Borders and Business: Union looks at closed border impact on trade

While various diplomatic maneuvers are used to regulate Armenian-Turkish relations politically, business relations between the two countries have long been non-officially established and
keep developing with each year aimed at increasing commodity turnover and contributing to the opening of the border.

Turkey imposed a ban on the import of Armenian goods in 1993. It also closed the border with Armenia because of the Karabakh war. Businessmen started importing and exporting goods through
third country, Georgia. According to the Union of Manufacturers and Businessmen of Armenia, in 2011 the bilateral trade between Armenia and Turkey totaled $240 million.

“Official Turkish sources report that there is zero commodity circulation, meaning that nothing is exported from Turkey to Armenia, and that it all goes to Georgia. Armenian sources say
$240 million, the main part of which is Turkish export to Armenia, and only one million is Armenian export to Turkey. The reason for this low index is partly the “Made in Armenia” label,
which makes it impossible for Turkey to import, because in fact there is high potential for Armenian export to Turkey, too,” says president of the Union Arsen Ghazaryan.

The union is currently trying to eliminate the obstacles hindering direct trade and to create conditions to have Made-in-Armenia goods easily exported to Turkey.

Lack of diplomatic relations forces businessmen to seek other ways for import and export of goods at the expense of economic losses. It is particularly difficult for drivers of trucks with
Armenian state license plates. The Turkish law requires that drivers have work permit visas (it goes for all countries, not only Armenia).

“Other countries don’t have a problem with that, as they have embassies in Turkey. We have found an in-between solution, which is that Armenian drivers can be issued Turkish visas at the
embassy in Georgia,” says Ghazaryan.

Armenia doesn’t demand the same thing from foreign-country cargo truck drivers, and it’s flooded with Made-in-Turkey goods.

Businessmen stress that if the Armenian legislation regulating this field gets more demanding it would first of all be damaging to Armenian businessmen.

The union’s executive director Eduard Kirakosyan says light industry in Armenia operates mainly with raw material imported from Turkey.

“If we restricted border passage, we’d greatly challenge light industry. After all, before taking a step we have to consider all possible consequences. Only when we have strong economy can
we afford dictating our rules to our neighbor country, like Israel does. Meaning that it’s not about Turkey now, it’s about us,” says Kirakosyan.

Research titled Eyes of Business Opinion Leaders, carried out within the framework of Support to Armenian-Turkish Rapprochement project, shows what the closed border means in the 21st
century. The survey presents the economic state of countries, the most promising fields and formats of potential cooperation under closed borders.

Project coordinator Armen Melkonyan says the key question the research raises is whether business relations can manage growing to an extent when they can impact the political processes,
rather than the other way around.

During the research 265 successful business entities were surveyed – 165 in Armenia and 100 in Turkey. Focus group discussions were held in Yerevan and Turkish cities – Kars, Malatya and
Denizli.

The research target fields were agriculture, construction, construction engineering, construction material manufacturing, information technologies, tourism, textile industry and transport.

The survey has revealed that 40 percent of Armenian and Turkish businessmen believe tourism is a possible field for cooperation, 31 percent pointed out textile industry. The Armenian side
also mentioned goldsmith and electric power production, the Turkish side selected animal husbandry.

Nonetheless, many of the businessmen said that politics does have an impact on business and that’s the way it should be, as national issues must be a priority to a businessman. Some have
their hopes for the opening of the border, saying that a new field for cooperation would open. An Armenia-based businessman (names aren’t identified) said that business finds its way no
matter what. A Turkey-based businessman said that Armenians are good at business and that for 15 years he had been cooperating with them without losing a penny (or a lira, as he said).

The survey was implemented by USAID financial support within the framework of Eurasia Cooperation Foundation and Global Political Trends Center’s Support to Armenian-Turkish Rapprochement
project.

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