Hazar Raporu - Issue 02 - Winter 2012

heavily influenced by extraneous political
factors over which the ECO members
had little control. Iran accounted for the
vast majority of the exponential increase
in Turkey’s exports to ECO in 2012, but
this was explained by a sharp increase
in sales of gold to Iran. In this case, the
imposition of economic sanctions by
the United Nations, the USA and EU,
due to the dispute over Iran’s alleged
attempt to develop a nuclear arsenal, and
the subsequent collapse of the Iranian
currency, had led to massive imports of
bullion by Iranian traders, either directly
from Turkey or indirectly via Dubai. There
was no proof that this would be anything
more than a temporary phenomenon, and
in any case it was likely to be offset by a
reduction in Turkey’s oil imports from Iran
during the second half of 2012, due to the
international sanctions campaign. 11
The main criticism of ECO has been that
it has been driven purely by strategic or
political priorities, and lacks economic
logic. The point is illustrated by the
general failure of ECO to achieve its
economic goals. By 2012, the ECOTA
had only been accepted by five of the ten
member states (that is, Afghanistan, Iran,
Pakistan, Tajikistan and Turkey) 12 and
there were only limited signs of progress
towards the implementation of a free trade
foreign trade statistics: accessed 29 October 2012.
11 Aydın Albayrak, ‘Turkey-Iran Relations Economically
Strained As Well’, Today’s Zaman (Istanbul, daily) 9 August
2012. This also reports that the gold imports may have been
supported by the Central Bank of Iran, which was purchasing it
through third parties.
12 The 3 rd Meeting of the ECOTA Cooperation Council, 02-
03 October 2012, Ankara, from www.ecosecretariat.org/ftproot/Press_Rls/2012/3ecota.htm:
accessed 29 October 2012.
area. Agreement on the ECObank was not
reached until 1995, and membership still
has to be signed and ratified by several
members. Moreover, its funds are limited,
with only $450 million in paid-up capital,
and it has to tread carefully to avoid
running foul of international sanctions
against Iran. 13 Given the very limited
progress on trade liberalisation, trade
within the group is still restricted: as of
2010, it was reported to account for only
seven percent of the total foreign trade of
the ten member states. 14
ECO members have also been active in
developing their relations with other
partners, notably Russia and China.
Among the Caspian members of ECO,
Kazakhstan is the closest, both politically
and economically, to the Russian
Federation, having agreed to form a
customs union with Russia and Belarus
in December 2009. It followed this up
with a free trade agreement signed with
Russia and six other members of the
Commonwealth of Independent States
in October 2011. 15 According to World
Trade Organisation (WTO) statistics,
the European Union is Kazakhstan’s most
important trading partner, followed by the
Russian Federation and China: none of
the other ECO member states enter the list
of its top five partners. Among the other
13 Abdullah Bozkurt, ‘Iran to Turn ECO into Paper Organization’,
Today’s Zaman, 15 October 2012.
14 Ibid.
15 ‘Russia, Belarus and Kazakhstan Agree on Customs Union’,
Turkish Weekly (www.turkishweekly.net/news) 5 December
2009: accessed 5 November 2012: Greg Delaney, ‘Kazakhstan
signs Free Trade Agreement with Russia & other CIS States’,
from www.kazakhstanlive.com, 19 October 2011, accessed 5
November 2012
CASPIAN REPORT
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