Turkey Pulse

How Turkey is losing a top trade partner

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Article Summary
Turkey is experiencing a serious but underreported crisis with its biggest export market in the Gulf.

A sensational news report appeared in the Turkish press last week. The journal Gercek Hayat claimed that the United Arab Emirates' administration was involved in a secret, multinational operation to topple Turkey's government and even promote a military coup. The report from a sister publication of impassioned Turkish administration supporter Yeni Safak media group — which specializes in sensational and usually unsubstantiated reports — didn’t have much of an impact on Turkish public opinion.

Most Turks believe that the Gulf countries are dedicated supporters of the ruling Justice and Development Party (AKP) and President Recep Tayyip Erdogan. According to data from the Stock Market Council of Turkey, before every election in Turkey, Gulf emirates send billions of dollars to Turkish financial markets, contributing significantly to sustaining Erdogan’s economic success. The Gulf states invest extensively in the real estate and media sectors, to which Erdogan pays particular attention.

On Dec. 1, Abu Dhabi shocked Ankara when UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan denounced Turkey’s downing Oct. 24 of a Russian plane. He later retracted his statement.

Though the Yeni Safak report was not widely acknowledged, it did give some credence to opinions that relations between Ankara and Abu Dhabi are not as good as people may think.

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The reality is, there is genuine tension behind closed doors between the countries. For example, the UAE has not appointed an ambassador to Ankara for about a year. UAE diplomatic sources also noted the UAE has delayed the appointment of Turkey’s ambassador to Abu Dhabi by withholding the necessary accreditation for eight months.

The UAE is vitally important to Turkey and Turkish business. The UAE is Turkey’s second-largest market in the Middle East after Iraq and ninth-largest overall export market. The emirates buys on average $4.6 billion worth of goods and services annually from Turkey. Turkey can't afford to lose such an important market, especially while its economy is shrinking and exports are declining.

Turkey’s exports to the Gulf countries have increased substantially over the past three years, except to the UAE. The same is true for the tourism sector. Although there has been a major increase in the number of tourists coming from the Gulf countries, the same isn’t true for the UAE. All these numbers suggest a major problem between Ankara and Abu Dhabi.

Veysel Ayhan, an associate professor at Abant Izzet Baysal University and chairman of the International Center for Middle East Peace, said relations between Turkey and the UAE began to sour after the 2013 coup in Egypt. While Erdogan opposed coup leader and now-President Gen. Abdel Fattah al-Sisi, Gulf countries led by Saudi Arabia strongly supported Sisi.

‘‘Most Gulf countries [oppose] the Muslim Brotherhood ousted by the coup in Egypt. Turkey’s taking a position on the side of the Brotherhood was not received well in the region. We know that there are deep differences of opinion between Erdogan and the UAE government. This may well have spilled over to economic relations.’’

Turkish maritime sources told Al-Monitor that for the past six months Turkish companies have been encountering myriad problems in their efforts to use the UAE for their trade with the Middle East and Asia. Transal Maritime officials, who have been sending many ships to the UAE, confirmed that since Nov. 24 they have been experiencing problems with crew visas. Some smaller Turkish maritime companies said they are having similar problems. Transal officials said they have asked the Turkish Foreign Ministry for a speedy solution to the problem.

A Turkish manager who works in the UAE but did not want to be identified said the problems in doing business with the UAE have been going on since the coup in Egypt. "Work is moving much slower compared with the old days. We are facing serious problems with visas and residence permits," the manager said.

Erdogan and his AKP, which has ruled Turkey for 14 years, have tried hard to maintain good relations with oil-rich Arab emirates. Erdogan, who is never sparing in his harsh criticism of Sisi, has not said one negative word about Saudi Arabia, Kuwait and the UAE, which are major financial backers of Sisi.

The pro-government media controlled by Erdogan until now did not report much about these souring relations. But last week's story about a coup plot — while questionable — could well signal that a change may be in the offing.

Should the tension escalate, Erdogan will have to make a choice between its second-largest trade partner in the Middle East or the Muslim Brotherhood that he identifies with.

Figures are quite illustrative. Turkey’s trade relations with Gulf countries follow a path parallel to diplomatic relations. According to official statistics, Turkey had exported $12.8 billion to regional countries in 2013, but the outlook changed in 2014 when that figure regressed to $9.1 billion. In the first 11 months of 2015, the total further declined to $8.8 billion.

How will this tension — not openly discussed, but seriously disturbing the Turkish business world — be resolved?

Ayhan thinks the crisis will be solved when regional dynamics change.

“Gulf countries are seriously concerned with the return of Iran to the world's politics and economy," Ayhan said. "Undoubtedly, it is the Saudis who are most upset. They are exerting major efforts to restore friendly relations between Erdogan and UAE officials. I believe there will be some changes, which may also mean settling the problems with the UAE."

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Found in: united arab emirates, trade, recep tayyip erdogan, gulf emirates, exports, ankara, abu dhabi

Ufuk Sanli is a Turkish journalist who served most recently as the director of the economics division of Millet. He has also worked for Turkish dailies Sabah and Vatan, the TGRT television station and Aksiyon magazine covering finance and energy issues. Sanli is the founder of the finance news site Uzmanpara.

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