In recent years, Israel has been the side damaging economic ties between the two countries. Thus, Turkish firms operating in Israel have been facing a number of obstacles and problems, ranging from difficulties in the extension of work visas to increasingly difficult working conditions since the “one minute” crisis in Davos.
The tension existing between the two countries has also been reflected in tourism. Turkey used to be the second-most popular destination for Israeli tourists, while it was also among three countries that the Israeli media promoted as a tourism destination. In 2007, the number of Israeli tourists visiting Turkey was up by a stunning 41 percent over 2006, reaching 511,535, a figure which rose even further to 558,183 in 2008. Following the “one minute” crisis, the number of tourists coming to Turkey from Israel fell dramatically. In 2009 the number of Israeli tourists to Turkey dropped by 44 percent to reach 311,000. Consequently, travel agencies started to charge their Israeli customers only $200 for a one-week trip to Turkey trip last year, down from an average of $600 in previous years. In 2010, however, these figures started to recover.
Following aid flotilla crisis, the Israeli Foreign Ministry advised its citizens to avoid travel to Turkey. Calling back its tourists in Turkey, the Israeli government also wanted tours to be cancelled for an indefinite period of time. It is for this reason that the bookings of 130,000 Israeli tourists who were set to come to Turkey as of June (15,000 to Bodrum, 35,000 to Marmaris, 80,000 to Antalya) were put on hold. As Israeli tourists cut short their trips in Turkey, “crisis desks” were established in Turkish hotels hosting these tourists. As a result of these developments, ships carrying Israeli tourists changed course, travelling to south Cyprus and Rhodes instead. Travel agencies began organizing tours to bolster the morale of fearful and anxious Israeli tourists who stayed on in Turkey. The real drop in figures is expected to become apparent in the July-August period of the year, the Turkey’s tourism sector’s high season.
Economic cooperation between Turkey and Israel was boosted on March 14, 1996, when the two countries signed a free trade agreement, which was put into force in May 1997. After lifting customs duties imposed on nearly 200 goods, the trade volume between the two countries grew by 658 percent from $446 million in 1996 to $3.38 billion in 2008. However, this figure declined to $2.52 billion in 2009. Of this figure, $1.07 billion comprises Turkey’s imports, which are predominantly in the defense industry and technology. The cost of the modernization of 54 F-4 aircrafts exceeded $1 billion, up from the previous estimate of $632 million. The modernization of 170 M60 tanks cost $670 million. Ten Heron Unmanned Aerial Vehicles (UAVs) were purchased from Israel for $188 million.
Israel won the tender for synthetic aperture radar (SAR) systems, which enable F-4 aircraft to detect moving objects, for $160 million. Israel won the Datalink 16 tender, a system for transmitting pictures of F-4 and F-16 aircrafts, for $120 million. Turkey’s BMC gave the highest bid at the tender for the “Walking Fortress” land vehicles for protection against land mines. In the manufacture of the vehicles, BMC will cooperate with Israel’s armed vehicles manufacturer Hatehof.
Turkey’s exports to Israel account for $1.53 billion and are mainly concentrated in the textile, automotive and iron and steel sectors. Israel is one of those rare countries that Turkey has a trade surplus with. While there are nearly 250 Israeli companies operating in Turkey. Their investments in the country are worth around $300 million. So far, Turkish construction firms have assumed projects worth of $583 million in Israel. Despite the fact that Israel’s share in Turkey’s overall trade volume is currently only 1 percent, taking into consideration Israel’s comparatively small population (7.2 million), along with the absence of a common land frontier between the two countries, it might be said that economic relations between Israel and Turkey were in fact going quite well. Also, bilateral trade volume was expected to exceed $3 billion in 2010. However, as the crises come one after one, it is clear that businessmen from the two countries will have to determine their commercial and investment strategies in line with political decisions made by their governments. It is for this reason people continue waiting anxiously. Long-term investment plans are being influenced adversely due to the ongoing clashes and current instability.
