Selim Cevik:  Economic dimension of Turkey – Gulf relations

Decoupling of Countries

The difference in the speed and degree of Turkey’s reconciliation with Gulf states and Egypt is also a sign of the de-coupling of different regional blocs formed in response to the Arab Spring. In addition to the regional bloc formed by Iran and its proxies, a Saudi-UAE bloc and a Turkey-Qatar bloc emerged after the 2011 uprisings. Now, as a result of the regional reconciliation process, these countries have started to act more independently. For example, the UAE and Saudi Arabia have diverged significantly in their foreign policies. In fact, a rivalry has emerged between the two countries, as evidenced by their competition to host the regional headquarters of international companies. The fact that both countries have similar powers and visions has the potential to accelerate their rivalry.



While it is not possible to speak of a rivalry between Turkey and Qatar, the two countries sometimes act more autonomously. The lifting of the Saudi-Emirati-Bahraini-Egyptian blockade on Qatar in January 2021 lessened Qatar’s dependence on Turkey. Turkey’s reconciliation with Saudi Arabia and the UAE has the potential to weaken Qatar’s economic priority role for Turkey.

Given the fast pace of the Turkey-UAE reconciliation, the UAE may well overtake Qatar in economic relations with Ankara. With the de-escalation of tensions between Abu Dhabi and Ankara, economic relations and bilateral trade started to increase rapidly and return to their previously robust levels.


Economic Dimensions, and Limits of Reconciliation

Another dimension of economic relations is investment. The UAE has announced its intention to invest $15 billion in the Turkish economy. To what extent this will materialize is not known. Qatar has made similar pledges in the past, but it is unclear if they were fulfilled. Turkey’s hectic economic management and its tendency to deviate from orthodox economic policies are obstacles for long-term investment in the Turkish economy. This has been the case for Qatar as well as for the UAE.



UAE banks facilitate loans to Turkey

Finally, the UAE offers important services in terms of financing and loans. While the size of the currency swap agreements between the central banks of Turkey and the UAE pale in comparison to those between Qatar and Turkey, the UAE has played an important role in providing loans to Turkish banks. In fact, in the first half of 2023, two UAE banks alone arranged 61 percent of all syndicated loans to Turkey.

Securing UAE financing remains important for Turkey, since that western lenders are increasingly cautious about lending to the Turkish state and banks due to Erdoğan’s unorthodox monetary policies.


But economic ties do not translate into a full geopolitical alliance. While Turkey’s pragmatism toward the MB and the UAE’s desire to multiply its regional partners have ensured that the reconciliation has proceeded smoothly, this does not mean that there is a complete geopolitical alignment between Turkey and the UAE. For example, despite the easing of tensions, both countries continue to take opposing positions in Libya. On another front, while Turkey is careful not to criticize the UAE for its continued adherence to the Abraham Accords, it has been extremely vocal against Israeli atrocities in Gaza. In contrast, Turkey and Qatar have consistently aligned themselves in almost every regional conflict.

Moreover, despite MBZ’s pragmatic moves to facilitate the reconciliation process, the UAE and Qatar still differ in their relationship with Erdoğan himself. While reconciliation began in 2021 and there were many promises of economic cooperation and leadership-level bilateral meetings throughout 2022, most important developments took place after Erdoğan won the May 2023 presidential election. The UAE, like Saudi Arabia, was waiting to see if Erdoğan would remain in power. Moreover, given Erdoğan’s urgent need for a cash injection before the election, the limited assistance from Saudi Arabia and the UAE sent a message that they were ready to work with Erdoğan without strongly favoring his continued rule. This contrasts with Erdoğan’s more durable allies in Doha and Moscow, who went to great lengths to provide him with financial assistance at a critical time.


In light of all these factors, even if the UAE surpasses Qatar in its economic ties with Turkey, its relations with Ankara are unlikely to reach the level of the Turkish-Qatari alliance with its deep personal ties and history of taking common positions in regional conflicts. The Turkish-Qatari relationship is a tested and mutually beneficial one that has proven its resilience in times of crisis. Moreover, Turkey has a military base in Qatar, which provides a strong institutional dimension to and foundation for the two countries’ security cooperation. While Turkey’s deepening relations with the UAE may not be welcomed by Qatar, in the new era of multiple alignments, Doha may not have the clout, or even the desire, to prevent Ankara from deepening its relations with Abu Dhabi.


Trump Presidency as the Wild Card

Washington largely has viewed the regional reconciliation efforts favorably, yet recent outbreaks of violence underscore the efforts’ inability to foster peace. Primarily orchestrated at elite levels, these reconciliatory endeavors have skirted around addressing fundamental problems plaguing the region, such as the Palestinian question, the prevalence of oppressive and dysfunctional states, and entrenched economic crises. However, events following October 7 have also revealed a widespread determination across the region to preserve the reconciliation achieved so far. Apart from Israel, all major actors in the region, as well as the United States, are working to contain the Gaza conflict, even as they disregard the shocking level of Palestinian deaths in Gaza. This reality demonstrates the significance of regional reconciliation for local actors and for American foreign policy objectives.


However, the prospect of former President Donald Trump returning to the White House in January 2025 looms as a wildcard. This is not because the Biden administration has made such substantial strides in promoting regional peace and stability, but because it is not certain how Saudi Arabia and the UAE would navigate reconciliation under a Trump presidency. Under Trump’s expected carte blanche, there is a risk of the United States reverting to aggressive and confrontational foreign policy in the Middle East, and there are questions about whether such US policies would solely target Iran or extend to Turkey and Qatar. The escalating tensions between Turkey and Iran suggest the possibility of Turkey aligning with aggressive postures against Iran.


Despite Turkey’s vested interests in maintaining reconciliation with Gulf countries and in deepening ties in the region, potential belligerence from Middle Eastern partners could force Turkey to respond in kind. Turkey’s history of swiftly abandoning reconciliatory efforts, as seen in the vicissitudes of its relations with Israel over recent decades, shows how its pragmatic approach is shaped by both domestic and regional dynamics. Ultimately, Turkey would not object to American efforts to help stabilize the region, by both confronting the fundamental structural problems plaguing US foreign policy and succeed in restraining actors from reverting to aggression and conflict.


This is an excerpt from the original article. The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.