Economic ties grow despite political fluctuations between Israel, Turkey

Economic ties grow despite political fluctuations between Israel, Turkey

An Israeli delegation arrives at the Turkish Foreign Ministry to hold talks on compensation for families of victims killed in a 2010 naval raid on a Turkish-led humanitarian aid convoy to Gaza, in Ankara on April 22. (Photo: Reuters)

July 28, 2013, Sunday/ 11:12:00

The rapprochement between Turkey and Israel is moving slowly, with hiccups over a compensation deal on an incident from May 2010, yet trade figures indicate the blossoming of economic activity between the two countries.

Data from the Turkish Statistics Institute (TurkStat) suggest there was an increase of 56 percent in exports to Israel in May 2013 compared to the same month of the previous year. Imports from Israel show an increase of 22 percent in May 2013 compared to the figures of May 2012.

“Except for fields like tourism that are highly sensitive to the political and security relationships of countries, it is quite normal for the countries to be maintaining their economic relationship,” said Harun Öztürkler, an expert on Middle Eastern economies at the Center for Middle Eastern Strategic Studies (ORSAM), though noting that political relations can have long-term impacts on the economy.

Relations between Turkey and Israel -- countries that once enjoyed solid ties at all levels -- worsened in May of 2010 and have remained strained ever since then, when Israeli naval commandos stormed the Mavi Marmara, a ship carrying humanitarian aid attempting to breach Israel's blockade of Gaza, killing eight Turkish civilians and one Turkish-American.

The tension between the two countries eased when Israeli Prime Minister Benjamin Netanyahu offered a formal apology on March 22 and promised compensation for the families of the victims and those injured during the Israeli raid on the Mavi Marmara. Turkey had put forward the lifting of the blockade on Gaza, compensation for the families of the Mavi Marmara victims and a formal apology as conditions for reconciliation with the country.

The trade volume between Israel and Turkey reached nearly $2 billion in the period from January to May 2013. Turkey's exports to Israel totaled over $1 billion, while imports from Israel sat at around $1 billion. Even before the apology was made, economic relations were improving. The Turkish-Israeli trade volume, which was $3.4 billion in 2008, reached $4.4 billion in 2011 and exceeded $4 billion in 2012.

One of the main areas that Turkey and Israel cooperate on is defense technology. “As defense industry products are considered within long-term foreign trade agreements, short-term political tensions wouldn't have a negative impact on these goods,” said Öztürkler. He added that considering the foreign trade figures between Turkey and Israel over the last 10 years, an increase may be observed even if there are fluctuations seen in both import and export figures.

Shmaya Avieli, director of the Foreign Defense Assistance and Defense Export Organization (SIBAT) at the Israeli Ministry of Defense, stated that defense exports between Turkey and Israel never halted. “The relationship that existed in recent years didn't continue, but if you look at the numbers, defense exports to Turkey were not zero,” he said, underlining that these export contracts mainly consisted of past contracts but that there are requests for new transactions from Turkey.

Atilla Sandıklı, chairman of the Wise Men Center for Strategic Studies (BİLGESAM), believes that there are signs of improvement in political relations between Turkey and Israel. “I am not sure whether a total recovery is possible soon, though,” he added.

Turkish Deputy Prime Minister Bülent Arınç blamed Israel on Tuesday for stalling the negotiations on compensation. “Our two conditions have not been accepted by the Israeli side, and that is why the issue has been left hanging in the air despite the fact that we agreed on a general framework on how to move forward,” said Arınç, who oversees the compensation talks with Israel on behalf of the Turkish government.

The main sticking point stalling progress in the talks is how to define the compensation in law, Arınç said. The Israeli side wants the settlement of the compensation to be part of an “ex gratia” payment, which means the payment will be made without recognizing any liability or obligation on the part of Israel. Turkey, however, has argued against this, saying that Israel, which has officially apologized to Turkey, must admit the incident was a “wrongful act,” which would indicate that Israel seriously breached the rights of Turkish citizens.

Middle East expert Öztürkler added that it will be possible to observe a significant development in economic relations between Turkey and Israel if the Mavi Marmara process comes to an end. “Regarding the statements of Turkish President Abdullah Gül saying there should be economic cooperation in the eastern Mediterranean, we may say that his statement could pave the way for the two countries to establish cooperation in the field of energy,” Öztürkler said.

It is estimated that there are 15 trillion cubic meters of natural gas in the region of the Mediterranean surrounded by Turkey, Israel and southern Cyprus. The reserve has been estimated at about $7 trillion, which is seven times more than Turkey's gross domestic product (GDP).

The Israeli and Greek Cypriot administrations began to cooperate on energy matters right after American oil company Noble Energy discovered the deposits. This cooperation came about at a time when ties between Turkey and Israel were frozen due to the Israeli raid.

Another development in economic ties was the visit of the Manufacturers Association of Israel (MAI) to the Turkish Industrialists and Businessmen's Association (TÜSİAD) in May. The two organizations agreed to draft an action plan to develop economic relations.

The two countries cooperate in other areas as well. Speaking to Sunday's Zaman, Mensur Akgün, director of the Global Political Trends Center, recalled the June visit of Tamir Pardo, director of Israeli national intelligence agency Mossad, saying it may indicate intelligence sharing.

Going back three years, one can see further involvement of the two countries in each other's affairs. Prime Minister Recep Tayyip Erdoğan left two high-ranking officials in Cairo to take part in efforts to broker a cease-fire between Hamas and Israel in the Gaza Strip in November of 2012 as the fighting left more than 100 dead, mainly non-combatants. In 2011, Turkey was involved in negotiating the release of a captured Israeli soldier and welcomed a landmark Israeli-Hamas deal to free this soldier in exchange for Palestinian prisoners. Turkey announced at the time that it is ready to contribute to the peace process.

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