Erdogan is counting on Gulf petrodollars to revive his economy

On the flight back from Saudi Arabia on Saturday, Recep Tayyip Erdogan was particularly optimistic. He had not been to the kingdom of Al Saud since 2017. Five long years in which the leaders of the two countries tore apart and made public their estrangement before coming closer late last year. “I believe my visit will usher in a new era,” the Turkish president told reporters on the presidential plane. We have agreed with Saudi Arabia to reactivate great economic potential.”

During his three-day visit, the head of state met King Salman and Crown Prince Mohammed bin Salman to discuss regional and bilateral issues at a time when the United States is withdrawing from the region. In the coming weeks, employers’ organizations and chambers of commerce from both countries will meet to restart activities.

These have clearly deteriorated as a result of numerous diplomatic disputes over Syria, Libya, Sudan and the Horn of Africa. Ankara also supported Qatar during the blockade of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain. Riyadh labeled the Muslim Brotherhood a terrorist organization in 2014, while Erdogan’s party AKP is close to the organization.

Khasoggi case. Relations became odious after the murder of journalist Jamal Khashoggi by Saudi agents at the Saudi Arabian consulate in Istanbul on October 2, 2018. Turkey made a soap opera in media close to the government before repeatedly asking Saudi officials to intervene in the investigation. to bring justice.

In retaliation, Riyadh had his textbooks changed, called the period of the Ottoman Empire “the occupation” of the kingdom, banned the broadcasting of highly popular Turkish soap operas, encouraged his tourists to avoid his partner’s beaches and imposed an unofficial embargo on his Products. In May 2019, Riyadh Governor Faisal Bin Bandar set a good example by refusing a Turkish coffee offered to him.

Trade has thus risen from $5.6 billion in 2015 to $3.5 billion in 2021. But the trade balance has become especially unfavorable for Turkey, which exported only $886 million worth of products last year but still needs hydrocarbons from the kingdom. has. In fact, with the proliferation of sanctions against Russia, Saudi oil is of particular importance to the country’s energy supply.

The resumption of relations between Qatar, a key partner of Turkey, and the other Gulf countries began to ease in 2021. Long and discreet consultations followed before the transfer of the trial of the accused in the murder of Jamal Khashoggi to Saudi Arabia, formalized in April. It was a prerequisite for the resumption of normal relations as the Saudi Crown Prince was deeply attached to his international image while being first in King Salman’s succession order.

A sign that the negotiations were on the right track, Turkish exports to the kingdom rose by 25% in the first quarter of 2022. By the end of the year, much to the delight of the businessmen, they should finish strong. Before the crisis between the two countries, there were more than 200 Turkish companies operating in the kingdom.

“Turkish exports are likely to increase in sectors such as automotive, machinery, textiles, building materials, defense industry, software, chemicals…,” predicts Bahadir Kaleagasi, president of the Think Franco-Turkish Tank Institut du Bosphore. The Turkish president is also trying to place his proven drones and tanks in the Middle East. An opportunity as the US administration has shunned Riyadh since Donald Trump’s departure.

investments† Rising oil prices are expected to generate more than $400 billion in revenue for the kingdom this year. Enough to resume investment in Turkey. Prior to Khashoggi’s assassination, they had reached more than $2 billion and Turkey’s in Saudi Arabia was estimated to be around $660 million. The Saudis owned 3,500 properties in Turkey. “The tourism and real estate sectors are interesting for investors from Saudi Arabia,” continues Bahadir Kaleagasi. Turkey’s return to the European integration process, possibly after modernizing the current customs union, would further enhance its economic attractiveness in the eyes of its partners outside Europe, especially in the Gulf States. †

The influx of Saudi funding could help Erdogan alleviate the economic woes of his compatriots. Poor monetary management and international uncertainties have pushed inflation to 61% over the past year, while the lira has fallen by 45%. Results that weigh on households and generate social discontent. A year before the presidential election, the Turkish president’s popularity score is at its lowest.

With his back to the wall, Erdogan is trying to get back together with his rivals from Israel, Egypt, the United Arab Emirates and Saudi Arabia as part of an overall effort to restore Turkish influence and secure foreign investment.

The recent rapprochement with the United Arab Emirates has resulted in a $10 billion investment commitment. Emirati funds and companies close to Abu Dhabi’s royal family have expressed interest in investing in health, finance, new technologies and industry. This rapprochement has also resulted in a $5 billion currency exchange aimed at supporting the Turkish lira. In talks with Saudi Arabia, analysts say Turkey is also seeking a similar deal, which would increase its reserves.

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