* 2008 trade volume $10 billion
* Turk businessmen eyeing Iran sell-offs as early as 2011
By Thomas Grove
ISTANBUL, Sept 16 (Reuters) - Turkey wants to triple its trade volume with Iran within five years, Turkey’s prime minister told businessmen on Thursday, at a time when sanctions are scaring off Western investors from the Islamic Republic.
Prime Minister Tayyip Erdogan and Iranian First Vice President Mohammad Reza Rahimi oversaw the meeting which brought together over a hundred businessmen, including Turkish investors eager to buy into Iran’s mostly government-owned textile, machinery and automotive industries.
“Our bilateral trade ties have reached $10 billion ... When we take away the barriers to trade between ourselves, when we complete our preferential trade agreement we can reach a bilateral trade volume of $30 billion in five years,” Erdogan told the businessmen from Turkey and Iran.
Numerous rounds of sanctions on Iran by the United Nations, the United States and the European Union have hit the Islamic Republic, discouraging investment in its huge natural gas reserves as well as its banking sector. Turkey on the other hand has fostered diplomatic and business ties with Tehran. A trade agreement between the two countries is set to expand business ties even further.
Analysts say Turkey is seeking to capitalise on the diplomatic risks it has taken in backing Iran while the West piled on sanctions.
Erdogan and Brazilian President Luiz Inacio Lula da Silva brokered a uranium swap deal earlier in the year that they hoped would stave off sanctions and ease fears in the West that Iran’s nuclear programme was a front for creating weapons.
But it was not enough to stop the United Nations, EU and Washington from imposing new sanctions on Iran.
Iranian privatisations, seen starting by some Turkish businessmen as early as 2011, are also attracting interest.
“This is a big opportunity for Turkey. Finance and trade that was carried out by Dubai and the United Arab Emirates before the sanctions can be taken over by Turkey,” said Mehmet Koca, member of the executive board of the Turkey-Iran business group.
“We’re hoping the efforts of the prime minister pay off and I think they will to some extent. But Iran is still very closed to foreigners, they have to be convinced to open up to foreign investors,” said Koca who is also the general manager of Turkish fertiliser company Gubretas (GUBRF.IS).
The company bought a majority stake in Iranian Razi Petrochemical in 2008, according to information on its website.
Much of the Turkish investment would come in the form of privatisation purchases or joint ventures with Iranian businesses.
“Turkey’s private sector is more forward looking and more experienced than ours,” said Iran’s Rahimi.
“There are still problems to our private sector as well as hindrances to free trade, but if we work together we can overcome this together and boost our trade,” he said.
Turkey and Iran shared a bilateral trade volume of nearly $10 billion in 2008, 80 percent of which were Iranian exports to Turkey, mostly in the form of natural gas. Iran supplies Turkey with one third of its gas needs. (Writing by Thomas Grove)