Turkey removes Israel from export target list

Recep Tayyip Erdo?an and Benjamin Netanyahu credit: Shutterstock
Recep Tayyip Erdo?an and Benjamin Netanyahu credit: Shutterstock

"Globes" asks why Turkey's President Recep Tayyip Erdogan has taken this step and discusses to what extent it will influence trade between the two countries?

Since the outbreak of the war in Gaza, Turkey has taken diplomatic measures against Israel including supporting the charges in the International Court of Justice in The Hague. But this week Turkey has moved things up a gear by acting on the economic front to remove Israel from its list of export target countries.

This latest move comes even though Israel was Turkey's 13th largest market for exports in 2023, with goods exported worth $5.42 billion. The decision comes after years in which there have been ups and downs in diplomatic relations but no economic restrictions were imposed by Turkey. Why has Turkey's President Recep Tayyip Erdo?an taken this step and will it influence trade between the two countries?

By its decision to remove Israel from the list of export target countries, Turkey will stop encouraging its residents to subsidize trade and support businesses working with Israel. The decision also sends a message to Turkish businesses that if they trade with Israel, the state will not help them.

Another significance is that the Turkish Ministry of Trade will halt support for joint conferences with Israel. This is a step that thwarts the ability of the Turkish trade attaché in Israel to encourage contacts between the two countries.

Were there any other changes on Turkey's list?

Yes. At the same time as the measure against Israel, Turkey removed Iraq, Sudan, Mozambique and Congo from the list. The considerations in removing Iraq, Turkey's third biggest export market, is it is believed due to disagreements with Baghdad over military operations against the Kurds in Northern Iraq. In Sudan, Erdogan is looking to harm the government there. Turkey has also added countries to the export target list including Algeria, a close friend of Hamas.

What led Erdogan to take this step?

Erdogan, at least according to the Turkish constitution is in his last term of office and he is thinking about the political situation after the war in Gaza. If before the Israel-Hamas war, he tried to advance his political power through cooperation with Israel and turning Turkey into a leading player in transporting natural gas, now he understands that his voter base and the supporters of political Islam in general in his country will perceive the collapse of Hamas rule in Gaza as a failure of the president himself. Therefore, Erdogan is trying in every way to get Israel to stop the fighting, or at least to be perceived as the one who did everything in order to achieve this.

What is the extent of trade between Israel and Turkey?

As said in 2023, Turkey exported goods worth $5.42 billion to Israel, down from $7 billion in 2022.

According to Israel's Central Bureau of Statistics, Israel exported goods worth $1.5 billion to Turkey in 2023, down from $2.5 billion in 2022. Turkey was among seven countries that saw a big fall in Israeli exports in 2023 along with Malaysia, Albania, Taiwan, France, the UK, and Canada.

What does Israel import from Turkey?

More than 50% of Israel's exports from Turkey are in the quarrying, machinery and metal category, mainly for use in Israeli construction. Food comprises 8% of Turkey's exports to Israel.

What alternative markets does Israel have and will the measures become more severe?

SlickChain digital supply chain platform founding partner and CEO Elad Barshan, an expert in international supplies, told "Globes," "Everything has an alternative. The problem is price and availability." He says Israel's alternatives are trade with East Asia, which has much longer supply times, or with Europe, where prices of goods are much higher than in Turkey.

Barshan says, "Without the line from Turkey, the shipment could be extended to a 60-day route from East Asia. If we move to Europe, then the problem is the expensive prices." In his assessment of the possibility of Erdogan intensifying his measures, he says, "The heads of Turkish industry will not let Erdogan intervene. There is a terrible economic situation there, extremely high interest rates. Turkey needs foreign currency, and I don't see any step beyond ending the subsidy."

Will the Turkish economy be hit by the decision?

The answer is probably no. In 2023 Turkey broke records with exports totaling $255.8 billion, up 0.6% from 2022. The trade deficit was high at $106 billion but that is a reality that Ankara, which has no energy independence, is used to.

Have Turkish ships continued to call at Israeli ports during the war?

Despite Erdogan's anti-Israel policy, the official figures from Turkey's Ministry of Transport show that since October 7, 701 Turkish ships have sailed to Israel - an average of eight ships per day. Of these 480 ships sailed only between Turkey and Israel, while 221 ships reached Israel via Turkey.

Who can replace Israel as an export market for Turkey?

In 2023, Turkey's exports to the UAE jumped $2.7 billion to $5.92 billion, representing 3.4% of Turkey's overall exports. The second biggest jump in exports was to Russia with exports up $1.78 billion last year to $9.42 billion. The third biggest jump in Turkish exports last year was to Saudi Arabia with exports climbing $949 million to $2.27 billion.

Was the writing on the wall?

It has definitely been an ongoing process, whether reflected in the arrest of soccer player Sagiv Jehezkel, or the actions of the Turkish Ministry of Trade. About three weeks ago, for example, the ministry published a statement in which it was claimed that trade "is not done with Israeli Jews. Trade with Israel is done for the sake of 2.2 million Israeli citizens of Arab origin and for those who live under Israeli occupation."

In which export areas is there competition between Israel and Turkey?

There is competition between Israel and Turkey in the defense industry. Israel's defense exports broke a record in 2022, with contracts amounting to $12.5 billion. Elbit Systems jumped to the 21st place in Defense News' list of the 100 largest defense companies in the world, with Israel Aerospace Industry (IAI) (29th) and Rafael (34th) also moving up. Turkey also broke its defense export record last year with contracts worth $4.4 billion. Turkey had four companies in the Defense News ranking.

Another rivalry is for regional control of goods. Turkey perceives itself as the regional "hub" in all areas, and therefore was outraged last September, when US President Joe Biden presented his proposal for a logistics corridor between Greece and India - through Israel, Jordan, Saudi Arabia and the UAE - bypassing Turkey.

This led Ankara to re-promote a plan for its own transport corridor between Turkey and Iraq, from there to the Persian Gulf and Indian Ocean. However, since Turkey has now removed Iraq from the list of export targets, it seems that this plan will not be promoted soon.

What about Israeli tourism to Turkey?

Turkish Ministry of Tourism figures show that in November 2022, 68,000 Israelis visited Turkey, while in November 2023 the number dropped to just 1,800. Between January and November 2023, 762,000 Israelis visited Turkey compared with 780,000 over the same period in 2022.

Published by Globes, Israel business news - en.globes.co.il - on January 23, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Recep Tayyip Erdo?an and Benjamin Netanyahu credit: Shutterstock
Recep Tayyip Erdo?an and Benjamin Netanyahu credit: Shutterstock
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018