HomeMiddle EastUAE, Turkey deepen economic ties with investment deals

UAE, Turkey deepen economic ties with investment deals

ANKARA: Turkey welcomed Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan, the UAE’s de facto ruler, on Nov. 24, marking the highest-level visit to Ankara since a nearly decade-long disagreement between the two countries.

The visit represents a new page in Turkey-UAE economic relations with the signature of several investment accords that will be supported with a $10 billion fund.

The agreements concentrated on strategic sectors such as energy, ports and logistics, petrochemicals, technology, food and health care, as well as some cooperation deals between stock exchanges and central banks with a potential swap agreement on the horizon.

Dr. Robert C. Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington, said that Turkey was a big market that the UAE could not afford to ignore if it wanted to get the most out of economic engagement with the broader Middle East and North Africa region.

“Turkey likewise wants to shore up stable trade and investment partners given the volatility and uncertainty plaguing its domestic economy,” Mogielnicki told Arab News.

Considering the huge potential of the accords, especially in times of economic hardship for Turkey with its lira plumbing new lows this week, to what extent this economic rapprochement that unlocked billions of dollars will be supported by political contacts remains to be seen.

Simultaneously, the Emirati economy minister Abdulla bin Touq Al-Mari held a meeting with Turkish Trade Minister Mehmet Mus, just after the Turkey-UAE Joint Economic Commission meeting in Dubai.

“Today, we are starting a new era in sustainable economic partnership between the two countries,” Al-Mari said.

Sovereign wealth funds of the UAE have already made huge investments in Turkish online grocer Getir and e-commerce giant Trendyol.

Soner Cagaptay, director of the Turkish program at the Washington Institute, thinks that the UAE signaling that Abu Dhabi is willing to invest 10 billion dollars in Turkey could be a shot in the arm for the Turkish economy, coupled with sound economic policies in Ankara.

“It will be not for complete recovery of the Turkish economy but will just help to prevent further deterioration nowadays,” he told Arab News.

However, Mogielnicki thinks that the Emirati-Turkish rapprochement is unlikely to have a major impact on Turkey’s currency crisis, which is more closely related to political dynamics surrounding the central bank and US interest rates.

“But an economic vote of confidence from the Emiratis won’t hurt,” he said.

Turkish Foreign Minister Mevlut Cavusoglu will visit Abu Dhabi in mid-December when hopes are pinned on mutual steps for initiating political rapprochement.

Melahat Kemal, an Istanbul-based researcher on Turkey-MENA relations, said that Turkey and the UAE had to settle some of their key political disputes to sustain the economic benefits of this latest wave of agreements.

“As a first step, they need to develop a consensus over their policies in the Syrian and Libyan conflict and gas exploration in the Eastern Mediterranean,” she told Arab News.

“There is still no political statement from the leaders regarding these hot topics. Turkish authorities rather prefer to compartmentalize their rapprochement by focusing merely on the monetary side of the relations.”

The trade volume of the two countries increased by 21 percent last year compared to 2019, and doubled in the first half of 2021 compared to the same period the previous year.

Both sides are working to diversify non-oil trade as Turkey is a key market for Emirati products to reach Asia and Europe, while the UAE helps Turkish goods opening up to the Middle Eastern and African markets.

According to Kemal, the political rapprochement requires confidence-building measures on a mutual basis, and in the short term relations are likely to proceed merely on economic fronts that could contribute to stability in the region.

“The visit of Cavusoglu in December is a significant step toward this direction,” she said.

Cagaptay agreed but said that there was a long way to go as both countries did not see eye-to-eye on a number of issues.

“In three war zones they have different views, with the UAE moving forward to normalize ties with Syria’s Assad regime while Turkey is still remaining hostile to him,” he said.

“In the Libyan and Yemeni civil wars, they also have opposing interests,” he said.

According to Cagaptay, the Muslim Brotherhood issue will be a litmus test for political normalization.

“Turkey also should end its support for Hamas and the Muslim Brotherhood that is seen by the UAE as the greatest security threat both domestically and internationally,” he said.

With the US shifting pivot from the Middle East to the Pacific, Arab countries are trying to de-escalate tensions in the region and pursue normalization efforts.

Ankara has also taken some steps to restrict the activities of Hamas and the Muslim Brotherhood on Turkish soil — an incentive for the Gulf countries to reconcile with Turkey.

According to Mogielnicki, since early 2021 there has been a broad realization that diplomatic tensions and conflicts in the region have reached a point of diminishing returns.

“Lingering conflicts have the potential to hamper the all-important economic recovery efforts in the region. Gulf states like the UAE want to ensure that its foreign policy decisions going forward are good for business,” he said.

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