Turkish President Recep Tayyip Erdogan embarked on a visit to Saudi Arabia as part of his tour of Persian Gulf states, with the aim of exploring trade and investment opportunities to revive Turkey’s struggling economy. Accompanied by a delegation of around 200 businesspeople, Erdogan met with Saudi Crown Prince Mohammed bin Salman at Al Salam Palace, where they exchanged pleasantries and attended a welcoming ceremony. The visit includes business forums in Saudi Arabia, Qatar, and the United Arab Emirates, with a focus on joint investments and commercial initiatives.
The timing of Erdogan’s trip coincides with the implementation of sales and fuel tax increases in Turkey, which Finance Minister Mehmet Simsek claims are necessary to restore fiscal discipline and combat inflation. While the official annual inflation rate dropped to 38 percent last month from a high of 85 percent in October, independent economists argue that the actual rate is closer to 108 percent.
Turkey’s current account deficit has hit record levels, reaching $37.7 billion in the first five months of this year. Erdogan hopes that the oil- and gas-rich Gulf states will assist in bridging this gap. The Turkish central bank recently implemented a significant interest rate hike, signaling a shift towards more conventional economic policies after criticism that Erdogan’s low-rate approach worsened the cost of living crisis.
Erdogan’s visit follows talks held by Turkish officials, including Vice President Cevdet Yilmaz and central bank Governor Hafize Gaye Erkan, in all three countries. The rift between Turkey and Saudi Arabia and the UAE, which stemmed from the events of the Arab Spring in 2011 and Turkey’s support for the Muslim Brotherhood, has been recently repaired. Additionally, strained relations were intensified by a boycott of Qatar by Saudi Arabia, the UAE, Egypt, and Bahrain. The killing of Saudi dissident journalist Jamal Khashoggi in Istanbul in 2018 further strained ties with Riyadh, with U.S. intelligence agencies alleging that the act was ordered by Prince Mohammed.
However, none of these prior tensions were evident during the visit, as economic agreements between the two countries were signed. The funding from Gulf states, which began after Erdogan sought diplomatic re-engagement two years ago, has provided much-needed relief to Turkey’s economy. Erdogan previously visited Saudi Crown Prince Mohammed and Emirati President Mohammed bin Zayed Al Nahyan, while the latter visited Istanbul for the Champions League final.
Qatar and the UAE recently provided Turkey with approximately $20 billion in currency swap agreements, and Saudi Arabia deposited $5 billion into Turkey’s Central Bank in March. Following Erdogan’s re-election last month, Turkey and the UAE signed a trade deal that potentially amounts to $40 billion over the next five years. Erdogan is scheduled to meet with Qatar’s emir in Doha on Tuesday and the UAE leader in Abu Dhabi on Wednesday.
In conclusion, President Erdogan’s visit to Saudi Arabia forms part of an effort to boost Turkey’s economy by exploring trade and investment opportunities in the Gulf region. The trip aims to strengthen relations and cooperation in various fields, particularly joint investments and commercial initiatives. Furthermore, the visit comes at a crucial time for Turkey, as it faces significant economic challenges and a high inflation rate. By establishing partnerships with the oil- and gas-rich Gulf states, Erdogan hopes to address the country’s current account deficit and stabilize the economy.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
