A top Turkish official says in the U.S. that Turkish firms are ‘free to make their own decisions’ about complying with sanctions aimed at cutting off trade with Iran over its nuclear program.

By Paul Richter

Source:

October 21, 2010
Reporting from Washington — has rebuffed a U.S. effort to persuade it to scale back its trade ties with despite a persistent U.S. lobbying campaign this week in Washington and Ankara.

Ali Babacan, a Turkish deputy prime minister, told reporters in Washington on Wednesday that Turkish companies remained “free to make their own decisions” about whether to comply with U.S. and European sanctions aimed at cutting off trade with Iran.

The sanctions, the latest round of which were adopted in June, were designed to build enough economic pressure on Iran to persuade its leaders to limit its disputed nuclear program. The United States and many other countries believe the program is aimed at obtaining the know-how to build nuclear weapons, although Iran says it seeks nuclear energy only for peaceful uses.

Turkey is a major trading partner with its neighbor to the east, and its failure to comply with the sanctions is a threat to their success. Turkey’s prime minister, Recep Tayyip Erdogan, said last month that his country wanted to triple its trade with Iran.

The administration this week mounted a major effort to bring Turkey in line. The ‘s point man on Iran sanctions, Stuart Levey, visited Ankara, the Turkish capital, on Wednesday to urge Turkish officials to cooperate in the sanctions effort, even as American officials in Washington offered to broaden U.S.-Turkish trade ties.

Yet Babacan, a founding member of Turkey’s ruling Justice and Development Party, said Turkish businesses would be unwise to break off ties to Iranian firms when many European, Chinese and Russian companies “are still doing quite a big business with Iran and finding open doors.”

Babacan, though acknowledging that the Iranian economy is coming under “more and more pressure,” said he doubted whether Iran’s leadership, which had faced decades of sanctions, would fold.

Turkey receives about a third of its energy from Iran, and their two-way trade, valued at more than $10 billion, is especially important to impoverished areas of Turkey along the border with Iran.

Despite the government’s attitude, U.S. and European sanctions may have some bite, including for Turkish banks, which risk losing access to the U.S. market if they do business with companies that trade with Iran.

Zafer Caglayan, Turkey’s minister of state for foreign trade, complained this month about U.S. pressure on the banks.

Meanwhile, the Obama administration is also trying to sharpen pressure on Chinese companies, whose behavior is the greatest threat to the sanctions. As other companies cut ties with Iran, Chinese firms appear to be replacing them in the energy, financial and arms sectors.

spokesman P.J. Crowley said Monday that the administration has given China the names of companies it suspects are violating sanctions rules, and that it has received promises that Beijing will investigate.