Economy, Domestic Economy

Iran-Turkey Transit Dispute Remains Unresolved

Iran-Turkey Transit Dispute Remains Unresolved Iran-Turkey Transit Dispute Remains Unresolved

In probably one of the most curious transit disputes in the Middle East over the past year, Tehran and Ankara have so far failed to solve the issue of long line of trucks – reaching 15 kilometers at times – waiting to enter Iran at the Bazargan-Dogubayazit border with Turkey.

Driving from the eastern Turkish town of Dogubayazit, situated at the foot of Mount Ararat, to the border with Iran 40 kilometers to the east, no one can miss the double-lined trail of over a thousand trucks either parked or covering the remaining kilometers in snail-pace.

The vast collection of goods and physical capital waiting to enter Iran has nothing to do with still-unresolved sanctions imposed by the West over Iran’s nuclear program. But they are the result of a longstanding transit dispute which the two sides formally agreed to settle over three months ago but whose ramifications still linger on.

In October last year, Iran decided to charge Turkish trucks $750 to compensate for the lower fuel price in Iran. Ankara retaliated, forcing Iranian trucks to pay a fee of $31 for every 100 kilometers travelled in Turkey. The saga then moved to new heights when Iran raised its fuel charge up to $1,500. A seemingly minor issue had in a matter of weeks turned into a veritable threat to bilateral trade and political relations.

Trade between Iran and Turkey stood at $14.5 billion in 2013, making Ankara one of Iran’s largest trade partners. This economic reality put pressure on both sides to resolve the dispute as fast as possible. In late October, Iran offered its counterpart a number of solutions, none of which was accepted by Ankara. These options included charging Turkish fuel prices in Iran, paying Iranian fuel prices in Turkey or settling on an equal price.

In early December, Iran backtracked and cancelled the fee, announcing instead that it would seal fuel tanks or charge €1.6 per liter as a surcharge for the cheaper Iranian fuel.

Finally, in January, Turkish and Iranian officials signed an agreement in Ankara, which stipulates that Turkish trucks entering Iran pay €0.3 for each liter of fuel purchased in Iran. Trucks destined for a country other than Iran would not be required to pay any fee.

The dispute was then seemingly resolved with confirmations of friendship from both sides, emphasizing that the mutual aim is to bring bilateral trade to $30 billion soon.

Nevertheless, wrangling continued and culminated eventually in both sides agreeing to sealing fuel tanks, so that Turkish trucks would not be able to refill in Iran.

While this final move occurred on the last day of January, the queue of trucks has not been reduced, with drivers complaining of waiting times of up to three days. In the meantime, unprepared drivers have found that the border area lacks shops and food facilities, while the few local food dealers saw the opportunity to charge much higher prices. Some trucks also run out of fuel while in the queue, forcing drivers to fill them with fuel normally used for cooking.

The root cause of this driver discomfort and continuing delay is the failure of the Turkish side to build the necessary gasoline facilities at the border for the final refuel and seal. Even worse, Iranian trucks, which require neither of the two, have been queuing together with the Turkish lorries.  Mohammad Javad Atrchian, head of the department for tariffs and transit at Iran’s Road Maintenance and Transportation Organization, told Eghtesad-News on Sunday that Tehran had sent a letter requesting the Turkish side to organize Iranian and Turkish trucks in separate lanes.    

Atrchian also stated that in the past Iranian year, which ended March 20, a total of 76,000 Turkish trucks entered Iran, while the figure was only 37,000 in the opposite direction.

It remains to be seen whether this curious border issue can be resolved as fast as Tehran would like to see. Meanwhile, drivers would do best to bring a few extra lunch packages with them.