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Thursday <strong>15</strong> <strong>Feb</strong>ruary <strong>2018</strong><br />

Harvard<br />

Business<br />

Review<br />

Global Business Perspectives<br />

CONNECTING THE WORLD ONE BUSINESS AT A TIME<br />

BUSINESS DAY<br />

21<br />

Russia, Turkey and Iran: It’s about the money<br />

In past years Turkey, a<br />

functioning democracy<br />

and NATO’s only Muslim-majority<br />

member,<br />

often was presented by<br />

the United States as a model<br />

for the autocratic Arab Middle<br />

East. When the Arab Spring<br />

buffeted the region, President<br />

Recep Tayyip Erdoğan of<br />

Turkey saw an opportunity to<br />

promote this idea among the<br />

protesters in Arab autocracies.<br />

The Arab Spring soon<br />

turned into winter, however,<br />

and Erdoğan’s relationship<br />

with NATO underwent a remarkable<br />

change. While retaining<br />

its NATO membership,<br />

Turkey has become part of the<br />

Russia-led triad engaged in<br />

peacemaking in the Syrian<br />

civil war outside the purview<br />

of the United Nations. To the<br />

alarm of its NATO partners,<br />

Turkey also has decided to<br />

purchase Russian S-400 missiles.<br />

The key to understanding<br />

this phenomenon is to examine<br />

the Turkish Republic’s<br />

geopolitics and economics.<br />

Domestically, the aborted<br />

military coup that rocked Turkey<br />

in July 2016 was a defining<br />

moment in the country’s<br />

foreign policy. As the first<br />

foreign leader to congratulate<br />

Erdoğan for crushing the<br />

coup, President Vladimir Putin<br />

of Russia won the Turkish<br />

leader’s gratitude. Foreign<br />

Minister Muhammad Javad<br />

Zarif of Iran had tweeted:<br />

“Stability and democracy in<br />

Turkey are paramount,” and<br />

President Hassan Rouhani<br />

told Erdoğan that the coup<br />

attempt was “a test to identify<br />

your domestic and foreign<br />

friends and enemies.”<br />

With a population of nearly<br />

80 million with steadily rising<br />

President Recep Tayyip Erdogan of Turkey addresses the United Nations General Assembly, at the U.N. headquarters<br />

in New York, Sept. 19, 2017. (CREDIT: Chang W. Lee/The New York Times.<br />

living conditions, Turkey has<br />

urgent need of a dependable<br />

supply of natural gas. Its main<br />

sources are Iran and Russia,<br />

with the rest coming from<br />

Azerbaijan.<br />

Russia’s state-owned Gazprom<br />

supplies natural gas<br />

to several European nations<br />

through a pipeline stretching<br />

across Ukraine. To reduce its<br />

dependence on Ukraine for<br />

gas exports, Moscow came<br />

up with a plan called South<br />

Stream to transport natural gas<br />

to other parts of Europe. This<br />

project advanced until <strong>Feb</strong>ruary<br />

2014, when the Kremlin’s<br />

seizure of the Crimean Peninsula<br />

from Ukraine led the European<br />

Union to impose economic<br />

sanctions on Russia.<br />

This opened the door to<br />

Russian-Turkish economic<br />

cooperation. In December<br />

2017 Putin canceled the South<br />

Stream project, replacing it<br />

with the $13.74 billion Turkstream<br />

gas pipeline, which<br />

will carry Russian natural gas<br />

to southern Europe via Bulgaria<br />

by 2020.<br />

Erdoğan, who earlier had<br />

joined efforts to depose President<br />

Bashar Assad of Syria,<br />

a Russian and Iranian client,<br />

has moderated his opposition<br />

to the country’s regime.<br />

Instead he has focused on<br />

blocking the creation of a<br />

Kurdish enclave in Syria. This<br />

has given Putin an opening<br />

to co-opt Turkey in his efforts<br />

to end the Syrian civil war on<br />

terms favorable to Assad.<br />

After hosting a Nov. 22<br />

meeting with Erdoğan and<br />

Rouhani in Sochi, Russia, Putin<br />

said, “The militants in Syria<br />

have sustained a decisive blow<br />

and now there is a realistic<br />

chance to end the multiyear<br />

civil war.” He had conferred<br />

with Assad two days earlier.<br />

Notably, on Nov. 12 Turkey<br />

had announced a contract for<br />

the purchase of Russian S-400<br />

missiles, ignoring the disapproval<br />

of other NATO members,<br />

particularly the United<br />

States.<br />

In mid-December Putin<br />

and Erdoğan suggested the<br />

Kazakh capital of Astana as a<br />

venue for conducting peace<br />

talks for Syria. On Dec. 20 Zarif<br />

joined them at Astana. As<br />

Turkey reversed its past policies,<br />

Iran and Turkey found<br />

2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate<br />

themselves on the same side<br />

in the Syrian crisis.<br />

That has not always been<br />

the case. Since November<br />

2002, when Erdogan’s Justice<br />

and Development Party<br />

won its first electoral victory,<br />

diplomatic relations between<br />

Turkey and Iran have improved—in<br />

2009 Ankara invested<br />

as much as $4 billion<br />

in Iran’s South Pars gas field—<br />

but there have been periodic<br />

disagreements.<br />

In the Syrian civil war that<br />

began in 2012, Turkey and<br />

Iran backed opposite camps.<br />

When Saudi Arabia intervened<br />

militarily in Yemen’s civil war<br />

in March 20<strong>15</strong>, Erdoğan said<br />

in an interview with France 24<br />

TV: “We support Saudi Arabia’s<br />

intervention in Yemen,”<br />

and added that “Iran and the<br />

terrorist groups must withdraw.”<br />

Nonetheless Erdoğan visited<br />

Tehran on April 1, 20<strong>15</strong>,<br />

to sign eight economic-cooperation<br />

agreements with<br />

Iran. When trade between the<br />

countries fell to $9.67 billion<br />

in 2016, he met with Rouhani<br />

for a joint news conference<br />

at which he emphasized that<br />

Turkey and Iran should join<br />

hands to bring about a peaceful<br />

outcome to the Yemeni crisis.<br />

Accompanied by Rouhani,<br />

Erdoğan has met with Iran’s<br />

Supreme Leader Ayatollah Ali<br />

Khamenei to propose joint<br />

mediation efforts.<br />

Since then the Turkey-Iran<br />

entente has only strengthened.<br />

(Dilip Hiro, author of “A Comprehensive<br />

Dictionary of the Middle<br />

East” (Olive Branch Press, 2013),<br />

is based in London.)

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