Economy
Ankara, Baghdad to sign 12-month deal on Iraq-Türkiye pipeline
Türkiye and Iraq are set to sign a one-year agreement in the coming days to keep open the crude oil pipeline between the two countries, Energy and Natural Resources Minister Alparslan Bayraktar said on Thursday.
Their decades-old agreement, which governs exports through the Iraq-Türkiye Crude Oil Pipeline, is due to expire on July 27.
“We have brought the agreement that will cover the next 12 months to the final stage. We aim to sign it in the coming days,” Bayraktar, who was in Baghdad for an official visit, said in a statement.
He added that oil flow from Iraq to Türkiye’s port of Ceyhan on the eastern Mediterranean coast will continue.
The pipeline had remained offline for 2-1/2 years after an arbitration court ruled for Ankara to pay $1.5 billion over what it said were unauthorized exports by Iraq’s Kurdistan Regional Government (KRG) between 2014 and 2018.
Türkiye, on the other hand, said the International Chamber of Commerce (ICC) had recognized most of Ankara’s demands.
Flows resumed late last year.
Earlier on Thursday, Bayraktar said he had a fruitful meeting with Iraqi Oil Minister Basim Mohammed Khudair, during which they discussed oil and gas cooperation.
“We assessed the areas of cooperation we can develop in the oil and natural gas sectors, particularly focusing on the Iraq-Türkiye Crude Oil Pipeline,” he wrote on the social media platform X.
He said the effective use of existing infrastructure and its support through new connections form the foundation of the two countries’ shared energy vision.
Bayraktar added that Türkiye aims to turn the Development Road Project into not only a trade and transportation corridor but also a regional energy route.
He said Ankara attaches importance to advancing cooperation with Iraq’s newly established government through close coordination, and that concrete steps would raise the partnership between the two countries to a higher level.
Iraqi Prime Minister Ali al-Zaidi also met with Bayraktar during his visit, according to his office.
During the meeting, al-Zaidi said the two countries have significant opportunities for cooperation and partnership across multiple sectors and called on Türkiye to increase its investments in Iraq, particularly in agriculture.
He said efforts are underway to establish a Türkiye-Iraq fund to strengthen the two countries’ economic partnership and support and accelerate Turkish investments in Iraq.
Al-Zaidi also stressed that Iraq is making significant progress under a major development program, particularly in the agriculture and livestock sectors, adding that the government has begun providing the necessary infrastructure and facilities for investors.
Russia is in contact with Türkiye about the fate of the Russian S-400 air defense system that Ankara owns, the Kremlin said on Friday.
The statement came after a news outlet claimed that Türkiye was poised to transfer the air defense missiles to an unnamed Gulf country.
Daily Hürriyet reported earlier on Friday that Türkiye could announce it would resell the S-400s to one of the Gulf nations in a bid to get access to U.S. F-35 fighter jets.
In 2019, the U.S. removed Türkiye from the F-35 program, where Ankara was also a production partner, following its purchase of the S-400 systems. It later also imposed sanctions on its NATO ally.
Washington claimed the system would endanger the jets and is incompatible with NATO systems, while Ankara repeatedly said there is no conflict between the two and proposed a commission to study the issue.
Türkiye also said it fulfilled its obligations on the F-35s and that its suspension broke the rules. Ankara maintains that the jets would strengthen not only Türkiye but also NATO.
Speaking alongside President Recep Tayyip Erdoğan before this week’s NATO summit, U.S. President Donald Trump said Washington would lift sanctions on Türkiye and signaled a willingness to sell the F-35 jets.
The move would be the biggest gesture yet from Trump to Erdoğan, whom he regularly praises and sees as a close ally. The two countries have enjoyed warmer ties since Trump returned to office last year.
Erdoğan said he was confident Trump would resolve the issue and end the dispute.
Asked on Friday about the media report and if Türkiye had sought Russia’s permission to go ahead with the alleged deal, Kremlin spokesperson Dmitry Peskov said: “I can say one thing here: this is an extremely sensitive issue. However, we have been in contact with the Turkish side on this matter, and we will continue to maintain contact with them on this issue.”
Volkswagen plans to drastically cut its model lineup and further pare back capacity, as Europe’s largest automaker considers a far-reaching overhaul that sources say could cost around 100,000 jobs.
Volkswagen is under unprecedented pressure to restructure the business model that underpinned its success for decades, as it grapples with high costs and excess capacity at home.
Those factors, along with rising Chinese competition, regulation, and U.S. import tariffs, have sliced its profit margins in half between 2021 and 2025.
The company said on Thursday, following a supervisory board meeting, that its lineup would be gradually cut by up to half, as it concentrates on the most attractive market segments. Production capacity will be reduced to nine million vehicles per year, down from 10 million currently.
“The global situation has continued to deteriorate over the past twelve months,” Volkswagen CEO Oliver Blume said. “That is why we are acting now.”
Sources have said Blume is considering closing four German plants – Hanover, Emden, Zwickau and Audi’s Neckarsulm site – and cutting up to 100,000 jobs, roughly double the number currently planned, in what would be Volkswagen’s biggest restructuring yet.
Volkswagen did not provide specifics on what sources have said about potential job cuts and factory closures, which drew massive worker protests across company sites on Thursday.
The prospect of plant closures and deep job cuts at one of Germany’s most storied companies, founded 89 years ago, exemplifies the challenges Europe’s largest economy faces as it struggles with weak growth and high labor and energy costs. So-called offering complexity, including the number of equipment options, will be cut by up to 75%.
No word on job-cut speculation
At the board meeting at Volkswagen’s headquarters in Wolfsburg on Thursday, Blume faced the committee’s powerful labor representatives, who oppose deeper cuts across the group, which includes the Audi and Porsche brands.
He is also under pressure from the Porsche and Piech owner families, whose core investments have lost tens of billions of euros in market value in recent years. Volkswagen shares have lost more than half their value in the last three years.
In Wolfsburg, workers blew whistles, waved red union flags and marched behind a banner reading “gemeinsam stark” – “strong together” – as a klaxon sounded in the background.
The IG Metall union said around 400 people were demonstrating in Wolfsburg, with union representative Thorsten Groeger warning the company risked a “major conflict” with workers.
Daniela Cavallo, the head of the company’s works council, which represents employees, said staff were not to blame for the sector’s crisis, and “great fear and deep uncertainty” were spreading across company factories and offices.
Volkswagen’s works council called on Blume to address speculation around job cuts and plant closures by a Friday deadline, warning of further extraordinary staff meetings in the months ahead if he did not.
“Not a word about production, not a word about employment,” said German automotive industry analyst Ferdinand Dudenhoeffer. “One could also say that uncertainty remains – which is not good for customers, employees and investors.”
Volkswagen faced mass strikes in December 2024, but there is currently an agreement for workers not to take industrial action while existing work contracts are in force.
The company’s supervisory board includes representatives of the owner families, unions and the Lower Saxony state government, a power-sharing structure that often complicates decision-making.
Car plants expected to cut output
Under Blume’s last restructuring deal, unions secured a commitment from management to avoid German plant closures, prompting Volkswagen to seek alternative uses for underutilized sites.
Those efforts include a long-running search for a defense-sector partner for the Osnabrueck factory and the possibility of producing models designed for the Chinese market in Germany.
Mobility Global data seen by Reuters estimates the group’s German car plants will operate at 81% of standard capacity in 2026. That figure is expected to fall to 73% by the end of the decade, even after the anticipated removal of Osnabrueck from the network.
Among the four sites threatened with closure, Zwickau is forecast to have the highest utilization rate in 2026 at 88%, which is expected to fall to 42% by 2030, the data showed.
Conservative Chancellor Friedrich Merz, currently trailing in polls to the far-right Alternative for Germany (AfD), has promised a series of reforms to make Germany more competitive.
The AfD, which could take power in a German state for the first time in elections in September, has seized on Volkswagen’s troubles as a line of attack against the government.
Treasury and Finance Minister Mehmet Şimşek said Thursday that Türkiye’s de-dollarization drive had made significant progress, with Turkish lira deposits rising to their highest share of total bank deposits in about 11 years.
Şimşek said increased policy predictability and stronger investor confidence have supported the shift toward lira-denominated savings.
“Despite multiple shocks, the share of Turkish lira deposits in total deposits has reached approximately 62%, the highest level in the past 11 years,” Şimşek wrote on the social media platform X.
The rate compared to about 31.6% share in August 2023.
“We will continue our policies to reinforce confidence in the Turkish lira, strengthen macro-financial stability and achieve price stability, which is the prerequisite for sustainable high growth,” he added.
Data released by the central bank Thursday showed total deposits in the banking sector fell 0.82% in the week ending July 3 to TL 31.37 trillion (about $670 billion) from TL 31.63 trillion a week earlier.
Lira-denominated deposits declined 2.4% to TL 17.10 trillion, while foreign currency deposits edged up 0.02% to TL 10.13 trillion.
Total foreign currency deposits stood at $256.9 billion, of which $217.7 billion belonged to domestic residents. Adjusted for exchange-rate effects, domestic residents’ foreign currency holdings fell by $3.25 billion during the week.
Separately, the Central Bank of the Republic of Türkiye (CBRT) said its gross international reserves rose by $10.49 billion to $159.69 billion during the same week.
Gross foreign exchange reserves increased by $7.70 billion to $61.95 billion, while gold reserves climbed by $2.79 billion to $97.74 billion.
OpenAI on Thursday unveiled ChatGPT Work, an agent within its popular chatbot designed to execute tasks across different applications and files, marking the startup’s latest push into workplace automation.
Powered by the company’s new GPT-5.6 model, ChatGPT Work can gather context from apps, files and workflows to create finished documents, spreadsheets, presentations, reports and websites, the company said.
The launch reflects intensifying competition to build and sell AI tools for professional use, as technology companies seek to capitalize on rising demand for autonomous agents that can complete complex tasks with minimal human input.
ChatGPT Work comes months after OpenAI rival Anthropic stepped up its enterprise push with Claude Cowork, an agent capable of planning and executing multi-step tasks autonomously.
OpenAI, which is preparing for its IPO, also announced a new ChatGPT desktop application and a hosted websites feature to let users build and share websites directly through Work.
ChatGPT Work will roll out on Thursday on web and mobile, and expand over the next few days.
Türkiye’s exports to African countries surged 12% on an annual basis to $11 billion (TL 515.63 billion) in January through June, reflecting Ankara’s strengthening economic cooperation and trade diplomacy with the continent, according to the data from the Türkiye Exporters Assembly (TIM).
Trade diplomacy has become one of Ankara’s key foreign trade policy tools in strengthening economic ties with Africa since the Turkish Trade Ministry launched an action plan in 2003 to boost commercial and economic relations with African nations.
The plan aims to promote mutual investment, expand the presence of Turkish firms in projects across various sectors and strengthen cooperation between Turkish and African business communities.
In the first half of the year, Morocco was the top African destination for Turkish exports with $2.2 billion, followed by Egypt with around $2 billion, Libya with $1.3 billion, Algeria with $950.9 million and Tunisia with $619.4 million.
Türkiye’s investments in Morocco are mostly focused on sectors including the automotive industry, cleaning products, textiles, mining, logistics, and iron and steel.
The free trade agreement (FTA) between the two countries plays a key role in resolving trade issues and identifying new areas of cooperation.
Some 250 Turkish firms operate in Morocco, which will co-host the 2030 World Cup with Spain and Portugal. The event is expected to offer Turkish firms new opportunities for cooperation in transportation infrastructure, construction, contracting and other areas.
Ankara has set a target of $15 billion in trade volume with Egypt, its largest trading partner in Africa and its second-largest destination for investments on the continent.
Many Turkish companies operating in textiles, chemicals, manufacturing, tourism and other sectors are active in Egypt.
Turkish contractors are expected to play a greater role in Egypt’s 14 planned new smart city projects.
Türkiye and Egypt are focusing on boosting cooperation in areas including energy, mining, shipbuilding and the development of Ro-Ro transportation.
Meanwhile, Türkiye’s exports to Libya are mainly made up of furniture, food, machinery, mechanical devices and tools, and construction materials made from iron and steel.
The two countries cooperate in infrastructure, energy and foreign trade.
Türkiye-Algeria trade relations have also steadily deepened in recent years, with economic cooperation focused on energy, industry, textiles, iron and steel, and construction, while the two countries aim to reach $10 billion in trade volume.
China’s consumer prices stabilized in June as energy and commodities prices eased, official data showed on Thursday.
The consumer price index (CPI), a key measure of inflation, rose 1.0% year-on-year in June, edging lower from 1.2% in May, data from the National Bureau of Statistics showed.
It fell slightly below a Bloomberg forecast of 1.1%.
However, last month’s CPI was still well below the government’s two percent target for the year.
“Factors such as imported international price pressures contributed to a slowdown in the rate of increase for domestic industrial consumer goods prices,” according to Dong Lijuan, chief NBS statistician.
The growth rates of prices for gold jewellery and gasoline also eased, Dong added.
The uptick in Chinese inflation caused by the Iran war “continued to unwind in June, amid lower prices for oil and many other commodities”, said Julian Evans-Pritchard, head of China economics at Capital Economics.
“The latest escalation in U.S.-Iran tensions could deliver some renewed upward pressure on inflation in the near-term,” Evans-Pritchard wrote in a note.
U.S. President Donald Trump ordered new strikes on Iran on Wednesday and warned of “much worse” if Tehran continues to attack vessels in the vital Strait of Hormuz.
He said earlier that a ceasefire with Iran was over, prompting mediators Pakistan and Qatar and the United Nations to call for de-escalation.
But Evans-Pritchard added that the impact of an escalation of U.S.-Iran tensions will “remain limited to a few narrow areas and inflation still looks set to return near zero once energy supply normalizes.”
The June producer price index (PPI), which measures wholesale inflation, increased by 4.1% on a yearly basis, up from 3.9% in May, and was in line with Bloomberg’s forecast.
The figure marked the quickest pace since July 2022, when the PPI came in at 4.2%.
The gauge had been in negative territory since that October and did not reverse until March this year.
The steady rise was partly driven by industries like coal mining and electrical machinery manufacturing “experiencing price increases,” NBS’ Dong said.
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