BusinessDay 15 Feb 2018
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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.)