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Dire straits for Turkey’s economy - by TAYLAN BİLGİÇ

The 1973 oil embargo by members of the then-OAPEC has become so engraved in collective memory that we are reminded of its disastrous consequences every time there is diplomatic/political friction that involves the Middle East. It is as if our generation “wishes” to witness a similar embargo in a furtive desire to test the limits of our energy dependence!

Maybe because of that, the news Feb. 15 that Iran was halting oil exports to six EU members landed like a bombshell on newsrooms. Iran’s Oil Ministry denied the report minutes later, and the story was molded into something like the issuance of a “warning” that Iran’s oil exports would be cut “unless long-term deals are made and payments by the EU states guaranteed.”

The warning comes as the clock ticks toward the EU’s announced embargo on Iran oil, which takes effect July 1. This “grace period” aims to help EU members find alternative sources without disrupting the oil flow.

A $10 hike in the price of a barrel of crude oil raises Turkish inflation by 0.4 percentage point, while also boosting the nation’s energy import bill by $4 billion. The Turkish Central Bank’s 2012 average oil price estimate stands at $110 per barrel. The economy management thus needs to do the math regarding the outcomes of a regional policy that helps to raise tensions, rather than ease them. 

For moreTAYLAN BİLGİÇ - Dire straits for Turkey’s economy

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