Turkish sanctions worry Iraqi Kurds

ARBIL, Iraq (AFP) — Turkey's vow to impose economic sanctions in reprisal for Kurdish rebels using Iraqi rear bases is threatening to torpedo booming cross-border trade, to the dismay of Iraqi officials and Turkish businessmen alike.

Officials in the autonomous Kurdish administration are concerned that the sanctions could halt projects worth billions of dollars in northern Iraq, many of them being carried out by Turkish companies.

"We are really concerned about the economic consequences as these projects are large,"

said Hirsh Muharram, head of the Investment Board in northern Iraq's Kurdistan Regional Government (KRG).

"Seventy percent of our recent contracts worth two billion dollars have been signed with Turkish companies."

Last month, Ankara announced it would levy sanctions on northern Iraq because the regional administration had failed to crack down on rebels who have been fighting for self-rule in southeastern Turkey since 1984.

The sanctions could include restricting trade to Iraq and cutting off electricity supplies to the north of the country, local media said.

Iraq is a lucrative market for Turkey and one of the few countries with which Ankara has a trade surplus.

Turkish exports to Iraq totalled 1.7 billion dollars (1.2 billion euros) in the first eight months of this year and 2.5 billion dollars during 2006, according to official figures.

Muharram said the sanctions would affect Ankara too.

"They must consider their economic interests before they take any step in this direction," he told AFP.

Muharram said many regional contracts had been given to Turkish companies at the cost of upsetting European firms.

"Turkish companies have the lion's share" of the contracts, he said, adding that Iraqi Kurds preferred Turkish companies because of geographical proximity.

"It is the ease of transportation that encourages us to sign contracts with them," he said.

The Kurdish administration's director general for trade, Aziz Ibrahim, said 300 Turkish companies were engaged in business with northern Iraq.

"They are building roads and bridges," he said.

"If Turkey imposed economic sanctions on the region, that would mean imposing sanctions against Iraq, because goods that come through the border are not meant only for Kurdistan but for the whole of Iraq."

Traders in Baghdad also fear that closing the border could raise prices.

"Before the crisis more than 500 trucks containing Turkish goods came to Iraq every week, but now only 50 trucks manage to enter the country. If the border is closed it is going to push up prices," said Abu Jaafar, a trader selling Turkish goods in Baghdad's Al-Shorja market.

"This may result in the closing of shops belonging to traders such as me."

Ahmed al-Dahlagi, who sells Turkish electrical appliances in Al-Shorja market, said importing Turkish goods from Syria was another option but that too "is extra burden and cost."

The threat of sanctions has unnerved even Turkish firms operating in the north.

"We are worried. Our interests are at stake,"

said Suleiman Bamuk, director general of Cevekler, a Turkish company which has investments in Sulaimaniyah, including the construction of the local airport.

"We have been working here for three years and we have excellent ties with the Kurds. We have executed projects here worth 160 million dollars."

Muharram said the situation is still under control.

"The crisis has not affected us so far and we are in talks to build the largest project in Kurdistan expected to cost 200 to 250 million dollars," he said, adding that his company had already signed a contract with a Turkish partner to build the American University in Sulaimaniyah.

Muharram hoped that Ankara would make a clear distinction between economic and political interests, and prayed that Turkey would not close the only border opening with Iraq near the town of Ibrahim al-Khalil as it would "impact us" hard.

Bamuk shared his fears.

"We hope to continue working and that there would be no Turkish incursion or economic sanctions," he said, adding he would continue to work even in the event of an incursion.

"We will not leave unless we are ordered to leave," he said firmly.

"If an incursion took place, it would harm our work for sure. We will suffer big losses or even face bankruptcy and neither Turkey nor any other authority will compensate us."