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Turkey’s troubled economy to benefit from Iraq’s oil-for-food deal

December 11, 1996

YUMURTALIK, Turkey (AP) _ A deal allowing Iraq to sell a limited amount of oil has been a cause for celebration here, where a six-year U.N. embargo against Iraq has left thousands jobless and deprived exporters of a major market.

The embargo is still in place, but the United Nation’s final approval of an an oil-for-food deal bears the promise of jobs and hard currency for Turkey.

Oil started flowing again Wednesday through a 616-mile pipeline that carries it from Kirkuk, Iraq, to a terminal at Yumurtalik, on Turkey’s Mediterranean coast. In preparation for this long-awaited event, firefighters washed their vehicles and workers freshened the pipeline’s gray paint.

Prior to the Persian Gulf War _ and the embargo punishing Saddam Hussein for it _ Iraq had been one of Turkey’s largest trading partners. Turkey estimates the embargo has cost it $30 billion.

It lost revenues it drew from charging Iraq to use Turkish ports and the Turkish part of the pipeline. The embargo also affected local merchants, banking and transportation systems, contractors working in Iraq and airline revenues.

Truckers took up house painting. Turkish contractors in Iraq came home. Hundreds of car repair shops, gas stations and markets closed along the roads in southeastern Turkey that stretch to Iraq.

The Turkish economy, already suffering from high inflation and a budget deficit, lost crucial hard currency revenues.

Former Prime Minister Tansu Ciller says the embargo cost her her job because it contributed to the deteriorating economy, a factor in her election loss last year.

The United Nations on Monday allowed Iraq to export $2 billion of oil for a 180-day period to buy food and medicine. The agreement can be renewed after this initial period and, if Iraq complies with U.N. conditions, is expected to be extended every six months.

The next day, Turkey signed an agreement in Baghdad to buy 25 million barrels of crude oil from Iraq per year. Turkey expects it will earn about $500 million in the next six months.

``It is far from covering the billions of dollars of losses,″ columnist Sami Kohen wrote Tuesday in the Milliyet daily newspaper. ``But it is better to start cutting losses than continuing to pile them up.″

Sezai Ugur, a gas station owner in Ceyhan, 15 miles from Yumurtalik, complained that during the embargo he had to drive 360 miles to get fuel. ``Now I hope we will be able to buy Iraqi oil and reduce oil prices.″

Iraqi Ambassador Rafi el-Tikriti said Sunday that Iraq would make it a priority to buy food and other supplies from Turkish companies. Iraq initially plans to purchase medicines, beans, margarine, cooking oil, sugar and tea.

And that means truckers no longer have to work as house painters.

Update hourly