Turkish President Abdullah Gul shakes hands with his Iranian counterpart Mahmoud Ahmadinejad in Tehran on February 14, 2011.In a region beset by conflicts, economic insecurity, and intermittent military interventions, two countries have emerged as independent, often assertive, centers of power: Iran and Turkey. Instead of competing for regional dominance – as they did during the Safavid-Ottoman imperial rivalry – these two nation-states are increasingly expanding, and deepening their partnership in multiple dimensions, but mainly in energy investments, trade, and nuclear cooperation.

On a more macro-level, the two indigenous powerhouses represent the new face of 21st century politics, where emerging powers seek to shape the destiny of their region – at the expense of a great power-dominated status quo. A combination of developments in the domestic sphere and not-so-favorable deterioration in the regional security environment has pushed both powers to extend their influence across the Middle East – making Turkish Prime Minister Recep Tayyip Erdogan and Iranian President Mahmoud Ahmadinejad the most popular men on the Arab Street.

Home to the region’s biggest economies, largest middle classes, and most educated populations, Iran and Turkey represent vibrant societies with huge reservoir of both soft and hard power. Growing cooperation between the two may signal the opening of a new chapter in the Middle Eastern affairs.

Seismic Domestic Shifts

Without certain developments in the domestic political landscape of both countries, it would have been more difficult to imagine an increasing level of cooperation between two countries, which have starkly divergent ideological and political configuration. The 1979 Iranian revolution was a seismic event, which not only toppled a staunch U.S. ally but also sent shockwaves across the region. Turkey was not immune to this. An Islamic republic emerged in Iran alongside a Turkish republic, which was founded on a fiercely secular Kemalist ideological edifice that kept Islamists out of power. By contrast, a theocratic regime in Iran stood as a guardian of piety and religious purity. Over succeeding decades, a dialectical relationship developed between the thesis of a Persian Islamic revolution and the anti-thesis of Turkish secular-modernization.

On the part of Iran, the significant shift began by the end of the Iran-Iraq war, where a more pragmatic politics guided the country’s foreign policy doctrine. With the election of President Khatami in 1997, a so-called Islam-democracy synthesis supplanted political pragmatism with an ever-growing fervor for peaceful external relations, domestic liberal reform, economic opening, and reaching out to those on the other side of the political spectrum. This political paradigm facilitated Iran’s rapprochement with Turkey.

In 2002, Turkey marked a shift in its domestic political landscape by catapulting the Justice and Development Party (AKP) to the pinnacle of state power. Although the leaders of the AKP – mainly Erdogan – carefully distanced themselves from the so-called Islamist political parties, mainly the disbanded and deposed Welfare Party, they were far from hostile to Islamic traditions, beliefs, and social movements. In fact, they embraced a deeply rooted Islamic discourse – infused with unique Turkish attributes and experiences. In 2003, against a backdrop of national opposition to the Iraq War, the Turkish government refused to allow the United States to launch an invasion through the Turkish-Northern Iraq border.

In the succeeding years, the AKP initiated a series of domestic and foreign policy reforms, which resulted in growing pluralism in both national politics as well as external affairs. This pluralistic and progressive political paradigm, allowed Turkey to introduce decisive changes in its foreign policy outlook, paving the way for growing cooperation with an oil-rich, influential, Islamic neighbor: Iran.

Meanwhile, the AKP’s rise coincided with almost a decade of economic prosperity and an unprecedented level of political stability since Turkey entered its era of democracy.. The 2007 election helped AKP to consolidate its power, and in 2008 it narrowly evaded a ban by the constitutional court. The AKP has strategically used the EU membership card to justify its introduction of sweeping legal and political reforms – at the expense of its secularist nemesis. The Ergenekon trial, which exposed the plans of some elements in the military to overthrow the civilian government, and the 2010 referendum, which introduced sweeping reforms into the Turkish judicial and political system, provided the necessary space for AKP to weaken the Kemalist elite of ultra-nationalist bureaucrats, members of the constitutional court, and high ranking military officials. In the context of such dramatic changes, the first decade of the 21st century precipitated a convergence in the outlook of both countries – making sustained bilateral cooperation ever more likely.

The Economics Behind the Partnership

Both Iran and Turkey are emerging economies that belong to the famous Goldman Sachs list of major emerging economies, which seek growing trade, investments, and industrial expansion. In the future, the two countries are projected to play an even more prominent role in the global economy. According to the global consultancy company Ernst and Young, Turkey will be among the top 10 economies by 2050. According to The Economist, Iran’s Gross Domestic Product (GDP) is expected to double in the next five years. Currently, in purchasing power parity (PPP), Turkey and Iran rank 15th and 18th respectively. According to the National Intelligence Council report Global Trends 2025, both Turkey and Iran will benefit enormously in the long run from a demographic transition that will ease the current “youth bulge” burden on the economy – thanks to favorable macro-economic and population policies. More critically, the report suggests that by 2025 Turkey and Iran will be “well-suited for growing international roles.” On top of this, both countries are considered high human development nations in light of their impressive growth in areas such as education, health, and per capita income.

For the relatively foreign investment-starved Iran, a bourgeoning domestic industrial base and a large young population means growing pressure on the government to raise hydrocarbon-based revenues, deepen trade relations, and encourage foreign direct investments (FDI). Iran hosts the world’s second largest reserves of gas and oil – making it a global energy power – but it needs huge capital investments in order to develop, maintain, and upgrade its refining capacity. On Turkey’s part, its well-integrated market-economy is desperately in need of capital-technology inflow as well as energy imports to sustain its high levels of economic growth. Iran is important to Turkey, precisely because the Turkish economy faces serious energy-security concerns. In 2008, Turkey had an import dependency of 93 percent in oil and 95 percent in natural gas.

Turkey has also an even more serious diversification-problem. In 2005, Turkey imported 66 percent of its gas from one country alone: Russia. Given Russia’s history of using gas as a tool of foreign policy, Turkey is hedging its bets. Iran is both a major natural gas reserve holder and a possible corridor for natural gas transfer from resource-rich central Asia and the Persian Gulf. Moreover, Turkey could be transformed into a global energy hub if it becomes a gateway for both Iranian-Qatari as well as Russian-Central Asian natural gas. This is the regional energy-economic map that both Iran and Turkey seek to optimize.

For Iran, Turkey is a platform for further expansion into the highly lucrative European market. Iran is currently Turkey’s second largest supplier of natural gas, with daily gas exports reaching a high of 31.5 million cubic meters in late-2010. Bilateral trade currently stands over $10 billion, with plans to expand it up to $30 billion in 2015. Importantly, Turkish companies have been relatively aggressive – given the uncertain investment climate – in investing in Iran’s vast energy sector. In 2008, Turkish Energy Minister Hilmi Guler said, “Turkey will invest $12 billion on developing phases of South Pars offshore gas field in southern Iran and construction of gas pipeline from Assalouyeh to Turkish border.”

The same year, Turkey’s Turkiye Petrolleri Anonim Ortakligi inked a $3.5 billion deal to further develop Iran South Pars gas field. In 2009, following Prime Minister Erdogan’s visit to Iran, the National Iranian Gas Export Company and Sam Petrol Company signed a $2 billion deal to develop a field in Northern Iran. In 2010, Turkey announced its hopes to finalize a $5.5 billion investment in Iran’s south Pars gas field. In late 2010, Turkey announced a $1.3 billion deal with Iran to build a new gas pipeline from Iran to Turkey, which would supply gas to Europe. Recently, Iran proposed that Turkish companies could develop several oil and gas fields in the country. Although threatened by the UN Security Council resolutions against Iran, these multi-billion investments indicate growing Turkish participation in Iran’s energy sector.

Turkey and the Iranian Nuclear Saga

The most controversial and visible aspect of Turkey’s foreign policy make-up is its commitment to a purely diplomatic resolution of Iran’s nuclear stand-off with the West. Turkey has time and again expressed its deep opposition to any crippling sanctions against Iran and has fiercely criticized the prospects of a military intervention by Israel or the United States. Just after Turkey and Brazil brokered a nuclear swap deal with Iran, Prime Minister Erdogan, in an interview with the French newspaper Le Figaro, expressed his opposition to a new round of sanctions against Iran by stating, “We consider that this question [controversy over Iran’s nuclear program] should be resolved diplomatically.”

Turkey’s subsequent ‘no vote’ to a new round of sanctions issued by the United Nations Security Council prompted a sharp rebuke from Susan Rice, U.S. ambassador to the UN, who described Turkey as “standing outside of the rest of the Security Council, outside of the body of the international community.” Turkish Deputy Foreign Minister, Ali Babacan, criticized the fresh set of sanctions by stating, “….but is it [the UN sanctions] getting any possible results about making the Iranians take steps that the P5-plus-1 expect? I have big doubts about it.”

Turkey’s surprisingly pro-active role vis-à-vis Iran’s nuclear program is founded on pragmatic grounds: crippling sanctions against Iran could further radicalize the regime at the expense of regional security; sanctions could affect Turkish prospective and current investments in Iran’s enormous energy sector; any military intervention in Iran could trigger a region-wide apocalyptic series of retaliations; and finally, any further deterioration in Iran-West ties could force Turkey to chose between supporting its Western allies or a fellow Muslim nation.

The Turkish public has been increasingly confident with its Islamic identity while deeply critical of western military adventurism. Turkey’s substantially growing trade with fellow Middle Eastern countries has not only helped the economy to recover from the 2008 global financial crisis, but it also represents a huge amount of economic opportunities for world-class Turkish companies, which have spread across the region. The recent nuclear talks in Istanbul produced few concrete results, but it represents a new chapter in regional politics, where indigenous powers seek to play a crucial role in resolving problems in their own neighborhoods.

The U.S. Role

U.S. foreign policy in the Middle East is still recovering from a prolonged hangover after the burst of unilateralism following the end of the Cold War. The world has dramatically changed since 1991, and increasingly regional powers in Latin America, East Asia, and the Middle East are beginning to assert their right to shape their own geopolitical destinies. In the Middle East, Iran and Turkey represent this new trend in international politics. While Turkey enjoys a position of immense privilege as part of the Group of 20 elite economies and the UN Security Council, Iran has assumed the presidency of the all-powerful OPEC as well as the Group of 77 in the United Nations. Moreover, Tehran’s allies have been gaining significant political ground in Iraq, Lebanon, and Palestine.

These two powers are today indispensable to any serious prospect for regional security. In the Middle East, Iran and Turkey represent this new trend in international politics. Stephen Kinzer’s book, Reset, provides a succinct overview of how the new dynamics of regional politics progressively evinces the passé nature of current US foreign policy. In an article for the Guardian, Stephen Kinzer repeats an argument from his book Reset: any hope for regional stability lies in U.S. recognition of Iran and Turkey’s constructive visions for their own region. “[In their] drive to assert themselves,” however, he argues, Iran and Turkey “pose an inevitable challenge to powers accustomed to dominating the world, chiefly the United States.” Although the emergence of a U.S.-Iran-Turkey power triangle seems bizarre, if not impossible, independent centers of power have finally emerged in the region – changing the rules of the game.

In an article for Foreign Policy, Professor Muhammed Ayoob eloquently captures the bourgeoning role of Turkey and Iran in shaping the Middle East, “The political elites in Ankara and Tehran are not naïve enough to be interested in recreating the Ottoman and Safavid empires but are merely asserting their long overdue role as major regional actors in a system of sovereign states,” he writes. The two powers wield significant influence among the Arab nations, precisely because, “ …the perception that these are the only two countries/regimes in the Middle East that are able to stand up to Israel and challenge what is widely seen in the region as predatory behavior adds to Turkey’s and Iran’s popularity among the Arab and Muslim publics.”

Currently, the ball is in the U.S. court, and it is up to Washington whether to accept this new reality or to confront the emerging tandem. So far, there are signs that Washington seems to be more appreciative of Turkey’s mediator role with respect to Iran. In an interview with Turkish Daily Hurriyet, the president of Turkish-American chamber of commerce James Holmes, “I think [US officials] have felt that Ankara has been a valuable communicator with strong messages as far as Tehran is concerned.”

Turkey, meanwhile, is still highly dependent on Western technology, political recognition, and continued support if it wishes to rise to the pinnacle of global affairs – giving Washington sufficient leverage to influence Turkey’s political calculus. On the other hand, Iran’s stratagem has been consistent: to use south-south relations as a cushion against growing isolation from the Western order. The future of the region will increasingly depend on the interplay of Turkish, Iranian, and U.S. foreign policy decisions.

Seismic Shifts in the Arab World

As protests grew against the governments of U.S. allies across the Arab world, Iran and Turkey unequivocally expressed their support for the popular uprisings. When Egyptians demanded the resignation of former President Hosni Mubarak, Turkish Prime Minister Erdogan asked the Egyptian leader to “listen to the shouting of the people, the extremely humane demands. Without hesitation, satisfy the people’s desire for change.” President Ahmadinejad, meanwhile, said that the uprisings symbolize the “emergence of a new Middle East.”

If democratic processes prove successful, future governments from Egypt to Tunisia would be more sensitive to popular pressure, thereby potentially paving the way for the rise of more independent and critical foreign policies vis-à-vis Israel and the United States. Such a transformation in and around the Arabian Peninsula might also limit U.S. ability to balance Iran’s naval activities in the region. Iran’s ability to get the Egyptian military’s permission to send its warships through the Suez Canal and enter the Mediterranean Sea indicates major changes to come in the future. Currently, Iran is also beefing up its crude oil supply and petrodollar earnings as the crisis in Libya pushes global oil prices to new heights.

The Middle East has entered a new phase, and the balance of power is increasingly shifting in favor of states such as Turkey and potentially even Iran.

FPIF contributor Richard Javad Heydarian is an Iranian observer and analyst of developments in the Middle East. He is based in Manila.