcement has increased criticisms of the AKP policies in the region.
Mosul is a city in the north of Iraq, where oil production and Turkish investment in the area are at a high level. Turkey’s economy, as well as the international markets is tense at the risk of a rise in oil prices. Brent oil price increased by $1 and reached almost $111 per barrel. However, this increase is expected to be speculative and short term, rather than an actual shortage in the supply.
Trade relations and Turkish investments in the city and northern Iraq in general were seen to be under threat, after rising insecurity.
The sudden panic caused by the news led to an approximately 3,3% loss in the Istanbul Stock Exchange. The markets which were at a level of 81,762 on Tuesday June 10th dropped to 79,021 on Wednesday June 11th. However, the positive announcements of the truck drivers having been released –although there has not been an official announcement-, and the possibility of the diplomatic personnel also being released soon have given confidence to investors on June 12th. The markets are ranging at 80,000. An increase of 0,8% in the markets show a partial recovery.
The geopolitical crisis also had an impact on the Turkish Lira. On 11 June, the Turkish lira reached 2,1155 against the USD from 2,0803 on Tuesday and 2,8627 against the Euro from 2,8163 the day before. On 12 June, with the more positive developments, the Turkish Lira gained some value against both currency reaching 2,1005 against the dollar and 2,8432 against the euro.
Due to the high level of insecurity in Mosul, many Turkish firms have been avoiding the city in terms of their investments. Nevertheless, the developments are important for the more than 1000 firms operating in Iraq. Good relations between the Turkish and Iraqi governments, currency stability and safety matter for the Turkish businesses as well as the workers in Iraq.
Aside from the private business interests, Iraq is Turkey’s largest net trading partner. The trade relations have been increasing continuously in the past decade; in 2013, Turkey exported approximately USD $12 billion to Iraq and imported USD $145 billion worth of goods and services. Despite the imbalance, Iraq represents a significant export partner for Turkey. Trade relations with countries like Iraq significantly influence Turkey’s current account deficit. Turkey needs to keep as many export partners as it can, rather than lose them.
Transportation of goods not only for the Iraqi market but also via Iraq for other markets is also very important for Turkey. The control of the area by ISIL threatens the ease at which Turkish trucks will carry goods – at present, one truck needs 25 days to go through Iraq due to regulations and safety requirements.
CEFTUS Insights Editors