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The ripple effects of Israel's war on Turkish-Israeli trade and energy

The ripple effects of Israel's war on Turkish-Israeli trade and energy

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Politics History

Monday 27 November 202312:33 pm
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Since Operation Al-Aqsa Storm on October 7, 2023, and Israel's subsequent war on Gaza, dubbed Operation Swords of Iron, Turkish President Recep Tayyip Erdogan has accused the Israeli government of committing war crimes and genocide. The Turkish ambassador to Israel has since been recalled, and Erdogan delivered an impassioned public speech, filled with religious rhetoric and threats, in which he vehemently condemned Israel.

What exactly is happening, and what is the nature of the relationship between Turkey and Israel? Can this dispute escalate into open confrontation?

Israel ranks 9th among Turkey's top ten export destinations. How will this relationship be affected by recent events in the region? Will Turkey's economic ties weather the storm with Israel?


The roots of the crisis

This crisis can be traced back to May 2010, when Turkey launched the Freedom Flotilla, with the ship Mavi Marmara setting sail toward Gaza to break the Israeli blockade that has been imposed on the strip for years. However, the flotilla did not reach Gaza's shores, after Israel launched a military operation raiding the ship and killing 9 activists onboard in the process. This marked the first open confrontation between the two nations, although it lacked a military character. However, recent political relations between the two countries have appeared stronger and more resilient, despite Turkey’s current Justice and Development Party with its Islamic Brotherhood-inspired ideas.

For a number of reasons, Turkey-Israel relations have not been affected by the animosity between Israel and the dominant Hamas in Gaza which is ideologically classified as a branch of the Muslim Brotherhood.

The rise of Arab nationalism in the 20th century created a psychological and emotional bond between Turks and Israelis, and distracted from the issue of occupation and the concept of political Muslim hostility towards Zionism, or Jews in general. After President Erdogan welcomed Israeli President Herzog to Turkey in March 2022, the first Israeli president to visit after the Freedom Flotilla incident, it became clear that relations were productive.

Moreover, Turkey is a secular state, with the second article in its constitution stipulating the separation of religion and state. As a result, the Turkish Jewish community (approximately 20,000 Turkish Jewish citizens) enjoy equality and full citizenship rights.

Throughout modern history, Turkey has been a friend to Israel. Among the first countries to recognize Israel in 1949, Turkey opened its diplomatic mission in Israel in 1950. And after the Arab-Israeli war, it opposed severing diplomatic relations with Israel

Historical relationship

The relationship between Turkey and Israel can be traced back to both countries’ founding fathers, Kemal Ataturk (1880-1938) and David Ben-Gurion (1886-1973). According to Gabriel Mitchell, Turkey-Israel Project Coordinator at the Mitvim Institute for Regional Foreign Policies, the early years spent by Kemal Ataturk in Thessaloniki, where Jews comprised half the population, influenced his tolerant stance towards Jews. Additionally, the Ottoman state provided a safe haven in 1492 for Jews fleeing Spain during the Inquisition. This history has positioned modern Turkey as a friend to Israel, rather than a foe.

In his article ‘Ataturk, Ben-Gurion, and Turkey's Road Not Taken’, Mitchell states that secularism, as championed by Kemal Ataturk, enabled respect for Turkey’s Jewish minority. Flaws in Turkish-Israeli relations, he argues, should rather be attributed to the nuanced differences in approach between each country's founders; Ben-Gurion emphasized Zionist nationalism, whereas Ataturk emphasized Turkish nationalism.

Turkey was among the first countries to recognize Israel in 1949, opening its first diplomatic mission in Israel in 1950. After the Arab-Israeli war of 1967, Turkey opposed severing diplomatic relations with Israel.

Journalist Alan Simons detailed how Turkey helped thousands of Jews during World War II. In his article titled ‘Turkey and the Holocaust: How Turkish Diplomats Saved Jewish Lives’, he notes,
“While six million Jews were being exterminated by the Nazis, the rescue of some 15,000 Turkish Jews from France, and approximately 20,000 Jews from Eastern Europe might be considered relatively insignificant in comparison. To those who were rescued and their offspring… Turkey’s attitude showed that, as had been the case for more than five centuries, Turks and Jews continued to help each other in times of great crises.” Turkish solidarity in this period is remembered, as told by the documentary ‘Turkish Passport’.

There have, however, been instances of violence. The Istanbul Pogrom that unfolded in September 1955 is one such example. During this massacre, Christian and Jews were killed and their establishments were looted. According to a witness named Hercules Millas, this massacre reveals the issues of Turkish secularism, as it was based on nationalism and not on human rights. Millas concludes that despite the prevalent secular political system in place in Turkey, religious tribalism still governs a broad sector of Turks.

In the 26 year period from 1995-2021, Israeli exports to Turkey have increased at an annual rate of 9.17%, from 208 million US dollars in 1995 to 2.03 billion US dollars in 2021. And in 2022, Turkish exports to Israel reached 7.03 billion US dollars

Undoubtedly, these incidents have left a significant impact on shaping the ties between Turkey and Israel, and how the Israelis viewed Turkey and its culture, and vice versa.

Turkey has yet to fully shed Ataturk’s legacy, despite the rise of the religiously-oriented ruling Justice and Development Party. Turkey still maintains somewhat of a religious-nationalistic fervor, which could be manipulated and ignited at any moment for political gain. This contextualizes Erdogan's speech at Istanbul Airport on October 28, 2023, in which he used religious-nationalist sentiments against Israel despite their close ties.

Shared economy and mutual benefits

Today, the relationship between the two nations is governed by their trade and energy ties. According to trade data by the Turkish Statistical Institute (turkstat), Turkey's exports to Israel reached their highest monthly level in April 2022, totaling 718.82 million US dollars. This marked a significant increase from the same month in 2021, which recorded 156.05 million US dollars. The visit of Israeli President Herzog to Turkey in March 2022 likely acted as a catalyst for this surge.

In 2022, Turkish exports to Israel amounted to 7.03 billion US dollars, an increase of approximately 700 million US dollars from 2021, where Israel ranked ninth among Turkey's top ten export destinations.

In 2021, Israeli exports to Turkey amounted to 2.03 billion US dollars, and included refined oil (1.03 billion US dollars), iron scrap (220 million US dollars), and polypropylene polymers (87.3 million US dollars). In the 26 year period from 1995-2021, Israeli exports to Turkey have increased at an annual rate of 9.17%, from 208 million US dollars in 1995 to 2.03 billion US dollars in 2021.

In 1996, Turkey and Israel signed a free trade which came into effect the following year, and led to the removal of customs duties and non-customs barriers between the countries. The trade volume reached 10 billion US dollars in 2022, with Turkish Foreign Minister Mevlut Cavusoglu affirming that trade with Israel grew despite the pandemic. However, since the outbreak of this war on October 7, 2023, trade between Turkey and Israel has contracted by 50%, according to Turkish Trade Minister Omar Bulat.

Israeli exports to Turkey remain below one-third of Turkey's exports to Israel, indicating that economic relations and trade are more beneficial to Turkey than Israel, despite Turkey's GDP in 2023 reaching 906 billion US dollars and Israel's reaching 522 billion US dollars in 2022.

According to the Turkish Trade Minister, the recent decline in trade between the two nations should be considered exceptional and temporary. If the rupture was indeed definitive, trade would have approached zero.

Oil and gas challenges

The relationship between the two countries extends beyond the trade sector to the energy sector. Israel imports oil from Azerbaijan via Turkey. According to a Bloomberg report, this accounts for approximately 40% of annual Israeli oil consumption.

If realized, an ambitious underwater pipeline to transport Israeli gas from the Mediterranean Sea to Turkey and Europe is believed to become one of the most attractive projects in the Middle East. What is its fate now?

A project is currently in the works to transport Israeli gas from the Mediterranean Sea to Turkey and Europe. There is also collaborative exploration for gas in the Eastern Mediterranean. In his report titled ‘Energy Relations between Turkey and Israel’ for the Center for Middle Eastern and North African Studies, Dr Aybars Görgülü emphasizes the ambitious underwater pipeline project linking the two countries. “The ambitious sub-sea pipeline from Israel’s offshore Leviathan gas field to Ceyhan (Turkey) would be one of the more inviting projects of the Middle East, if it materializes.” However, he notes that the project is not without its difficulties, “The first impediment pertains to internal Israeli discussions about the right of use of the energy site. While gas extraction at the Tamar field began in 2013, and still provides Israel with its current natural gas supply today, development of the Leviathan field has faced political and legal obstacles that have resulted in delays to its construction plan.”

A Reuters report published on October 5 stated that Turkish Energy Minister Alparslan Bayraktar had plans to visit Israel in November to discuss the countries’ gas trade. However, on November 8, Turkey suspended talks on the proposed gas pipeline due to the war on Gaza. Bayraktar stated that Turkey would not engage in energy talks with Israel until a ceasefire was instated, and emphasized that the priority should be to restore electricity in the besieged strip.

In a Forbes article titled ‘Another Mideast Casualty – Turkey/Israel Joint Gas Exploration’, Daniel Markind observes that “although targeted against Israel, the suspension is likely to hit Turkey far worse than it hits the Jewish state. Israel already has reached deals with the European Union and individual countries in the region, as well as Lebanon (surprisingly), to develop natural gas resources and to construct pipelines to Europe, partly to offset Russian production limited by Ukraine-related sanctions.” Turkey, however, has been less successful, “entering into a bizarre agreement with one of the parties claiming governance of Libya, to share rights to develop the entire Eastern Mediterranean, which has been roundly dismissed.”


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