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Abu Dhabi, UAEWednesday 20 June 2018

Erdogan's GCC trip a balancing act of political and economic agendas

Turkish leader will push to end alienation of close ally Qatar, but also needs to boost business with its foes

Turkey's President Recep Tayyip Erdogan, right,with Qatar's foreign minister Sheikh Mohammed bin Abdulrahman Al Thani in Ankara, on July 14, 2017. Mr Edogan was due in the Gulf nine days on July 23. Presidency Press Service via  AP
Turkey's President Recep Tayyip Erdogan, right,with Qatar's foreign minister Sheikh Mohammed bin Abdulrahman Al Thani in Ankara, on July 14, 2017. Mr Edogan was due in the Gulf nine days on July 23. Presidency Press Service via AP

The Turkish president on Sunday begins a two-day trip to Saudi Arabia, Kuwait and Qatar, the latest leader to throw his country’s weight behind the gathering momentum of mediation efforts to resolve the Gulf crisis.

But for Ankara, which is viewed by the four countries boycotting Qatar as having fully backed Doha, the more important purpose of the visit is likely to be the salvaging of relationships that have become crucial for Turkey’s economy and maintaining the difficult balancing act between interests in the region.

Recep Tayyip Erdogan has stated his intention to try to help resolve the dispute between “brothers of the Gulf” when he meets with Saudi Arabia’s King Salman and Crown Prince Mohammed bin Salman on Sunday in Jeddah. "Political problems are temporary whereas economic ties are permanent, and I expect the investors from Gulf counties to choose long-term ties," he said on Friday in Istanbul.

Mr Erdogan will then travel to Kuwait, which is mediating between the two sides, and from there to Doha for discussions with his closest ally in the GCC, the emir of Qatar, Sheikh Tamim Al Thani.

From the first days after Saudi Arabia, UAE, Bahrain and Egypt closed land, air and sea links with Qatar, Turkey moved in to fill the gap, exporting food to keep the supermarket shelves full. It also fast-tracked the deployment of troops to a new military base near Doha.

To many, it is largely thanks to Turkey that Qatar has been able to withstand the boycott .Mr Erdogan’s remarks during Ramadan that the isolating of Qatar was “un-Islamic” also sparked widespread anger, with officials using unusually undiplomatic language to hint at longer-term damage to the strategic ties between Ankara and Riyadh that for various reasons, have strengthened significantly since King Salman took the throne in 2015.

“Our Turkish brothers need to recognise that the era of covert and to some extent unwanted intervention in the Arab world has long gone,” Riyadh’s UN envoy, Abdallah Al Mouallimi said last week.

While Mr Erdogan is likely to echo the Americans, the British, the French and the Germans — all of whom have engaged in Gulf shuttle diplomacy in recent weeks — analysts believe he will also emphasise, perhaps foremost, the mutual economic and strategic interests, particularly concerning Iran.

His mediation efforts are unlikely to succeed, however, according to observers.

“There is no doubt that Turkey is not qualified to have initiatives in this crisis because they don’t think Qatar is making any mistakes, that the four countries are wrong and Qatar is right,” said a Saudi diplomatic source, who added that Ankara had requested the talks.

“In the end I’m sure that nothing will be added from this visit, but Mr Erdogan will be welcomed with a cup of tea and Arabic coffee and at the end there is no expectation that he will change the mind of Saudi Arabia,” the source said.

He may find a more sympathetic ear when it comes to saving the growing economic partnership between Turkey and the GCC states which has done so much to repair the rift that developed early on during the Arab Spring, when Ankara and Doha backed Islamist political movements in Egypt, Libya and elsewhere.

As Ankara's ties with bigger markets in Europe and neighbours such as Syria, Iraq and Egypt have diminished, the GCC is increasingly important to Ankara for energy security, as a source of investment capital, as a player in the finance and Islamic banking sector and as a major market for its defence and construction industries.

Turkey also matters to the GCC countries that want to diversify their economies and attract foreign investment. Turkish firms have won contracts worth billions for airport construction and operations in Saudi Arabia and Kuwait. About 200 Turkish firms operate in the kingdom.

“I do see Saudi Vision 2030 as particularly dependent on foreign investment, especially in the infrastructure space," said Karen Young, a political economist and senior scholar at the Arab Gulf States Institute in Washington. "Of the firms and partners with the most Gulf experience, there are very few and many are Turkish in origin.”

But, she added, "while Qatari FDI in Turkey has been increasing since 2013, I think the Saudi position probably has more leverage at the moment".

Only two months ago, Mr Erdogan was in Kuwait to talk about long-stalled plans for a free-trade agreement with the entire GCC bloc and the establishment of industrial free zones in the Gulf. That trip capped fast-tracked political initiatives, including the return of a UAE ambassador to Ankara and an exchange of visits by the foreign minister of the two counties. Although relations between Abu Dhabi and Ankara remained strained, there was more movement on economic cooperation and a number of agreements were signed in the past year.

While Qatar has increased its trade and investment ties with its close partner, so too have Saudi and UAE. The two countries imported US$8.6 billion (Dh31.6bn) of Turkish goods and services last year, more than 20 times the $439 million in exports to Qatar.

But Turkish exports to the three boycotting GCC countries dropped significantly after the crisis erupted on June 5. According to Turkey’s Exporters Assembly, exports to Saudi dropped by more than 36 per cent during June, and by more than 20 per cent to the UAE. “The increase in the flow of Qatari capital to Turkey and opening its doors to Turkish export goods do not appear to be enough to make up for these losses,” said Charlotte Brandsma, a Turkey researcher at the German Marshall Fund.

Qatar and Turkey have a “special relationship”, said Birol Baskan, a professor at Georgetown University, “but Saudi Arabia and the UAE are equally, and from an economic perspective even more important than Qatar.”

If Turkey is unable to persuade Riyadh and Abu Dhabi to prioritise shared economic interests and convince the Saudis that Turkey will not align fully with Qatar, the economic consequences could increase.

“In this context, I think that the Saudis will bargain with Erdogan: if you don't stop your support for Doha, we will downgrade our economic relations,” said Jana Jabbour, a professor who studies Turkey's Middle East relations at Sciences Po. “In that sense, Erdogan has a very limited space for manoeuvre.”

Riyadh and Ankara have also begun to cooperate more on defence production, with a joint venture deal signed last year between the largest Turkish defence firm, Aseslan and Saudi Arabia's Taqnia. A diversification of defence relationships and the development of its domestic arms industry are both important goals for Riyadh, and a source said that Turkey has been negotiating the sale of military equipment to Saudi Arabia this year, in what potentially be could be Ankara's biggest ever defence sale.

“Turkey obviously doesn't want to lose this deal, which partly explains Erdogan's eagerness to personally get involved in the crisis and try to solve it,” the source said.

Turkey and Saudi Arabia also have a shared interest in containing the regional influence of Iran, which has been increasing in the wake of its role in Iraq and Syria and the lifting of nuclear-related economic sanctions. But the Gulf crisis has thrown into relief the tightrope Turkey has to walk in turning to Riyadh and the Gulf as a regional partner.

Turkey is also economically interdependent with Iran, and shares a key interest in preventing Kurdish groups from forming a state. Both countries view themselves as important transport hubs for China’s ambitious Belt and Road initiative linking Asia and Europe through trade infrastructure.

The crisis has pushed Turkey closer to Iran for the time being “as Erdogan is seeking alternatives for economic investment and energy supplies,” Ms Brandsma said. The Turkish trade minister visited Tehran last month with a large business delegation and the two countries set goals of a free-trade agreement and increasing annual trade from $30 billion to $50 billion.

“Who is the friend of Turkey now, is it Iran for example, or is it Russia?” said the Saudi diplomatic source. If so, “it will weaken the track between Saudi Arabia and Turkey, it will weaken the future” of their relationship.

Until the Gulf crisis, Turkey and Saudi Arabia were able to put aside the issue of the Muslim Brotherhood, but Ankara could come under more pressure if it were left as the sole regional power patronising Islamist parties.

"Erdogan will want to make sure that Qatar doesn’t give in to Riyadh’s demand to end Doha’s financial support for the Muslim Brotherhood," Ms Brandsma said. "Without Qatar, Turkey would be left as the sole main supporter of the group which could lead to rising tensions between Riyadh and Ankara."