Alwaght- Having sunk his country in economic and security crises with his ambitious regional policies over the past decade, Turkish President Recep Tayyip Erdogan in his last presidential term has put aside escalatory approach and embraced policy of interaction with neighbors and regional states in a bid to salvage his country’s crises. To this end, the president will have a three-day tour of Saudi Arabia, Qatar, and the UAE July 17-19, his office announced.
The visit to the Persian Gulf states comes as Turkey since last year started rapprochement process with Arab countries, and by further boosting the relations with the Persian Gulf monarchies, Erdogan after his reelection is using their capacities to strengthen Turkey's infrastructures.
In his new government, Erdogan is focusing on the UAE as an economic weight, and recently multiple visits have been exchanged between officials of the two countries. Minister of Treasure and Finance Mehmet Simsek and Vice President Cevdet Yelmaz later in June visited Abu Dhabi and said that they have walked a long way in advancing technical work of the agreements and a comprehensive pact is possible. Saying that in the forthcoming days a big Turkish delegation will visit the UAE, Simsek said that with complete of the job, the framework of Erdogan’s visit to the Arab country will be determined.
It is noteworthy that Mohammed bin Zayed, the ruler of the UAE, visited Turkey last month and discussed with Erdogan strengthening strategic relations and promoting comprehensive economic partnership. The two countries reached an agreement to increase bilateral trade to $40 billion within 5 years. Also, in March, Ankara signed an agreement to double its trade volume with the UAE, a move underscoring the growing economic ties between the two countries.
Magnetizing Arab capital for Turkish economy
The biggest challenge Erdogan’s administration is facing is economic crisis whose settlement takes huge capital, and the Arab petrodollars are the best choice to this end.
According to some diplomatic officials, the Turkish government plans to attract investments worth $30 billion from the Persian Gulf countries in long run for energy, infrastructure, and defense sectors through various channels, including privatization and acquisition. The UAE, Saudi Arabia, and Qatar have provided the currency needed by the Central Bank of Turkey through swap contracts and direct deposit in the past year, and Erdogan's expected trip is to improve these relations.
Erdogan's unorthodox policy to keep interest rates low at the expense of inflation has worried many Western investors, and for this reason, the Westerners have withheld their investments from this country in the past three years. Therefore, the Persian Gulf countries have emerged as potential candidates to fill the investment gap. During his regional tour, Erdogan can persuade the Arab rulers to have an extensive presence in the Turkish market.
Turkey has a current annual deficit of between $25 to $30 billion, and if billions in Arab capital are injected in its economy, its budget deficit will be cut and its economic boom guaranteed.
Experts suggest that due to the continued slump in the value of the Turkish lira against foreign currencies, which has brought the economy to the brink of bankruptcy, Erdogan will try to sign agreements worth $40 billion with the UAE.
The renewed Turkish economic cooperation with the UAE has started over the past months, but there are procedures and due to show of interest by the Arab countries for investment in Turkey, technical details should be first completed and then go to signing stage.
The volume of joint investment with the UAE is estimated between $30 and $40 billion in transportation, agriculture, defense industry, and energy. This amount of investment will make the UAE the biggest partner of Turkey in the region. Currently, the annual trade volume of the two countries is close to $10 billion, and Ankara and Abu Dhabi hope to reach $40 billion by the end of Erdogan's administration.
The Persian Gulf states were waiting for Turkish election results and transparency of governance before taking any new steps to bolster ties with Ankara. This means that election results have had a key role in acceleration of Turkish de-escalation with regional states, and Erdogan new government's economic orientation has significant influence on Ankara's foreign relations.
Erdogan has learned from the past and is determined to follow a more moderate policy in the region. After all, Turkey has not benefited from the tensions with the Arab states and to beat the economic crisis, it needs cooperation with Arab partners to close his presidency with elimination of home problems.
Turkey has been struggling with economic crisis since 2019, with inflation rate last year hitting record 85 percent. The value of its lira hit its lowest level against foreign currencies in the past two years, and after the presidential election, its downward trend continued and lost 20 percent of its value. Therefore, Erdogan plans to assuage the crisis in the next 5 years.
The magnitude 7.8 earthquake in February added fuel to fire, doubling the country's crises. Indeed, Erdogan is grappling with massive financial crises and to overcome them, he is calling for Arab help.
Concerning Qatar, the path is clear and the two countries are strategic partners. Their partnership dramatically increased since 2017 when Turkey sent to the Arab emirate troops to block possible coup amid outbreak of Doha crisis with Saudi-led bloc.
Although Qatar, as an ally of Turkey, has provided a lot of aid to Erdogan's government in recent years and invested about $32 billion in the tourism and transportation sectors in addition to multi-billion grants, Turkey is thirsty for new financial resources, and the UAE and Saudi Arabia can make proper creditors helping Turkey.
Despite the fact that relations with Saudi Arabia were strained over the past decade, after the détente last year, their bilateral ties witnessed an improvement. According to the Saudi statistics, trade with Turkey grew to $5.9 billion in 2022, and they set the volume at $10 billion in the next few years. A few months ago, the Saudi Fund for Development announced signing an agreement to deposit $5 billion with the Central Bank of Turkey to provide assistance in the face of earthquake fallout.
Saudi Arabia voiced its readiness to invest $18 billion in Turkey's infrastructure after the meeting of Crown Prince Mohammed bin Salman with Erdogan on the sidelines of the 2022 World Cup in Qatar. Although no action has been taken in this field so far, Erdogan's upcoming trip will undo the knot.
Under the ‘Turkish century’ strategy, Erdogan has vowed to transform his country into the regional financial hub and with the decline of the US hegemony, he began to mend ties with Arab world, especially the Persian Gulf monarchies.
Arab rulers know very well that Turkey has substantial economic potentials, particularly in tourism, and are seeking to control a chunk of the Turkish market, and given the path set, the Persian Gulf states will be among top partners of Turkey by end of Erdogan's presidency.
