The determination of the Kurdistan Regional Government (KRG) to establish a friendly business and investment climate, coupled with the entrepreneurial spirit of the Turkish private sector, has resulted in significant economic cooperation unthinkable a few years ago. The depth of economic interdependence between the KRG and Turkey is unmatched when compared to their other regional trade partners.

According to Turkey’s Trade Ministry, Turkey’s export volume to Iraq was $7bn, 70% of which went to the Kurdistan Region in 2010. In 2011, this figure rose to $12bn, of which 75% went to the Kurdistan Region. Projections anticipate that, with more emphasis on investments rather than trade, figures could be $20 billion by 2020. Iraq, particularly the KRG, has quickly become Turkey’s second-largest export market. Turkey, on the other hand, is the KRG’s largest trading partner.

Approximately 80 percent of all goods sold in the Kurdistan Region are made in Turkey. Turkey’s business presence is visible, more than that of any other country, with everything from shopping centers to housing projects to furniture stores, among other consumer and commercials goods, bearing a Turkish trademark.

Turkish companies are engaged in a diverse range of sectors: energy, construction, finance, education, health, telecom, transportation, tourism, agriculture, and water. Until recently, Turkey’s economic involvement in the Region has mostly been comprised of trade. Now, as the Kurdistan Region has become even more stable, investment, particularly, in the oil and gas sectors has started to increase.

During his April 2012 visit to Turkey, KRG Minister of Trade and Industry Sinan C?elebi pointed out that 25 new Turkish companies are launched every month in the Kurdistan Region, with more than half of foreign companies registered in the Region being Turkish. In 2009, there were only around 485 Turkish companies operating in the KRG whereas, today, there are approximately 1,500 with roughly 30,000 Turkish citizens possessing residence permits.

The depth of economic interdependence between the KRG and Turkey is unmatched when compared to their other regional trade partners.

The KRG, an oasis of peace and stability in the Middle East, has not only invested in its own security, but in the development of its economy, infrastructure, and human capital. Representatives of the Turkish private sector are well positioned to capitalize on positive developments from within the KRG due to common cultural values, historical trade patterns, and a contiguous land border.

Bilateral trade relations have greatly deepened since the first Turkish government delegation traveled to the Kurdistan Region to advance contacts in 2008. The opening of the Turkish Consulate in Erbil in 2010, the 2011 attendance of Turkish Prime Minister Tayyip Erdogan at the inauguration of Erbil International Airport (which was constructed by Turkish companies), the May 2012 visit of KRG President Masoud Barzani and KRG Prime Minister Nechirvan Barzani to Turkey, and subsequent high-level KRG and Turkish government delegations have all assisted in widening of economic relations.

Ankara and Erbil are both committed to developing infrastructure within the Kurdistan Region, thus further deepening economic interdependence. Building an industrial zone along their mutual border, the construction of two more border crossings, and the creation of additional oil and gas pipelines, airports, and highways would signal growing cooperation and promote long-term economic stability within the Region. Turkey’s stateowned TPAO and Genel Energy, an Anglo-Turkish partnership, have both supported the construction of a new pipeline, which would bypass the existing Baghdad-controlled pipeline to carry crude oil from the Kurdistan Region to Turkey. With the cut-off of transportation routes in Syria due to civil unrest, the Region is now the most viable gateway to the rest of Iraq and to the Persian Gulf for Turkish traders. About a third of Turkey’s exports to the Kurdish north are sold on to the rest of Iraq.

The KRG has invested heavily in human capital with many skilled workers speaking more than two languages and who are positioned to act as trade facilitators in the Region. Turkish companies and entrepreneurs can provide significant opportunities to transfer their skills and knowledge to the new generation of Kurdish businessmen and women. Both Turks and Kurds remain undaunted by new and challenging markets.

Despite the regional instability and global economic crisis, the remarkable upward trend can be attributed to economic cooperation between Ankara and Erbil. Turkish trade and investment is crucial to boosting the development of the Kurdistan Region and to contributing to Turkey’s own long-term socioeconomic development.