Foreign Minister Mevlut Cavusoglu on April 17 reasserted Turkey’s opposition to the US sanctions regime directed at Iran and said Turkish officials were looking into establishing new trade mechanisms with the Islamic Republic.

Cavusoglu cited Europe’s Instrument In Support Of Trade Exchanges (Instex) as one possible model for a mechanism, although Tehran has grown increasingly upset over the failure of France, Germany and Britain—the three countries that stand behind the scheme—to so far move the channel for sanctions-shielded non-dollar trading with Iran to an operational status. Ankara has also this week made it clear that it expects Washington to extend a sanctions waiver due to run out in May that gives US blessing to a certain level of Iranian oil exports being shipped to Turkey. Whether or not disagreements over the US approach to Iran were discussed by US President Donald Trump and Turkish Finance Minister Berat Albayrak during their April 16 Oval Office meeting has not been disclosed.

At a news conference in Ankara held jointly with Iranian counterpart Javad Zarif, Cavusoglu said Turkey and neighbouring Iran—which like Turkey has a population of just over 80mn—needed to keep working to lift their bilateral trade to a target of $30bn, approximately triple the current level.

"Along with the existing mechanisms, we evaluated how we can establish new mechanisms, like Instex... how we can remove the obstacles before us and before trade," Cavusoglu said. "What is important here is the solidarity and determination between us," he added.

Not averse to using national currencies
Cavusoglu did not detail any of the new mechanisms he had in mind, but Turkey, boasting the Middle East’s biggest economy, is not averse to using national currencies in international trade. In seeking to avoid US sanctions when trading with the Iranians, trade parties must attempt to avoid any connection to the USD or the US financial system via the global financial network. In October 2017, the Turkish and Iranian central banks formally agreed to trade in their local currencies. Previously, they used the euro for settlements.

Turkey, like the EU, is against Trump’s effort to strangle the Iranian economy to force concessions on Tehran’s Middle East activities and policies. It has stuck by the multilateral nuclear deal which granted Iran protection from international sanctions in return for compliance with measures that bar any potential path it might take to developing a nuclear weapon. Trump unilaterally pulled the US out of the accord in May 2018 even though, to this day, no evidence has been presented showing Tehran has breached its requirements.

The US effort to drive Iranian oil exports down to zero has been slowed by the need to ensure that the removal of Iran’s crude from the world market can be securely compensated with alternative supplies from other countries, thereby preventing the aggressive policy from driving up the oil price and impacting on consumers such as the US motorist.