Turkish, Israel firms circumvent boycott

Port of Gemlik in Turkey  credit: Shutterstock
Port of Gemlik in Turkey credit: Shutterstock

Turkish exporters are shipping goods to Israel via third countries. The Turkish government, however, is looking for broader political gains.

The "Globes" report last Thursday of the decision by Turkey to halt all exports and imports to and from Israeli ports made waves in Israel. But the dismay was not just on the Israeli side. The Turkish business community has also responded angrily to this unprecedented step in relations between the two countries.

In the face of this extraordinary step, those involved in trade on both sides are already working on ways of circumventing it, while it is not yet completely clear whether President Recep Tayyip Erdogan of Turkey plans additional measures against Israel down the line.

1. Exports continue

After the export of 54 items from Turkey to Israel was banned by the Turkish government a month ago, Israeli importers already began using intermediate destinations such as Slovenia to transfer goods from Turkey to Israel. Now, as the governments of the two countries exchange blows, importers and exporters on the two sides are teaming up to find solutions.

The trend that began a month ago started to expand considerably at the weekend. Instead of an Israeli port being stated as the destination on the bill of lading, goods are being transported to a third port and from there to Israel. The Turkish government might wish to prevent this, but the extent of Turkish exports all over the world makes it hard to do so.

The Turkish customs services is considered one of the toughest in the world when it comes to inspections, but it’s hard for it to investigate in depth what the actual final destination of a consignment is. So Turkish exporters ship goods to a third port where they are reloaded onto another ship with a new bill of lading and sent to Israel.

This method can cost double or more the regular cost of shipping between Turkey and Israel, but it gives fairly high assurance of the flow of goods continuing. Turkish goods with a final destination of Israel have continued to move in the past few days, even if in lower than usual volumes, to ports in Bulgaria, Greece, and Egypt among other places, from which they eventually find their way here.

2. Criticism in Turkey

As mentioned, it wasn’t just in Israel that the news of the halting of trade with Turkey caused consternation. Despite crises in diplomatic relations between the two countries over the years, commercial ties have remained stable.

Turkish and Israeli sources told "Globes" that there was considerable anger in commercial circles in Turkey over the government’s move. Israeli importers are receiving the message from their suppliers that the decision by the Turkish Ministry of Trade is indeed in force, and that the hope is that negotiations on a ceasefire in the Gaza Strip will result in an agreement, which will lead to cancelation of the decision, as the Turkish government has declared. "Turkish exporters are furious with the president," an Israeli source familiar with the matter told "Globes".

Meanwhile, there is panic at some Turkish factories, Turkish and Israeli sources say. Some Turkish industrialists built their business plans on the basis of exports to customers in Israel, who in some cases represent as much as 80% of their customer base. Along with this, the Turks have been suffering from a continuing currency crisis. In the past four years, the value of the Turkish lira has fallen from seven to 32.3 to the US dollar. "Erdogan acted against Turkey’s economic interests," a Turkish exporter told "Globes".

In 2023, Israeli imports from Turkey totaled $4.6 billion, according to the Central Bureau of Statistics, despite the outbreak of the Swords of Iron war, and in a year in which Turkey had a trade deficit of $106 billion (10% of its GDP). In other words, Erdogan’s move harm’s the interests of his country and its traders in accumulating foreign currency. Predictably, none of this finds expression in the main Turkish media, which toe the government’s narrative line.

Despite Erdogan’s policy, Turkish businesspeople expressed optimism talking to "Globes" last week that "this is a negative wave that will pass", and that, as with the crisis over the Mavi Marmara incident, for example, the war will end and everything will go back to routine.

3. A slice of the rebuilding of the Gaza Strip

Given all the negative effects of Erdogan’s anti-Israel step, the question arises, what does the Turkish president actually want? First of all, Erdogan identifies with the Muslim Brotherhood, and would presumably be happy to see the Hamas terrorist organization continue to govern the Gaza Strip, and even lead all of the Palestinian Authority territories from Ramallah. In addition, the Turkish government sees the halting of trade with Israel as a lever to bring pressure to bear for an end to the war.

The Turks are applying this lever because they are involved in the negotiations between Israel and Hamas - as Minister of Finance Bezalel Smotrich mentioned a few days ago, when he criticized this state of affairs - but they are a long way behind the main intermediaries. Qatar, and lately even more so Egypt, continue to dictate the tone in the talks on a ceasefire, while Turkey is hardly in the picture.

Turkey is not a significant payer in the talks among other things because Israel has drawn lessons from previous crises with it, and brought its diplomats home at an early stage. This left Erdogan and his ministers unable to summon them for reprimands or take other steps that might serve their political interests. In May 2018, Turkey expelled Israeli ambassador Eitan Na’eh after demonstrating Palestinians were killed in clashes with Israel troops on the Gaza Strip border.

Another aim is participation by major Turkish companies, whose owners are close to Erdogan, in rehabilitating the Gaza Strip. The Turks are keenly aware that while the moderate Sunni countries, the EU, and the US are discussing "the day after", they are being excluded. The rebuilding of the Gaza Strip, which three months ago was estimated will cost at least $18.5 billion, will thus bring no economic, political, or diplomatic benefit to Erdogan. He therefore seeks some way of participating that will profit the major Turkish companies.

Published by Globes, Israel business news - en.globes.co.il - on May 6, 2024.

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

Port of Gemlik in Turkey  credit: Shutterstock
Port of Gemlik in Turkey credit: Shutterstock
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