Related News

Rasmala denies investor’s claims over suspended trade finance fund

Bank ABC mints sustainable Saudi paper loan

Pakistan banks win Saudi, ITFC trade finance credit line

Twinco lands bumper debt facility to expand sustainable supply chain finance

Train exports to Turkey win Swiss ECA backing

Reports of an unofficial boycott of Turkish trade by Saudi Arabian authorities continue to swirl, with new data highlighting that exports from Turkey to the kingdom are slowing. Meanwhile, business associations say that Saudi Arabian officials are forcing companies to bypass Turkish goods.

Turkish exports to Saudi Arabia fell by 12.1% in October compared with the same month last year, according to the latest figures by the Turkish Statistical Institute, a government agency. The only other top 20 export market for Turkish goods that month to record a double-digit decline was the United Arab Emirates (UAE), a key ally.

In general, exports out of Turkey grew by 5.6% for the same time frame, indicating that the decrease in goods to Saudi Arabia and the UAE is not a result of lower demand because of the pandemic.

For the first 10 months of the year, Turkish exports to Saudi Arabia dropped by 16.4% compared with the same period in 2019. However, several other export markets also recorded sizeable drops, with Turkey’s overall exports shrinking by 9.1% during this period, suggesting that a wider issue – namely Covid-19, which disrupted supply chains and caused chaos for trade – was at play earlier in the year.

The recent lower export volumes could be due to Saudi authorities allegedly blocking Turkish goods from entering the kingdom.

On October 2, Ajlan al-Ajlan, the chairman of the Council of Saudi Chambers, tweeted his support for cutting Turkey off, writing that it is the duty of Saudi people to boycott Turkish products because of the country’s continued hostility towards Saudi leadership.

The effect of the deteriorating relationship and alleged trade block has been highlighted in a letter by several key business associations in Turkey, including TİM, an exporters’ assembly, and YASED, a global investors association, which has expressed regret over Riyadh “taking an increasingly negative stance against Turkish companies”.

It states that Saudi businesses have been forced by authorities to sign a document agreeing not to import goods from Turkey.

“Global logistics companies have been warning their customers about the obstacles that Turkish companies face in Saudi Arabia, that they should be prepared for long waiting times at Saudi customs for goods arriving from Turkey and that imports from Turkey might even be blocked. Thus, this issue has gone beyond bilateral economic relations and become a problem for global supply chains,” reads the letter.

Turkey is a key country in the apparel supply chain in Europe. According to the Financial Times, an employee at Spanish clothing group Mango told Turkish suppliers in an email that Saudi had banned imports for made in Turkey products.

 

Long-time sparring partners

The relationship between Ankara and Riyadh has long been tense, reflecting a competition for leadership in the Middle East and different ideologies.

However, it has become increasingly strained of late as Saudi and the UAE accuse Turkish President Recep Tayyip Erdogan of interfering in Arab matters.

The situation has “deteriorated sharply” in recent months, Laura James, senior analyst for the Middle East at Oxford Analytica, tells GTR. “This is partly a Saudi (and Emirati) reaction to Erdogan’s assertive foreign policy, criticism of outreach to Israel and alignment with Qatar. The Turkish trial in absentia of Saudi officials indicted over the murder of Jamal Khashoggi is also a major irritant.”

It is not the first time Saudi Arabia has attempted to apply pressure through economic measures. In 2017, the kingdom and the UAE led a regional alliance to cut off Qatar economically, accusing it of terror offences. Turkey backed Qatar, deploying troops and supplies to a base in the country, irking the two Middle Eastern powers.

When the Libyan conflict intensified earlier this year, Turkey and Qatar chose to support the United Nations (UN)-backed Government of National Accord (GNA), with Turkey deploying thousands of soldiers to assist GNA. Meanwhile Saudi, the UAE and Egypt backed the Libyan National Army (LNA), with the UAE sending arms to aid Libyan militia leader Khalifa Haftar. In late October, a nationwide ceasefire was agreed by the parties.

The ongoing murder trial of journalist Jamal Khashoggi, who was killed at the Saudi consulate in Istanbul in 2018 has only made matters worse. The trial in Turkey is in absentia of the Saudi officials accused, with the kingdom refusing to extradite them. Interpol has issued red notices for the arrest of 20 people believed to be involved in the murder.

Despite these deep ongoing issues, Saudi Arabia and Turkey’s current spat may be subsiding. A late November phone call between Erdogan and Saudi’s King Salman indicated a more amicable relationship on the horizon, with the sparring partners agreeing to keep “channels of dialogue open” in order to enhance bilateral relations and settle their issues for good.

However, backing down is not an Erdogan specialty and Riyadh is unlikely to forgive and forget, especially when Crown Prince Mohammed bin Salman comes to power, says James. “There will be fluctuations, but overall relations are likely to remain poor.”