Turkish President Recep Tayyip Erdogan visited the Gulf countries with the aim of reviving the national economy. As a result of the visit, Ankara hopes to conclude investment agreements worth 50 billion dollars. Turkey’s leadership is forced to seek support from foreign partners due to the domestic economic situation: after Erdogan’s re-election as president, the country continues to face crisis events. An important stimulus is the upcoming municipal elections, during which the ruling elite will have to fight for control over megacities.
Erdogan has plans to visit Qatar, Saudi Arabia and the United Arab Emirates (UAE). Turkey was able to restore full-fledged relations with the last two countries only in recent years. What is more remarkable now is that the visit to the Gulf is mainly aimed at attracting investment aid. In addition to meetings with the leaders of the Arab states, the work schedule of the President of Turkey also includes participation in business forums to be held under the auspices of the Council of Foreign Economic Relations of Turkey.
Erdogan is accompanied by 200 representatives of the business elite. Head of the Foreign Economic Relations Council, Nail Olpak, said shortly before the start of the tour that Ankara hopes to sign major contracts in the construction and contracting sector, including health, energy, transport, finance, tourism and agriculture. In turn, Vice President of Turkey Cevdet Yılmaz drew attention to the fact that we are talking about “long-term projects both in two countries and in a third country”. “Some of the direct investments will come immediately, and some will come in the future. We expect impressive numbers,” he stressed. However, he added that the exact information will be revealed only after the visit is over.
A separate topic of the negotiations is the supply of weapons to Turkey. Ismayil Demir, head of Turkey’s SSB Defense Industry Department, stated earlier this year that “the export figures for 2022 have reached and even exceeded our expectations.” We expect 6 billion dollars in 2023, and the numbers may be higher.” He then noted: “Despite the successful use of local products in the domestic and international operations of our security forces, we are also taking important measures to meet the needs of friendly and allied countries.” Ankara repeatedly emphasized that the Persian Gulf is an important buyer in this sense.
Turkey’s economy needs serious support for a long time. Economists polled by FactSet suggest the country’s government deficit could rise to 4.4% of GDP this year from 0.9% last year, highlighting the fragility of the domestic situation. “Financial Times” notes that the current account deficit, in which the overgrowing economy already exceeds imports and exports, has increased to $37.7 billion in the first five months of this year, bringing it to a record high. He also points out that Erdogan has spent a lot of money keeping his promise in the presidential and parliamentary elections held in May.
One of the elements of returning Turkey to a sustainable economic path, which Finance Minister Mehmet Şimsek is currently working on, is tightening the financial policy. A day ago, the tax on gasoline in the country was increased three times. According to Western business publications, for this reason, the price of fuel increased by almost 200% on the night of July 16. The Ministry of Finance noted that thanks to appropriate measures, the country will be able to eliminate the consequences of the strong earthquake that occurred in February, which officially caused 104 billion dollars in damage, and preserve its monetary reserves. At the same time, according to Bloomberg’s estimates, the tax initiative could increase inflationary pressure.
Turkish political scientist Karim Hasin explained in his conversation that the ruling establishment needs at least a decorative solution to the problem of the stability of the national economy. Even if there is something at the level of declarations of states that are hypothetically ready to invest, Ankara will be satisfied. Erdogan needs to get support before local elections start. The ruling party, which lost both Istanbul and Ankara in 2019, now aims to win back these cities.
As the expert emphasized, it is important for the leader of Turkey to remove from the political scene not only the CHP, but also one of the most popular figures, Istanbul Mayor Ekrem Imamoglu, as well as the opposition camp in general. “It was difficult for the ruling party to lose Istanbul in 2019, and the act of political revenge remained relevant,” Has said.
Turkey rose to fifty billion
Turkish President Recep Tayyip Erdogan is starting a tour of the Gulf countries – UAE, Qatar and Saudi Arabia. President Erdoğan, who has prioritized the restoration of the economy, which suffered as a result of the outflow of investments, hopes for the Gulf monarchies. Ankara expects to reach an agreement on the investment of more than 50 billion dollars in the Turkish economy. Turkey’s return to the Middle East is also related to the revision of its security strategy, which involves active rapprochement with the Arab world in order to solve regional problems and reduce the influence of Iran.
Recep Tayyip Erdogan started his three-day visit from the UAE on Monday. Later, the Turkish leader visited two other leading monarchies of the Gulf – Qatar and Saudi Arabia. After speaking with US President Joe Biden and other Western leaders at NATO’s Vilnius summit, which has been in the spotlight with a series of reconciliation steps with its Euro-Atlantic allies, President Erdogan will introduce Turkey’s position in the strategic Gulf region to everyone.
Nail Olpak, the head of the Council of Foreign Economic Relations of Turkey, who accompanied him on the trip, spoke about the ambitious tasks facing the Turkish leader. “Together with our president, we are going to three countries on a special plane with a huge trade caravan of more than 200 businessmen. We look forward to having very productive meetings and discussing multibillion-dollar cooperation agreements in sectors such as contracting, housing construction, digital technologies, energy, tourism, healthcare, food, agriculture, transportation, finance,” said Nail Olpak.
According to Nail Olpak, Ankara expects “a significant increase in mutual investments in the short term”. The implementation of this task should be helped by business forums in each of the three countries, in which President Erdogan will also participate.
The Turkish leader himself spoke about his expectations from his visit to the Gulf countries the other day. “We want to comprehensively strengthen our relations with these countries. The President of the UAE Sheikh Mohammed bin Zayed Al Nahyan called today and said that he is ready to make serious investments in Turkey. I hope that we will reach an agreement on this issue during the visit,” he told reporters.
Although Turkish officials are reluctant to mention contracts and projects, local media are trying to understand the approximate volume of investment contracts. Initially, it was reported that it could be close to 40 billion dollars. But according to “Hurriyet” newspaper citing sources in the government, now “there is an amount much higher than 50 billion dollars on the table”. According to the publication, each of the three countries included in the tour program is considering cooperation opportunities with Ankara in the fields of investment, energy, infrastructure, transport and defense industry: “Very serious preparations have been made. In addition to tourism, infrastructure works that will open the door to a significant flow of resources to Turkey have also been completed.
The strategic stake in the development of business cooperation with the wealthy monarchies of the Gulf countries is partly related to the formation of a new board of directors led by President Erdogan in Turkey. Now they are trying to find a way out of the crisis in the Turkish economy after the presidential and parliamentary elections in May.
At the beginning of July, the value of the national currency – the lira, broke the psychological limit of 26 lira for one dollar, renewing the historical minimum against the dollar. Against this background, almost every week, most Turkish businesses index the selling prices of their products and services upwards (only the price of seasonal vegetables and fruits decreases). In addition, Turkey’s current account deficit reached $37.7 billion in the first 5 months of 2023. That is, the capital outflow from the country significantly exceeds the capital inflow into the country.
The question of how foreign participation should be in the implementation of the course announced in the direction of economic liberalization is a hot topic of discussion that has not subsided even after the elections. Thus, the Ministry of Finance of Turkey called the news in the media about the intention to sell the shares of the state companies included in the National Welfare Fund to foreign capital invalid. “Cumhuriyet” newspaper published an article about plans to allow foreigners to buy shares of “Turkish Airlines”, “Turk Telekom” and “Botaş” companies. The article says that the team of the new finance minister, Mehmet Simsek, is investigating the possibility of selling the shares of state-owned companies included in the Welfare Fund, mainly to attract $100 billion from the Persian Gulf into the economy. “The publication of the newspaper is a lie and the result of his own conclusions. Such messages are aimed at lowering the reputation of our offices and manipulating them,” the Ministry of Finance of Turkey rejected this message.
In turn, the British newspaper “Financial Times” notes that obtaining economic dividends and investments has become the main task of the Turkish government in relations with the West. According to the publication, the authorities are “hoping to bring back foreign investors who fled the country during the economic crisis”, while the government hopes that inflows from other countries will help fill the gap.
Against this background, at the end of June, a public opinion survey conducted by the “Areda Survey” sociological service showed that slightly more than half of the respondents (52.4%) who called the solution of economic problems the main task of the government stated that the authorities are capable of coping with this task. 47.6% said that they do not expect improvement.
Turkey’s return to the Middle East is also linked to a revision of its security strategy, which currently involves active rapprochement with the Arab world to resolve regional crises and reduce Iran’s influence.
“Despite taking opposite positions on some regional issues for a decade, Turkey and the Gulf countries still share concerns about instability in Syria, Yemen, Libya and Iraq. At present, although Iran is developing diplomatic relations with the Gulf countries, and this marks the beginning of a new era in regional politics, its “reliable persons” still pose a threat to the interests of Turkey and the Gulf countries. Turkish political scientist Sinem Cengiz commented to “Arab News” that in such a situation, Turkey is trying to get rid of its “extra man” image in the region and has opened the door to restore relations with its former regional rivals. “However, this road is not paved with flowers, because Ankara will have to walk a fine line in relations with other regional players who have their own regional ambitions and pursue their own goals,” adds Sinem Cengiz.
V. VALYEV
