Seven weeks after being re-elected as Turkey’s president for five more years, President Recep Tayyip Erdogan embarked on a three-day tour of Saudi Arabia, the United Arab Emirates, and Qatar from 17 to 19 July. A sizable business delegation of more than 200 Turkish businessmen accompanied Erdogan on the tour.
Erdogan’s tour was preceded by preparatory trips by Finance Minister Mehmet Simsek to the UAE, Qatar, and Saudi Arabia on 21 June, 9 July, and 12 July, respectively, along with other officials. Simsek met with high-ranking officials and businessmen to explore opportunities for economic and financial cooperation and areas of bilateral cooperation, particularly in the investment, energy, and defense sectors—the same areas of focus for Erdogan’s tour.
Confluence of Interests
Erdogan’s election to a third term as Turkey’s president strengthened optimistic expectations for the continuation of the current rapprochement and reconciliation between Turkey and the Gulf Cooperation Council (GCC) states, which were among the first to congratulate Erdogan on his re-election, and their high-level representatives attended his inauguration ceremony and oath-taking. The new term offers a chance to improve ties between the two sides on a range of political, military, and economic fronts.
In broad terms, Erdogan’s recent trip aimed to accomplish the following objectives:
Unleashing Economic Potential: Turkey has realized that collaborating and integrating economically with Gulf states, which enjoy large financial surpluses, will benefit its economy. The Gulf region stands out as a crucial partner for Turkey in areas of investment, trade, and energy to support its ailing economy, characterized by waves of currency depreciation that have seen a decline of about 90 percent over the past ten years and a budget deficit that reached about 10 percent of GDP by the end of the year, pushing inflation to about 38.2 percent. Since improving the faltering economy was at the top of Erdogan’s business agenda during his third term campaign, his administration acknowledged that economic interests should trump ideological differences.
Gulf investments and financial assistance have been crucial in recent months in easing pressure on the Turkish economy and increasing its foreign exchange reserves. Additionally, economic backing from the Gulf states before the elections also helped Erdogan’s re-election prospects. For instance, in March 2023, Riyadh transferred $5 billion to the Central Bank of Turkey. The appointment of Mehmet Simsek as Minister of Finance paves the way for the development of Turkish-Gulf economic relations during the next phase, given his solid trade ties with the Gulf countries and his promise to pursue reliable and market-friendly economic policies, which were well-received by Gulf investors,.
In this context, Erdogan’s recent trip was primarily focused on strengthening economic ties with the GCC countries, luring more foreign direct investment, securing infrastructure contracts, promoting tourism, and securing funding for the earthquake-affected southern regions’ reconstruction, which the Turkish government estimates will cost about $100 billion. Further, Erdogan wants to investigate the business opportunities brought about by the GCC states’ strategic visions in areas like infrastructure, renewable and green energy, technology, and defense.
These objectives fit in with the Gulf’s current emphasis on development and economic diversification issues, particularly with regard to significant regional economies like Turkey. On the one hand, Abu Dhabi sees enhancing trade and investment ties with the developing Turkish economy as a necessary component of its ongoing national strategy to pursue and promote free trade in order to achieve stability, solidify its place in global supply chains, and open up new markets. On the other hand, as part of Vision 2030, Riyadh is pursuing “checkbook diplomacy” with Ankara, which refers to the use of financial assistance to gain political influence. This entails establishing credit lines with the Central Bank of Turkey, making investments in state-owned properties through the Turkey Wealth Fund, making investments in publicly traded, export-oriented businesses, and making substantial real estate investments.
For its part, Ankara sees bright prospects for cooperation and economic integration with the three Gulf countries that Erdogan visited in the areas of energy, trade, digital technologies, mining, health care, nutrition, agriculture, real estate, construction, and tourism, as well as expanding forms of joint bilateral investments to include the sale of state-owned assets, as is evidenced by Turkey’s negotiations with Gulf countries to sell the operating rights for Alsancak Port in the Aegean city of Izmir, boosting direct investments, and signing merger and acquisition agreements in light of the development of the two countries’ economic ties. During the visit, agreements were signed with Saudi Arabia in the areas of direct investment, the defense industry, energy, and communications, as well as deals worth approximately $50.7 billion with the United Arab Emirates.
• Creating Defense Partnerships: As part of its efforts to make its military sector one of its main export engines, Ankara seeks to reopen the Gulf market to defense companies. By doing so, it hopes to capitalize on the Gulf states’ propensity to diversify their defense partners in light of the waning confidence in Washington’s ability to continue to be a major security provider for the region.
Due to Turkey’s limited military presence in the Gulf and its confinement to the military base in Qatar, lack of progress on Erdogan’s 2015 proposal to establish a military base in Saudi Arabia, and the growing security concerns related to Iranian-backed militias, the Turkish defense industry stands out as a potential partner that can meet some of the defense needs of Gulf states, especially with regard to drone technology that allows them to defeat Iranian drones and face threats brought on by local non-state actors targeting oil and civilian facilities, and given the desire of Gulf states to diversify their military suppliers and the absence of political conditions in Turkish deals as opposed to those in the West.
The UAE and Turkish Baykar Defense signed a contract in 2022 to buy 120 Bayraktar TB2, medium-altitude long-endurance unmanned combat aerial vehicles, of which only 20 were delivered to Abu Dhabi. Saudi Arabia also expressed interest in Bayraktar drones, as well as other cutting-edge ground defense systems and defense technologies. Officials from the Saudi Arabian Military Industries Company discussed cooperation in this area with the Turkish defense company BMC. Erdogan’s visit saw the signing of a contract between the Saudi defense ministers and Baykar Defense to purchase the Bayraktar TB2, a deal anticipated to be worth more than $1 billion. Qatar was the first Gulf state to express interest in Bayraktar Turkish drones in 2018, when it signed a contract with Baykar Defense to import six Bayraktar TB2.
The scope of Turkish-Gulf defense cooperation was not limited to these countries but also included Kuwait and Oman. The Defense Ministry of Kuwait and Baykar signed a $370 million contract in January 2023 for the purchase of 18 Bayraktar aircraft. In 2012, the Omani and Turkish defense ministries reached an unspecified preliminary agreement regarding the purchase of Bayraktar drones.
• Managing Controversial Issues: Economic and political ties are intertwined to an extent, with the relative health of each influencing the other. As such, the expansion of economic ties between Turkey and the Gulf opens the door to greater cooperation and understanding with regard to the complex regional issues, particularly the Syrian and Libyan files, in which the two sides had previously taken opposing positions. The Turkish-Gulf rapprochement increases hope for political agreements and understandings that take into account the interests of both parties. Given their shared desire to contain the Iranian presence, which threatens the interests of both of them, and the fact that Syria is regarded as an economic gateway for Turkey towards the Gulf and vice versa, the Syrian crisis stands out as significant for both sides.
Significant Implications
Erdogan made the Gulf states one of his first international stops during his third term in office. This has ramifications for the objectives of Turkish foreign policy toward the Gulf in the subsequent phases, particularly the following:
• Prioritizing Pragmatism: Turkish moves on the Arab level generally and in the Gulf specifically confirm the pragmatic and realistic approach to foreign policy during the current stage, which stems from Ankara’s political leadership’s understanding that the hostile policy pursued over the past decade has had significant political and economic costs. Therefore, the Turkish government was forced to examine its regional relationships in order to investigate the political and economic potential that cooperation would bring about. This review of regional relations will undoubtedly reflect on the stability of the region and provide opportunities to coordinate positions and manage disagreements regarding regional crises such as those of Syria, Libya, Yemen, and Iraq, as well as the Iranian-Turkish rivalry within the shared spheres of influence.
• Advancement of Relations: Erdogan’s visit to the Gulf comes at a time when Turkey’s policy toward the GCC countries is undergoing significant changes following a decade of tense relations. These changes were prompted by new transformations produced by the regional and global geopolitical environment, which also brought with it new opportunities and challenges. As a result, regional parties were forced to reevaluate their foreign policies as well as their political and economic orientations in order to safeguard their strategic interests. As a result, Ankara changed its approach to dealing with the Gulf countries. This change was exemplified by Erdogan’s trips to the UAE in February 2022 and Saudi Arabia in April 2022, as well as his desire to forge close economic ties with these two powerful Gulf countries.
• Prioritizing Economic Relations: In light of the positive economic prospects brought about by cooperation on the commercial, investment, and energy levels, the economy served as the locomotive for the Turkey-Gulf rapprochement. The two sides sought to maximize their gains through agreements to strengthen economic ties and efforts to increase trade exchange rates. For instance, in March 2023, Turkey and the UAE signed a comprehensive economic partnership agreement, and Abu Dhabi also ratified a free trade agreement that would increase bilateral trade to $40 billion for a five-year period. The agreement is based on a strong foundation of bilateral trade, which increased by 40 percent to reach $18.9 billion in 2022, making Turkey one of the UAE’s top 10 trading partners and accounting for more than 3 percent of the UAE’s non-oil foreign trade.
By the end of 2021, the UAE was among the top 15 countries investing in Turkey, with approximately $7.8 billion in foreign direct investments across a number of industries, including financial services, real estate, transportation, renewable energy, ports, and logistics. Numerous agreements in the areas of energy, finance, trade, industry, technology, agriculture, and trade were also signed by the two countries.
The same is true for Saudi Arabia, which concluded deals worth SAR 2.3 billion ($610 million) with Turkey. The Saudi oil giant Aramco is in talks with approximately 80 Turkish contracting firms regarding potential $50 billion projects in Saudi Arabia through 2025, including the construction of an oil refinery and pipelines, administrative buildings, and other infrastructure. This is not the first time Aramco and Turkish contracting firms have worked together. An agreement worth $ 590 million was previously signed by Aramco and the Turkish firm Tekfen Construction to construct gas pipelines for the Haradh Gas Increment Program. After a period of unofficial trade boycott of Turkish goods, the trade exchange rate also underwent a remarkable recovery in 2022, reaching a record $6.5 billion. The two countries hope to increase trade to $10 billion in the near future and $30 billion in the long run.
In terms of relations between Qatar and Turkey, these are extensive, strategic, and have significantly improved in recent years on the political and security fronts as a result of Ankara’s support of Doha during the Arab boycott phase, the two countries’ shared stances on regional crises, and Qatar’s hosting of the only Turkish military base in the region. Although the Turkey-Qatar political relations are at a high level, this is not reflected in the same way on the economic level, as the rate of trade exchange in 2022 was only $2.1 billion, a small amount when compared to the UAE and Saudi Arabia. Nevertheless, Qatar had made about $22 billion in investments in Turkey by the end of 2022. There are 179 Qatari firms operating in Turkey, compared to 533 Turkish firms in Qatar. Significant investment transactions were also made by Qatar inside Turkey, such as the Qatar Investment Authority’s acquisition of a stake in the “Eurasia Tunnel”.
Establishing a Legacy: Erdogan is aware that his third term is his final chance to leave a personal mark on modern Turkish history and to position himself as one of the era’s most effective leaders—a leader who was able to elevate his country to a key position on the international stage and fortify its position in the region. This is what drove him to use personal diplomacy in his foreign policy and to take advantage of his capacity to make abrupt changes to his political allies in order to break Turkey’s isolation, improve its level of acceptance in its surrounding region, and address the shortcomings of the Turkish economy. Erdogan hopes that by doing so, the public’s perception of him and the Justice and Development Party, which dominated government for the first decade of their rule (2002-2012), as architects of Turkey’s economic and political renaissance will not be tarnished by the country’s recent experience of economic decline and political isolation.
In conclusion, Erdogan’s recent tour marked a new phase in the path of the Turkish-Gulf relations, driven by the new dynamics imposed by the ongoing international and regional transformations. Although the tour had have a political component, its primary economic focus resulted from the fact that the Turkish and Gulf sides hoped to leverage one another’s resources to advance economically, gain strategic independence from the West, and hedge against any shifts in the attitude of the world’s leading powers.
