In light of Erdogan’s visit to Saudi Arabia and the steps he is taking to improve relations with the Saudis, questions are being asked about the future of economic relations between the two countries.
According to Pak Sahafat News Agency International Group, the volume of trade between Saudi Arabia and Turkey has sharply decreased during the nearly 5 years of intense political differences between the two countries. The number of Saudi tourists entering Turkey also reached a record low. Investments declined as Saudi Arabia used the economy as leverage, and economic cooperation between the two countries became paralyzed in all areas.
According to Al-Quds Al-Arabi, following the visit of Turkish President Recep Tayyip Erdogan to Saudi Arabia and announcing the beginning of a new era of relations and cooperation between the two countries after meeting with Saudi King Salman bin Abdulaziz and Saudi Crown Prince Mohammed bin Salman.
Ankara is keen to improve its economic relations with Saudi Arabia; But Riyadh’s position remains unclear, and it is not yet clear whether Saudi Arabia has made a formal decision to make rapid progress or whether it is seeking gradual progress to continue to use the economy as a “lever of pressure” against Turkey.
Relations between Riyadh and Ankara have soured since the Islamic Awakening – what the Arabs call the “Arab Spring” – and Turkish support for the Akhwan-ul-Muslimeen. However, after the death of King Abdullah, changes took place in the relations between the two countries, so that King Salman, who was in charge of the Turkish-Saudi case during his reign, took steps to improve the two countries, but this improvement in relations did not last forever, and the fleeting common interests could not bring them together forever, although political differences between the two countries over the brutal murder of Jamal Khashgeji, a journalist critical of Al-Saud’s policies, also escalated at the Saudi consulate in Istanbul; In particular, Ankara, while leaking credible information about the identities of the killers, demanded that the perpetrators be punished.
Sharp decline in trade between Saudi Arabia and Turkey
As a result of political divisions, Riyadh mainly used the economy as leverage, as it imposed unannounced bans on Turkish goods amid widespread campaigns to boycott all Turkish products, as well as large-scale campaigns against those traveling to Turkey for tourism. As a result of declining rates of trade, tourism, real estate purchasing and investment reached unprecedented levels.
Turkey is seeking the lifting of the ban on exports to Saudi Arabia. Turkey’s exports to this country will reach zero in 2021. Some news sources have reported that Saudi officials have begun gradually lifting the export ban; but it is unclear whether we will see the ban lifted completely in the coming weeks, or whether Riyadh will continue to maintain this approach.
Prior to the Riyadh-Ankara conflict, the average trade volume between the two countries was close to $ 5 billion a year, and the trade balance was clearly in favor of Turkish exports, but with the announcement of the ban, trade volume declined. Currency exchanges have fallen by 98%, while Ankara is trying to return to its previous average within a few months, which is possible if all restrictions are lifted by Saudi Arabia.
According to information obtained from the official website of the Turkish Foreign Ministry, The volume of trade in 2015 reached $ 5.59 billion, in 2016 $ 5 billion, in 2017 $ 4.84 billion and also in 2018 $ 4.95 billion. This volume of transactions decreased by 98% before 2020 and 2021.
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Continuation of Turkey’s backward margins against Saudi Arabia
While Turkey mainly imports petroleum products and various chemicals from Saudi Arabia, Saudi Arabia imports cars, engines, spare parts, iron and aluminum, as well as food, electrical appliances, jewelry, furniture and clothing.
Tourism, real estate
Turkey expects Saudi tourists to travel to Turkey, as it is a popular destination for Saudi tourists, who used to travel to Saudi Arabia before the dispute. Disputes between Turkey and Saudi Arabia escalated to the point where the Saudis launched “betrayal” campaigns, meaning that anyone traveling to Turkey or buying Turkish goods was considered a traitor to their homeland, and the number of tourists dropped to an unprecedented level.
According to data obtained from the official website of the Turkish Ministry of Culture and Tourism, the number of tourists from Saudi Arabia to Turkey in 2018 reached 747 thousand. In 2016 it did not exceed 530 thousand people, in 2015 it did not exceed 450 thousand people and in 2014 it did not exceed 341 thousand.
But the number of Saudi tourists to Turkey in 2020 decreased to 67 thousand and in 2021 to only about 10 thousand tourists.
In addition to tourism, Turkish officials are trying to revive the Saudi property market in Turkey, because before the crisis, the Saudis were among the largest buyers of real estate in Turkey, and if the barriers are removed and the number of tourists increases again, the Saudis will return to their previous rank in terms of real estate ownership in Turkey, especially in Istanbul and Black Sea cities.
Decreased investment and currency exchange
By improving its relations with Saudi Arabia, Turkey is trying to return Saudi investments to the Turkish market at the level of individuals and businessmen, as well as at the level of large companies. Turkish officials expect Saudi Arabia to invest in Turkish defense companies.
In addition, Turkish officials are working to get Riyadh and Ankara to sign currency swaps, as previously done with the UAE and South Korea, to support the stability of the Turkish lira.
Critics of the Ankara government say Turkey’s policies in Syria, Libya and other parts of the Middle East and North Africa have failed, and that the country has become increasingly isolated in recent years, as a result, Erdogan is trying to help alleviate economic and political pressures by expanding and improving relations with regional actors.
In such a situation, Erdogan desperately needs the inflow of foreign capital to be able to resist the trade deficit that has been created by the global rise in energy and commodity prices following Russia’s invasion of Ukraine.
Some experts believe that relations between Ankara and Riyadh will continue to be tactical in nature, as distrust on both sides, especially in Saudi Arabia, remains high.