Compare and contrast Turkey with Iran

They are drought-stricken neighbours, they have roughly the same size populations and they are both sited in earthquake zones.

The first has little in the way of of oil and gas reserves but, despite economic mismanagement, was the 17th-largest economy in the world in 2024. The second has the third-largest reserves of oil and the second of gas globally but is in the middle of its fourth major bout of political turmoil in less than 20 years – and is massively poorer than the first.

Compare and contrast Turkey with Iran.

Interest rates in Turkey are currently a penal 38 percent and inflation is still 31 percent. Yet the IMF puts GDP per capita at a little over $18,000. For those in work, the monthly minimum wage has been hiked to 28,000 lira ($655).

No one would describe Recep Tayyip Erdoğan, who suppressed interest rates and sprayed cash in the run-up to elections in 2023, as a sound economic steward but growth this year is forecast at more than 3 percent.

How so? One major answer is Turkey’s thriving and resilient Mittelstand – medium-sized, usually family-owned businesses, known with only a hint of hyperbole as Anatolian Tigers. From Iraq to Somalia to Libya and Egypt, Turkish companies are adept at identifying niches at home and abroad. Access to capital is not a problem. The banks that lend to the Tigers are also for the most part professional and solid.

Ambition is tangible. It is striking that there is always a spokesperson for any sector of the Turkish economy you can think of – tourism, jewellery, agriculture – available to pitch, sell and comment to our excellent Turkey correspondent William Sellars.

And then there is Iran. Here GDP per capita is a little over $4,000. Yes, that is to a large extent distorted by a rapidly depreciating currency. Yesterday the rial was touching 141,950 toman to the dollar, according to the website Bonbast (which converts using 10 rials to the toman). Ordinary Iranians are being battered.

On December 29, the central bank governor fell on his sword after President Masoud Pezeshkian ordered the unification of multiple exchange rate tiers. Two days earlier the bazaaris had gone on strike because they benefited from the arbitrage available under the old system, but in doing so sparked two weeks of rioting in which hundreds or even thousands have died.

Iran shares many of the attributes of Turkey – as do Egypt, Morocco and Syria, which all have strong mercantile traditions. If the people can throw off the shackles of the clerical elite and its boot boys in the Revolutionary Guard, a much, much more prosperous future beckons.

The striking lesson from Turkey is that things do not have to be perfect for economies to prosper – but you do have to let others into the party.

Most Middle Eastern states, including Iran, are characterised by strongly monopolistic tendencies and jealous incumbents. But Turkey, for the most part, allows and encourages competition.

Remember: if you can maintain 5 percent growth for 14 years, your economy will double in size. Let the Tigers thrive.

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