July 2, 2007 | By Nicholas Birch

IRBIL, Iraq - Growing tensions between Turkey and Kurds in control of northern Iraq belie a deepening cooperation, as Turkish companies, workers and goods flock to a market enriched by 17 percent of Iraq's oil revenues.

Stocked almost entirely with Turkish brands, upmarket Iraqi Kurdish supermarkets only differ from their counterparts north of the border in their taste for gaudy decoration.

Once the preserve of two-story family houses, the suburbs of Iraqi Kurdish cities are increasingly home to the high-rise blocks characteristic of Turkey.

"Turkey is by far and away our most important trading partner," says Aziz Ibrahim Abdo, general director at the Ministry of Trade in the Iraqi Kurdish capital Irbil. "You can see that by looking around you."

The statistics back him up, too. In Irbil, 380 out of 500 foreign companies are Turkish. In Dohuk, a city farther west, 65 percent of contracts worth about $350 million so far this year have gone to Turkish companies.

Worth another $350 million and $300 million, respectively, brand new airports in Irbil and Sulaimaniyah are Turkish products.

Another Turkish company won a $260 million bid to build a new university campus in Sulaimaniyah.

"The quality of Turkish work is good, and they're much more trustworthy than the Iranians," said Ibrahim Sofy, deputy head of Irbil's Chamber of Commerce.

The brisk trade and investment contrasts sharply with recent threats by Turkey to send its armed forces into northern Iraq to hunt down rebels seeking their own state in southeastern Turkey.

The militant Kurdistan Workers Party (PKK) has staged a violent campaign against Turkey since the late 1970s, in which more than 30,000 people have been killed.

Turkey says PKK is conducting raids inside Turkey from hidden bases in northern Iraq.

Turkish trade with Iraq reached $3 billion in 2006 and "could top $5 billion this year," Turkey's trade minister, Kursad Tuzmen, told about 500 Turkish and Iraqi businessmen at an Iraqi trade fair last month.

Much of that money is flowing to Turkey's mainly Kurdish southeast, a region impoverished by two decades of war against separatist Kurds.

"This border is our lifeline," says Abdulkadir Sir, a taxi driver who used to make a living as a smuggler.

A builder from the Turkish Kurdish town of Bitlis, now in Irbil, Faysal Ozdemir is another one whose bank account has benefited.

"Back home, I'd be lucky to earn [$460] a month," he said. Here, he earns $2,000.

Qualified Turkish engineers working in northern Iraq can expect monthly salaries of at least $5,000, more than twice what they would earn in Turkey.

"It's hard being away from home, but the money makes it worthwhile," says Seyhmus Gurbuz, a waiter at one of the Turkish-run restaurants.

He's one of an estimated 15,000 Turkish citizens -- most of them Kurds -- working in Iraqi Kurdistan.

Not everything about the new Turkish-Kurdish economic relationship is rosy.

An Irbil resident for three years, Faysal Ozdemir estimates at least 10 percent of Turkish companies have left northern Iraq in the past month.

"All this talk of invasions scared them away," he says.