June 18 (Bloomberg) -- Turkish companies selling to Iraq, their second-biggest external market, are seeing business dry up with trucks unable to reach large areas of the neighboring country, which is engulfed in sectarian fighting.
“Shipments to central and southern Iraq have stopped,” Nevaf Kilic, head of the Turkey-Iraq Industrialists and Businessmen’s Association, said in a phone interview from the southern Turkish city of Mersin yesterday. “Business with the north goes on, but the roads to further south are shut. Products sent earlier are waiting at storage facilities in Zaho and Dohuk,” he said, referring to two provinces in Iraq’s Kurdistan region.
Iraq was Turkey’s second-biggest export market after Germany last year, according to official data, accounting for 7.9 percent of the total. Turkish companies exported $12 billion worth of goods, ranging from cooking oil and plastics to machinery and television sets.
The trade is under threat after militants from the Islamic State in Iraq and the Levant, or ISIL, captured the northern city of Mosul on June 10, swiftly advancing south toward Baghdad, the capital. More than 100,000 Kurdish peshmerga fighters have occupied areas around the city of Kirkuk in response. Iraq’s army is counter-attacking against the militants north of Baghdad, while the U.S. moved an aircraft carrier into the Persian Gulf for possible air strikes.
At least 31 Turkish truck drivers are among the dozens of Turkish citizens taken hostage by ISIL during its initial offensive, the state-run Anadolu news agency cited Transport Minister Lutfi Elvan as saying on June 13. As many as 70,000 Turkish trucks enter and exit Iraq every month, Elvan said.
“If the roads aren’t opened soon, Turkish businesses will suffer,” Kilic said. Companies could start firing workers or even shut down if the instability continues, he said.
Kilic, 42, is the chairman of Kilicsan Uluslararasi Tasimacilik Ic & Dis Tic Ltd., a closely held logistics company that mainly transports construction material to Iraq with more than 100 trucks. “Iraq constitutes almost all of our business,” he said, declining to provide details.
The events in Iraq will “negatively impact Turkey’s current account,” Anadolu cited Finance Minister Mehmet Simsek as saying yesterday. “If these developments aren’t swiftly taken under control, this would be an unfortunate development, an external shock for us,” he said at a conference in Istanbul.
“We are seriously concerned about the situation in Iraq,” Dunya newspaper cited Hikmet Tanriverdi, chairman of Itkib, an organization of Istanbul textile exporters, as saying in a report today. Turkish companies sold $580 million worth of ready-wear products to Iraq last year, Tanriverdi said.
The association Kilic heads has more than 100 members who sell or transport goods to Iraq, or invest in the country.
“Before this conflict started, goods were shipped to as far as Baghdad from Mersin in about four days,” Kilic said. “The alternative Basra port route would take too long and increase shipping costs.”
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