By Padraig O'Hannelly.
On the day Iraq announced that Exxon Mobil wants to abandon its business in southern Iraq in favour of potentially more profitable contracts in Iraqi Kurdistan, the Oil Ministry has cancelled a major exploration deal with Turkey's TPAO.
The reasons were described as "non-technical", with the decision coming from the cabinet; the move is widely believed to be a reaction to the political disagreements between the two counties, specifically Turkey's refusal to hand over Deputy Prime Minister Tareq al-Hashemi to face a death sentence, Turkish military incursions into Iraq, and a difference of opinion on the Syrian uprising.
Given the significance of Turkey to Iraq's economy, allowing political differences to get in the way of mutually beneficial commercial deals looks very strange -- Turkey is Iraq's biggest supplier of imported goods, and one of its top providers of foreign direct investment (FDI).
While the latest news relates to just one, state-owned, Turkish company, and to only one of that company's deals, this action will be perceived as arbitrary and capricious, and will be viewed negatively when assessing the risks of doing business in Iraq.