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Pera Palace Hotel in Istanbul is managed by Jumeirah, Dubai's flagship leisure company. Courtesy Pera Palace Hotel
Pera Palace Hotel in Istanbul is managed by Jumeirah, Dubai's flagship leisure company. Courtesy Pera Palace Hotel

Turkey partnership whets appetites but dish not cooked yet

Turkey, fascinating country that it is, was again under the spotlight at a Dubai conference sponsored by HSBC the other day.

Turkey, fascinating country that it is, was again under the spotlight at a Dubai conference sponsored by HSBC the other day.

The theme was the country's emergence as a major economic and commercial power in the region, "an Asian power on your doorstep", as the publicity had it.

While there was plenty of enthusiasm by Turkish and Arabian Gulf officials and businessmen for greater commercial dealings between the two, I came away with the impression both sides were fundamentally unsure about how the relationship would develop, or indeed should develop, and that further fine-tuning of the strategy was needed.

This is not to underestimate the cordiality of the relationship between Turkish and Gulf business partners.

Speaker after speaker applauded the great progress Turkey has made in the past 10 years under the government of the prime minister Recep Erdogan. The figures speak for themselves: about 8 per cent GDP growth last year, among the highest in the world; a rise in per capita GDP to more than US$10,000 (Dh36,730), a threefold increase in the average Turk's income; inflation at a maximum of 9 per cent, still high but a dramatic improvement on the 135 per cent annual rise in prices of a decade ago; public borrowing halved from 80 per cent of GDP.

All this is staggering progress, and it has prompted a string of business deals between Turkey and the GCC region, notably in construction, tourism and leisure, and energy services, among others.

Gerald Lawless, the president and chief executive of Dubai's flagship leisure company Jumeirah, spoke of the recent deal with the Pera Palace in Istanbul, one of the country's most prestigious and historic hotels and now under Jumeirah management.

The involvement of the Turkish airport operator Tav in the $3 billion contract to build a new terminal in Abu Dhabi was exhibited as an example of trade going the other way, in addition to increasing Gulf demand for Turkish goods, from televisions to tureens.

Trade between Turkey and the UAE stands at $5bn and is forecast to rise to $10bn by 2015, the Turkish president Abdullah GŁl said on a recent visit to Abu Dhabi.

In the wider Middle East and North Africa region, there is an increasing admiration for the Turkish economic achievement and a suggestion the country could be a political and economic model for some of the nations emerging from the convulsions of the Arab Spring, notably Egypt.

Nonetheless, it was left to the hard-nosed economists of HSBC to point to the deficiencies in the Turkey-Gulf relationship and how much further it has to go before we can really exploit the "Asian power on our doorstep".

Despite all the talk of "cultural affinities" between the two and comforting chatter about how "at home" Gulf Arabs feel as tourists in Turkey, it was also argued that, in fact, the cultural similarities might be exaggerated.

Sure, there is a common religion but this might be outweighed by significant differences in language and political culture.

Finally, it was suggested that what Turkey really needed from the GCC region - oil and capital - it doesn't get, at least not in any meaningful quantities.

The country needs long-term capital investment to replace the "hot money" that flooded in, mainly from Europe, which exacerbated a worrying current account deficit earlier this year and which many economists, including those at the IMF, view as a potentially serious impediment to Turkey's ongoing economic development.

The GCC's big investing institutions, such as the sovereign wealth funds, have not really risen to this opportunity as yet.

Finally, Turkey may be an export powerhouse but it has to import most of its energy needs, which it satisfies via oil and gas pipelines from Russia, the old enemy of the Ottoman centuries.

I'll believe in the reality of the new Turkish-Gulf commercial partnership when I see an oil pipeline running northwards from the Gulf towards Anatolia.

With the obstacle of Syria in the way, this could be some time coming.

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