Turkey and Israel will sustain trade relations
Turkey's recent lowering of diplomatic ties with Israel will not affect bilateral trade relations, business representatives and experts say.
By Esra Serez for SES Türkiye in Istanbul -- 20/09/11
Stormy diplomatic relations between Turkey and Israel are not likely to have a major impact on private businesses. Meanwhile, Turkey's plans to develop closer economic ties with other Middle Eastern countries will not make up for the country's trade ties with Israel.
"We undoubtedly want this [diplomatic] crisis to end as soon as possible," Mustafa Mente, deputy secretary general of the Turkey Exporters Assembly (TIM), told SES Türkiye.
Noting that previous tensions between Turkey and other countries such as Italy, France and Greece had not spoiled trade relations, Mente said he was confident a solution to the crisis with Israel would be found.
"We are closely following Turkey-Israel relations. As we have announced earlier, we do not plan to stop our investments [in Israel] at this stage. Our partners in Israel also think the same; we are following the events together," Sinan Ak, the deputy general manager responsible for finance at Zorlu Energy -- a subsidiary of Turkey's Zorlu Group, told SES Türkiye. The company is currently running four natural gas co-generation power plant projects in Israel.
Diplomatic tension between Turkey and Israel has so far not been reflected in trade relations among private businesses in both countries, and there is a very positive attitude on the part of Israeli businesses to continue to sell and invest in Turkey, Uriel Lynn, president of the Federation of the Israeli Chambers of Commerce, told SES Türkiye.
However, the current crisis has led to a certain change in businesses' psychology, he added.
"People are a little worried; they do not know how things will develop," Lynn said, adding that a further escalation of the crisis could change this positive attitude. "[Israeli] private businesses are just watching right now."
"There is no need for this escalation. Both our governments should get down from this high tree and [sit down and talk] like two mature people," Lynn added.
Bilateral trade volume was $3.44 billion in 2010, with Turkey exporting $2.08 billion to Israel and importing the remainder from the country, according to official data from Turkey's Foreign Trade Under-secretariat. The figure was $2.56 billion between January and July this year, 28.4% larger than trade volume in the same period last year.
Although Turkish ministers admit Turkey and Israel are important trade partners, Turkey recalled its chief consultant to Tel Aviv back to Ankara last week. At the same time, Prime Minister Recep Tayyip Erdoğan said Turkey is aiming to increase the trade volume with Egypt to $5 billion, compared to about $3.15 billion in 2010.
It will not be easy for Turkey to spoil trade relations with Israel, and it would hardly compensate for a possible downgrade of trade relations with Israel by building new partnerships with Arab Spring countries, such as Egypt, Esen Çağlar, a policy analyst at Turkey's Foundation for Economic Policy Research, told SES Türkiye.
Turkey's commercial relations with Israel are an extension of the country's trade relations with the EU, he explained.
Turkey signed a free trade agreement (FTA) with Israel in 1996 in the framework of the custom union agreement with the EU.
"Cancelling an FTA is not easy. Moreover, the quality of trade relations [with Israel] has changed in recent years: in the past iron and steel were the most important export items from Turkey to Israel, now it is [automotive and] electric cars," Çağlar said.
He explained that while Israel was purchasing electric cars and other high value added goods from Turkey, other Middle Eastern countries lacked the infrastructure to do so. In the case of Egypt, Turkey could compensate for the loss of trade relations with Israel for low-end products such as textiles and raw materials, he said.
"However, these would not substitute for high-end export products from Turkey."