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May 29, 2012, Tuesday

Turkish trade with Arab Spring countries flourishing

Turkey's political and economic changes over the past decade make for impressive comparisons. In 2002, gross domestic product (GDP) was $235 billion; last year it was $746 billion. The national export volume jumped from $32 billion in 2002 to $135 billion last year. These are all promising figures that are often voiced by the policymakers.

Another compelling outcome of the speedy expansion of the Turkish economy in the past decade is the Middle East and North Africa's share in the country's trade. It increased from 8 percent 10 years ago to 26 percent of Turkish exports in 2011. Moreover, the trade balance with the nations in those regions is highly favorable to Turkey. A couple of billion dollars in trade surplus to the benefit of Turkey in 2002 climbed to more than $20 billion last year. However, after Mohammad Bouzizi's self-immolation to protest the security forces and the poor management in Tunisia, a challenging year began for Turkey.

Turkey's trading partners in the region, such as Egypt, Libya, Algeria, Morocco and the United Arab Emirates, have been seriously affected by the growing unrest in the region. With the Arab Spring revolutions, it became a critical issue for Turkey to meet trade targets in the region. But since 2012 started, despite the crisis in Syria, Turkish trade with the Arab Spring countries has been flourishing.

Let's start with Egypt. Egypt is the home of many textile investors from Turkey. While labor and energy costs are rising in Turkey, the companies that were unable to cope with textile manufacturers in such cheap-workforce countries as China, Vietnam and Mexico rushed to Egypt's Qualifying Industrial Zones (QIZ). These zones were established by US, Israeli and Egyptian agreement and aim to find partners for Israel in the region. Manufacturers in these zones can sell freely to the US freely once they buy 11 percent of their inputs from Israel. These areas are popular destinations for the Turkish textile industry. Egypt is an important country for Turkey due to strong business relations and active investors in the QIZ.

Egypt-Turkey trade in 2011 reached a record level of $4.15 billion, in which Turkey has a $1.4 billion trade surplus. In 2010, it was $3.2 billion, an increase of about 30 percent. If we compare the first quarter of the past two years, this upward trend in trade is still there. In 2011, the total trade volume was around $780 million, and it reached $1.26 billion in 2012. The trade surplus for Turkey increased from $214 million to $572 million. These are remarkable figures, given the political risk in the country.

Turkish trade with Tunisia was around $1 billion in the past two years. It was slightly below a $1 billion in 2010 and slightly over $1 billion in 2011, in which Turkey has around $450 million in surplus. When it comes to 2012, Turkey's Tunisia trade increased 30 percent in the first three quarters from $180 million to $240 million. The same goes for almost all Middle East countries in the region.

If you check the Turkish trade with 17 nations in the Middle East, excluding Israel and Iran, the total trade increased from $4.7 billion in 2002 to $29.4 billion in 2010 and $34.2 billion in 2011. Turkey's trade surplus with the countries in that region was around $16.8 billion in 2011. Turkey has a trade deficit with only two countries in the region: Qatar and Iran. The comparison is no different for the first three months of 2012. Total trade with 17 nations in the region increased from $7.7 billion in 2011 to $9.6 billion in 2012. Trade surplus reached an all-time high of $5.7 billion for the first quarter of this year.

I have to warn you here that these figures include the dramatic decline of Syrian trade in the region. Turkish trade with Syria declined from $525 million in 2011 to $200 million this year, whereas Turkey still has a trade surplus.

Sometimes numbers reveal a lot more than the usual rhetoric. When people tell you that Turkey's trade is suffering due to the Arab Spring unrest, don't believe them. Also, if people tell you that Turkish companies don't like to take risks, reject this assumption as well.

From these figures, it is clear that the Turkish business community is trying to make the transformations in the region as painless as possible. While many countries are trying to escape from the region, Turkey is working to find more ways to work together.

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