What are the economic and political consequences for Türkiye and Israel from the suspension of mutual trade?

By Asif Aydinli

Turkish Minister of Trade Omer Bolat stated on 3 May that trade relations between Turkey and Israel will not resume until a long-lasting ceasefire is achieved in the Gaza Strip and continuous access to humanitarian aid in the region is ensured.

Turkish President Recep Tayyip Erdogan emphasized the country's firm stance by condemning Israel's actions in Gaza and announcing the suspension of trade relations regardless of their scale. In response, Israeli Foreign Minister Israel Katz criticized Erdogan for disregarding international agreements and suggested seeking alternatives to the Turkish direction in the country's foreign trade.

The Turkish Ministry of Trade and Industry officially announced the expansion of restrictions on exports to Israel , introduced due to the worsening humanitarian situation in Palestine. These measures, initially implemented in April, cover a wide range of goods, including products made from steel and copper, dyes, building materials, machinery, and other categories.

According to TurkStat, in 2023, the trade turnover between Israel and Turkey was just over $7 billion, with Turkish exports playing a dominant role. In response to the Turkish restrictions, Israel plans to appeal to allied states and international organizations to halt investment in Turkey and to sanction Turkish products.

Turkish export figures show a cut in shipment volumes to Israel before the start of the conflict in Gaza, but an increase was observed after the commencement of hostilities. The main Turkish exports to Israel include steel, machinery, minerals, fuel, and agricultural products.

According to the Turkish Statistical Institute (TurkStat), in 2023, the volume of trade between Israel and Turkey reached just over $7 billion, with Turkish exports accounting for $5.4 billion, which is more than 70% of the total volume of trade. This is an increase compared to 2022, when exports from Turkey to Israel reached a record $7 billion, and the total trade turnover was $9.4 billion. Tel Aviv ranks thirteenth among the major importers of Turkish goods, ahead of countries such as Belgium, Bulgaria, Greece, Ukraine, Egypt, and China.

Before the start of hostilities in Gaza on 7 October, there was a gradual decline in the volumes of Turkish exports to Israel. However, after this date, statistics show a rise in figures: in October 2023, the export volume was $347 million, fell to $319 million in November, but rose to $429 million in December.

According to the World Bank, in 2021, Turkey's share in Israel's imports was 5.1%, and in exports - 3.1%. In the first quarter of 2024, Turkish exports to Israel decreased to $1.1 billion, which is 21.6% less than in the same period of the previous year.

The main goods exported by Turkey to Israel include steel, machinery, minerals, fuel, and agricultural products. According to Trading Economics, in 2022, Turkey exported to Israel $1.19 billion worth of iron and steel, $516 million - plastics, $384 million - electrical equipment, $365 million - machinery, $186 million - aluminium, $138 million - copper, and $19.5 million - organic substances.

Israeli political analyst Zeev Hanin , as reported by News.Az, noted that over the last two decades, relations between Ankara and Jerusalem have experienced both highs and lows, but the overall trend has been towards deterioration, although there have occasionally been moves towards normalization and stabilization.

"The current conflict in Gaza has once again severely worsened relations between Israel and Turkey. During this period, Ankara seeks to revive its influence as a dominant force in the Middle East, which implies weakening ties with Israel.

Despite the weakening of political and diplomatic ties, economic partnership between the two countries remains strong. Israel continues to be an important economic partner for Turkey, especially after the onset of the war in Syria, when Israeli ports became a major route for Turkish exports to Asia . Despite critical statements and demands for international sanctions against Israel, as well as support for Islamist groups, Ankara has avoided actions that might threaten its economic interests. Even during periods of greatest tension between the two countries, the trade turnover not only did not decrease but sometimes increased," Hanin noted.

Turkey has reacted strongly to statements by Israel about the need for Jerusalem to adapt to new realities. It is suggested that Jerusalem should gradually learn to manage without the Turkish market, similar to how the Israeli defence industry adapted to the absence of Turkish military orders, Hanin highlighted.

"Today, trade between Israel and Turkey looks like this: exports to Turkey account for about 2.5% of Israel's total exports, while imports from Turkey are about 8%. This means that Israel imports four times more goods from Turkey than it exports there. Despite anti-Israeli rhetoric, this imbalance has long been considered a stabilizing factor in economic relations. However, it seems that Erdogan has reached a point of no return, and discussions about downgrading economic ties with Turkey are beginning to take more concrete forms.

Israel needs Turkish cement, vegetables, construction iron, and other materials, as well as textiles. The tourism sector remains a significant economic factor. Israel has already begun to intensify contacts with other countries to find substitutes for Turkish imports and alternative markets for its exports. In the future, we can expect periods of slowdown and easing in the level of conflicts. Perhaps, the completion of the anti-terrorism operation in the Gaza Strip will lead to such developments, but it is unlikely that the previous level of strategic partnership can be restored in the near future," Hanin declared.


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