The Road to Yerevan

Emerging Markets Economic Briefings

Oxford Business Group
Turkey, Volume 154
17.06.2005

A Turkish parliamentarian’s recent visit to Armenia has once again
spurred talk of Turkey reopening its border with its eastern neighbour –
a move that could spur trade and create jobs in Turkey’s impoverished
eastern provinces, while also providing a massive boost to Armenia’s GDP.

But before such a thing can happen, the two countries would have to
settle several long-simmering political spats, or at least choose to
ignore them – a process that carries some heavy political and historical
burdens.

In early June, Turhan Comez, a deputy in Turkey’s ruling Justice and
Development Party (AKP), visited Armenian deputy Hacat Sukyasian in
Yerevan. This was the first visit by a Turkish parliamentarian to
Armenia since Turkey sealed its borders with its eastern neighbour in 1993.

This closure came as a result of Armenia’s conflict with Azerbaijan.
Azeri defeat in the conflict led to Armenia occupying a land corridor
between its frontiers and the Armenian enclave of Nagorno-Karabakh,
which lies within Azeri territory. This occupation remains in place to
this day.

Turkey has long supported its ethnic kin in Azerbaijan, and closed the
border to pressure Armenia into resolving the conflict. Yet closing the
frontier has had a major economic impact on both sides.

Armenia, small and landlocked in the Caucasus region, lost a large and
valuable trading partner and a viable shipping route. Meanwhile, Turkey
saw a collapse in commerce in its eastern provinces, which are now among
its poorest.

At present, goods do circulate between the two countries, but largely
via a more circuitous route, using connections through Georgia. This,
however, is a far more costly business, both in terms of time and money.
Direct flights do run between Yerevan and Istanbul, yet these are of
minimal economic impact.

The co-chairman of the Turkish-Armenian Business Development Council
(TABDC), Kaan Soyak, claimed back in February that according to official
data, the volume of Armenian-Turkish goods in 2004 was a meagre $120m.
This, he suggested, could triple should the border be reopened. TABDC
also has ambitious plans ready to restore the Kars-Yerevan railway,
should the border be reopened, turning the currently desolate eastern
frontier into a major trade and transport corridor. This in turn would
provide a boost to the local economy that might help reverse the trend
towards depopulation on the Turkish side, as poorer rural dwellers head
west for jobs in the big cities.

TABDC also has integration plans such as an online wholesale market for
agricultural products grown in Armenia and eastern Turkey already set out.

Yet even with the obvious benefits for both sides, calls for an open
border and trade between the two countries have had little impact in the
past.

Armenia’s foreign minister, Turkish and Armenian businessmen and Western
diplomats have all expressed a preference for economic co-operation, and
Yerevan has stated it is ready for an unconditional restoration of land
links. However, Ankara has not been willing.

Yet, “Turkey’s own economic interests are playing a role here,” Nicolas
Tavitian, TABDC’s Brussels representative, says. “It is precisely
because [the Turks have] much to win from the border reopening that they
are perhaps seriously considering that possibility now.”

As for Armenia, if the border were opened, Tavitian argues, citing World
Bank statistics, “Armenia’s exports would double in the short term and
its GDP would increase by an estimated 30 to 40%.”

However, while the economic arguments for reopening the frontier may
have been clear for some time, the issue remains clouded by political
and strategic concerns. Indeed, few expect any shift in Turkey’s
position as long as the Nagorno-Karabakh issue remains unresolved. While
EU pressure may be on for Turkey to normalise its relations with its
neighbours – indeed, this is a positive requirement of EU candidate
Turkey in its accession process – and US pressure may be on as part of
Washington’s wider Central Asian strategy, Ankara remains largely pinned
down by its Azeri commitments.

Meanwhile, the controversy over Armenian claims of a genocide committed
by Ottoman Turks against them in 1915 also makes a resolution of
disputes between Turkey and Armenia much more complex. At the same time,
Ankara also accuses Yerevan of failing to satisfactorily renounce
territorial claims on Turkey.

Yet Comez’s visit, and generally positive reception, also indicates that
there is strong pressure for change and reassessment building. Tickets
through to Yerevan on the Kars railway may still be some way off, but
they may not be entirely out of the question, either.

From: Emil Lazarian | Ararat NewsPress