As Turkish businesses grapple with high inflation and a steeply devalued currency, a recent visit to Qatar by Turkish President Recep Tayyip Erdogan raises hopes that deepening economic ties between the two countries will open new avenues of trade and investment with other Gulf States.
Qatar is already the second largest foreign investor in Turkey, with major holdings in the banking, shipping, retail and financial sectors.
While bilateral trade between the two countries is modest, Turkish traders say it increased significantly in recent years, when Qatar endured a three-and-a-half-year blockade by four Arab states that was finally eased in early This year.
Turkish construction firms, meanwhile, say Qatar has provided them with a unique opportunity to showcase work globally – an opening they hope will continue to be available as the Gulf region continues to emerge. diplomatic tensions that interrupted trade.
While many details are still unclear, Turkey and Qatar signed more than a dozen agreements during a Dec. 6-7 visit by Erdogan to Doha. Turkey’s President and Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, oversaw the seventh major summit to coordinate strategy between the two close allies.
Many areas of cooperation announced concern the sharing of know-how between government departments responsible for emergency and disaster management, diplomatic training, culture and tourism promotion, health and medical sciences, religious affairs and media training.
“Previously, these were declarations of intent, and now, on this trip, some of these general agreements have been better defined, put in place and more detailed,” said Başar Arıoğlu, President of the Qatar Business Council under under the aegis of the Turkish Council for Foreign Economic Relations. AlJazeera.
The board has more than 70 members, Arıoğlu said — companies that include construction contractors, architectural firms, real estate brokers and groups that export everything from furniture to medical products and healthcare services. There is even a Turkish company that provides meals for the Qatari army, Arıoğlu said.
A unique partnership
While Turkey and Qatar have been close on the political front for decades, the alliance took center stage in 2017, after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a blockade in Qatar. Demands for the blockade to be lifted included severing important ties with Turkey, such as removing a Turkish military base in Qatar. In response, Turkey sent cargo planes with aid for Qatar and increased its military presence in the country.
This kind of global political partnership is what distinguishes the Turkey-Qatar alliance, said Betul Doğan-Akkaş, a research associate at the Al Sharq Center for Strategic Research and a doctoral candidate in a joint degree program between the University of Qatar and Durham University.
Turkey and Qatar agreed not only to support groups after the 2011 Arab Spring, but more recently to support the same parties in major conflicts in places like Syria and Libya. After the Taliban took control of Afghanistan earlier this year, Ankara and Doha have also sought to cooperate on projects there.
“What makes their alliance unique is that their overseas policies overlap,” Doğan-Akkaş said. “We can say it’s partly because of political pragmatism for both of them, but there must also be a deep motivation to cooperate in all these different cases.”
With some $33.2 billion in foreign direct investment in Turkey, Qatar is the country’s second-largest individual investor. Qatar’s investments are spread over various sectors in Turkey. Qatar Holding owns a 42% stake, worth nearly $1 billion, in Istinye Park, one of Istanbul’s largest shopping malls. The Qatar Investment Authority has a 10% stake in Borsa Istanbul, Turkey’s largest stock exchange. Doha-based belN Media Group owns Digiturk, one of Turkey’s largest sports and entertainment broadcasters. The National Bank of Qatar owns Finansbank of Turkey, and other Qatari companies also have significant stakes in some of Turkey’s largest banks.
Since 2020, Qatar has also provided $15 billion in currency swaps to Turkey, a crucial lifeline given the volatility of the Turkish lira, which collapsed in November and lost around 45% of its value. value this year.
Part of Turkey’s economic crisis, says Doğan-Akkaş, stems from global perceptions of Turkey and President Erdogan, so just being seen as accepted and meeting regional leaders has a measurable effect on Turkey’s economy .
A visit by Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (MBZ) to Ankara last month, for example, involved genuine economic cooperation in the form of a $10 billion investment pledge. , but it also helped temporarily shore up the beleaguered lira.
“Even when MBZ went to Ankara – even though he was not someone like [Qatari Emir Sheikh Tamim bin Hamad] Al Thani, a longtime supporter of Erdogan, his meeting had a positive effect on the Turkish economy. So when someone like Emir Al Thani and Qatar in general are seen as supporting Turkey, it means a lot politically and in terms of practical financial support, in addition to their investments and contribution to trade volume.
The most important sign of the alliance, Doğan-Akkaş said, is the fact that Qatar is not only one of the biggest customers of the Turkish defense industry, but also an investor in it. this. Qatar has a 50% stake, for example, in BMC, a major producer of Turkish military transport vehicles. “When someone invests in your defense industry, you literally can’t have political problems with them,” Doğan-Akkaş said.
A global showcase of Turkish capabilities
While Turkey and Qatar have maintained significant bilateral trade for years, the volume of such trade increased significantly following the blockade of Qatar in 2017. In 2013, bilateral trade was valued at only 643 million dollars, but in 2018 it had increased to $1.63 billion, and $1.4 billion in 2020. About $1 billion of this amount was made up of Turkish exports to Qatar, mainly precious metals, furniture, aircraft parts and electronics.
“The decision to apply an economic and political embargo on Qatar led by Saudi Arabia and also supported by many countries in the Middle East has already recently steered Qatar towards Turkey in terms of exports,” said Mahmut Asmali. , President of the Turkish Association of Independent Industrialists and Businessmen (MUSIAD). ) told Al Jazeera.
Asmali said while the coronavirus pandemic had dampened some of the levels of bilateral trade, he expected new agreements signed in Doha this month to put trade back on an upward trajectory. “We believe that the product range of bilateral trade will increase in the new period, and an area of opportunity that spans many sectors will emerge.”
The blockade has allowed Turkish exports to Qatar to diversify significantly, Arıoğlu said, into a portfolio that now includes products ranging from furniture to clothing, dairy and eggs to iron and cement.
“[The blockade] was a big bonus for the Turkish economy, as Qatar turned to Turkey for much of its basic supplies and trade with Turkey boomed during the embargo period.
Although it is a positive sign that Qatar is now strengthening its ties with other Gulf countries, Arıoğlu said Turkish companies hope their services will not be forgotten. “I think Qatar has already discovered Turkish companies, so this is a good opportunity for Turkish companies to prove themselves, to prove the strength of their supply lines in Turkey and the quality of their products,” he said. he declared.
The opportunities the blockade has presented to Turkish exporters are analogous to how Qatar’s biggest infrastructure projects have allowed Turkish companies to show off their own capabilities, Arıoğlu said.
Yapi Merkezi, one of Turkey’s biggest construction companies and led by Arıoğlu, has gained in-house experience with projects like Istanbul’s Eurasia Tunnel, which connects the Asian and European sides of the city. When Qatar sought contractors to expand its metro system in Doha with the Gold Line, Yapi Merkezi had the chance to work alongside other major global companies. Unlike similar contracts in other countries in the region, the Qatar deal allowed Yapi Merkezi to bring a large number of its own engineers and other workers to the project, allowing the company to rely on his expertise.
Arıoğlu said that today only a handful of infrastructure projects continue in Doha as the city prepares for the 2022 World Cup, but among these is North Field East, the largest project in liquefied natural gas (LNG) in the world. Turkish company Tekfen said this month it had been chosen as the subcontractor for a tender on a project worth more than $400 million.
This kind of opportunity, Arıoğlu said, helps propel Turkey’s capabilities onto the world stage. “If you are in Qatar, you are visible to the world,” he said, “because we compete with world-class international contractors.”