Monday, April 19, 2021

As Turkey-Saudi Ties Deteriorate To A Historical Low, Is Riyadh Boycotting Turkish Products?

As ties between Saudi Arabia and Turkey deteriorates, there have been speculations that officials responsible for Riyadh’s commercial sector have been pressing Saudi firms to end trade with Turkey, including boycotting Turkish products, investment and tourism to the country.

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Relations between the two countries have soured in recent years due to the stark positions adopted by both countries on a number of issues, ranging from Ankara’s support for the Arab Spring to the backing of Qatar in the face of the decision by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to boycott the tiny Gulf state in June 2017.

Tensions increased following the assassination of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul on Oct. 2, 2018. Turkey’s strong stance demanding the trial of those responsible for his killing has only worsened the situation.

Recently, the campaign to limit commercial ties with Turkey has assumed a more pronounced character, with the chairman of the Council of Saudi Chambers of Commerce, Ajlan Al-Ajlan, supported by individuals close to the ruling circles organizing campaigns with media outlets and social media platforms urging the cutting off of trade ties between the Kingdom and Turkey.

Last month, the UAE and Bahrain, two of Saudi Arabia’s closest allies, officially signed a US-brokered agreement in Washington to normalize relations with Israel.

TURKEY-SAUDI

Observers believe there is a link between this “semi-official” Saudi campaign to boycott Turkish products and the “informal” and indirect rapprochement between Saudi Arabia and Israel as well as the possibility of Israeli goods entering the Saudi market via Bahrain and the UAE.

Prince Bandar bin Sultan, the former Saudi ambassador to Washington, recently criticized the Palestinian leadership for wasting opportunities for the Palestinian people to reach a settlement with Israel. Analysts see Bandar’s comments as an attempt to sway public opinion towards greater acceptance of the Israelis.

Analysts are convinced that comments such as those made by Ajlan cannot be made without the “blessings” of the Saudi leadership, considering the Kingdom’s poor record in granting freedom of expression to its citizens.

Saudi Arabia has denied the validity of reports that spoke about an official decision to ban Turkish products from entering the Kingdom, according to Reuters, which quoted the Saudi government media office. The office added that the Kingdom is committed to international agreements and treaties and to free trade.

Saudi Arabia insists that trade between the two countries did not witness a significant decline and that the recent slowdown emanates from the global impact of the coronavirus pandemic.

Meanwhile, a joint statement on Oct. 10 by the heads of the eight largest Turkish business groups mentioned complaints from Saudi companies of being forced by the Saudi government to sign letters obliging them not to import goods from Turkey.

The groups have also complained that Turkish contractors have been excluded from bidding for major Saudi tenders.

The groups that signed the joint statement include textile export companies, contractors, prominent businessmen, trade union officials, the Office of Foreign Economic Relations, the Exporters Association and the Federation of Chambers and Commodity Exchanges.

The head of the Turkish Foreign Economic Relations Committee, Nail Olpak, said in a press statement on Oct. 2 that he had received information from the members of the committee of Saudi Arabia’s boycott of Turkish products since the beginning of this month.

According to the Turkish Foreign Ministry’s website, the trade volume between the two countries in 2015 amounted to around $5.59 billion and declined the following year to $5 billion, followed by $4.84 billion in 2017. In 2018 and 2019, however, it rose to $4.95 billion and $5.1 billion, respectively.

The trade balance is tilting in Turkey’s favor. Between 2015 and 2017, Turkish exports to Saudi Arabia surpassed Saudi imports — with Turkey exporting more to the Kingdom than it imported from it — by about $1.3 billion. However, the difference narrowed to $300 million in 2018 in an indication of the decline in Turkish exports at the height of the political differences between the two countries. In 2019, the trade balance returned to $1.3 billion.

Based on this, it is unlikely that the boycott of Turkish products will have important repercussions on the Turkish economy, even though some Turkish companies, investors and businessmen who take the Saudi market as a priority for their commercial activities will be affected.

On the other hand, Saudi exports to Turkey between January and August amounted to $1.1 billion compared to $1.44 billion in the same period last year, a decrease of $340 million.

The reasons for the decline in the level of trade exchange between the two countries during those months may not be related to the political tensions between them, as most countries of the world are witnessing a complete or partial closure caused by the coronavirus.

Turkish products cover an important area of the daily consumption market for Saudi citizens and are favored for their lower prices and higher quality compared to those from other countries, and therefore boycotting them may mean additional burdens on the Saudi consumer.

Saudis reacting on social media to news about boycotting Turkish products appeared to reject the move, whose potential alternative would be to import through the port of Jebel Ali in the UAE, which is facing widespread criticism in Saudi circles for allowing in adulterated goods.

Therefore, the Saudi government is not expected to take a formal decision to ban the import of Turkish products and to stop commercial dealings with Turkish companies and investors.

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