Yuksekova trade plunges after Iran sanctions

About 20 Turkish trucks loaded with steel wait behind a fence at the Esendere border crossing with Iran. On the Iranian side, the trucks will be unloaded into depots, but today there is little movement.

Three truckers wait for their cargo to be unloaded at the Esendere border crossing with Iran.

“There is less work, there are fewer trucks going towards the border. It’s become harder for me to feed my family,” Mehmet Tas, a Turkish truck driver, complained as he waited in a restaurant tea house.

Iran is under increasing pressure from the EU and United States over concern it is building nuclear weapons, charges Iran denies. On July 1st, EU sanctions boycotting purchases of Iranian oil went into effect.

The US implemented a fresh round of sanctions earlier this year targeting foreign financial institutions and companies doing business with Iran’s oil sector.

While the sanctions don’t directly target the goods trade, they have had a devastating effect on Iran’s currency, the rial, making Turkish goods twice as expensive for Iranians than before. This has led to a drop in exports to Iran.

Sabih Kayhan, the head of the Chamber of Commerce in Yuksekova, a town of 60,000 people 50km from the Esendere border crossing, said every day 20 to 30 Turkish trucks transport goods to Iran via Yüksekova.

“Last year, about a hundred trucks a days passed here, mainly filled with steel. The last six months the exports have plunged,” he told SES Türkiye.

According to the chamber’s statistics, between 2007 and 2011 trade via Yüksekova grew from $88m to $503m, but in the first five months of 2012 reached only $102m.

Kayhan also trades in furniture and has seen his income drop. “Iranians choose cheaper products from China now, even though their quality is worse than textiles or furniture from Turkey,” he told SES Türkiye.

One of the biggest steel traders in Yuksekova is Lokman Turgut. From his office in the city centre he buys steel from other parts of Turkey and sells it to neighbouring countries.

For Turgut, doing business at the crossroads of Turkey, Iran, Iraq and Syria is a constant juggling act with the ever changing politics of the region.

“Business with Iran has been growing for years, so I concentrated on that market. Now I have to turn to Iraq,” he said, noting that new border gates with Iraq will be opened and trade with conflict-torn Syria has plummeted.

The lost trade has been a blow to Yüksekova’s already troubled economy. Located in a Kurdish populated area where the mountains of Turkey, Iran and Iraq meet, Yuksekova’s economy has been heavily affected by ongoing violence between the Turkish army and the PKK. Investment is non-existent and traditional farming has been in trouble since the nineties, when the army declared an increasing number of areas restricted.

“We have a milk and cheese factory, but the milk has to be brought in from other areas in Turkey because we don’t have enough open lands to keep enough cattle,” Kayhan explained.

For decades villages along the borders have supplemented their income with illegal trade in rice, sugar, sweets, dates, honey, cigarettes and petrol.

A liter of smuggled petrol is about 25% cheaper than official petrol, sugar about 20%, and a kilo of honey is 60% cheaper when illegally imported from Iran. The cheap goods are a small blessing for the poor local population. But the official traders are not helped by it in any way.

Close to the border, piles of empty jerrycans are everywhere. They mark the places where smuggled petrol can be bought for 3 lira per liter, instead of the official rate of 3.9 lira.

It would save the boss of truck driver Mehmet Tas a lot of money if he could fill his tank with illegal petrol. “But I don’t,” he said. “You never know the quality. I won’t have bad petrol ruin my truck. That would be a disaster.”