Turkey said Wednesday that U.S. and EU sanctions have led to hesitation by Turkish banks on doing business with Iran. But Turkish Deputy Prime Minister Ali Babacan told reporters in Washington that he expects overall Turkish trade with Iran to increase.
Babacan that the Turkish government has let Turkish banks make their own decisions in the face of sanctions aimed at isolating Iran from the global financial sector. The sanctions target individuals and institutions deemed to be helping Iran develop its nuclear and missile programs.
"Turkish banks are hesitating," he said. "Some of them are doing business with Iran, some are pausing to decide what to do."
The U.S. Treasury Department's point man on Iran sanctions, Stuart Levey, is visiting Turkey and Azerbaijan this week to discuss the sanctions with government officials and business leaders.
Babacan said that the sanctions were hitting the Iranian economy but doubted that they were making Iran rethink its nuclear program. Turkey has opposed sanctions as ineffective and damaging to the Turkish economy, since they target an important neighbor. Babacan stressed the importance for Turkey of trade with Iran, specially in the energy sector. He pointed out the volume of Turkish exports to Iran is about the same level as exports to the United States.
Babacan expects that trade with Iran, excluding oil and gas, will grow at a moderate pace. His boss, Turkish Prime Minister Recep Tayyip Erdogan, has said he would like to triple trade volumes in the next five years while still respecting the limits set by United Nations sanctions. That push, along with Turkey's vote against sanctions in the U.N. Security Council has fed tensions with the West.
But with a booming economy, Turkey has growing energy needs, particularly for natural gas. It has said it plans to boost domestic consumption of natural gas from Iran and to export Iranian gas to Europe.