I don't understand. Why?
I don't understand why no one in the Turkish press has written about this.
Everyone is writing something about the Türkiye–Iraq oil pipeline arbitration.
Let me tell you what no one else is writing:
The main ruling is this:
In favor of Iraq: $1,997,976,023.50
In favor of Türkiye: $526,585,537.45
But that's not the important part.
Because these are GROSS amounts.
What do you mean we've never heard this before?
Of course you haven't, my friend.
That's exactly the problem.
Interest will accrue on these amounts.
So what?
Here's what:
Türkiye's claims go back as far as 1990. Two transportation fee items originating in 1990 ($58 million + $70.7 million, totaling approximately $128.7 million) accrue compound interest for 32 years until the date of the award. (According to the decision, interest on each item is calculated separately up to the date of the award, February 13, 2023.) The 2003–2007 item carries interest for 15–19 years, the largest item of $281 million from the 2007–2011 period carries interest for 11–15 years, and the 2011–2013 MGT item carries interest for 9–11 years. A principal amount accruing compound interest for more than 30 years at the interest rate on Turkish dollar-denominated government bonds, with an average annual rate of roughly 7–8% (and even higher in some years), would increase approximately eight- to tenfold. In other words, the interest on the 1990 items alone would far exceed one billion dollars. (I'm not sure whether the Turkish bond interest rate was ultimately accepted. The arbitration tribunal may have chosen a specific reference interest rate in its ruling, but given the very long period involved, the amount would still grow substantially.)
Anyone who's curious should calculate what $128.7 million from the 1990 transportation fees becomes after 32 years.
Iraq's main claim of $2 billion, on the other hand, arises from the 2014–2018 period.
That means the impact of interest is much smaller.
Looking at the final net figures, both countries could even conclude that they are the creditor.
I repeat: what I really don't understand is why no one is coming out and explaining these points.
Why?
