What is behind Erdogan’s recent Gulf tour? Regional stability in the light of the economic crisis

On July 20, 2023, Turkish President Recep Tayyip Erdogan started his three-nation Gulf tour in an attempt to mend ties and mull new cooperation agreements to attract additional investments from wealthy neighbours.

During the tour, agreements were signed between Türkiye and the three Gulf nations. Ankara has recently repaired relations with Gulf states, including the UAE and Saudi Arabia, after years of rivalry following the 2011 Arab Spring uprisings. Turkish support for organizations linked to the Muslim Brotherhood initially spurred a rupture with Gulf states, which view the movement as a terrorist group.

In fact, President Erdogan's outreach to previously estranged Arab leaders and attempts to mend fences with Western capitals whom he criticized harshly in the past mark a significant turnaround in Turkish foreign policy following the May general elections. After ensuring the next five years in office, Erdogan now faces seemingly insurmountable problems at home, especially on the economic front. The devastating earthquakes in February made matters worse. Indeed, the top priority of the Turkish government is to save the economy and tackle inflation rates, and this is the logic behind his visits to Saudi Arabia, Qatar and the UAE.

In Saudi Arabia, the leading regional actor, President Erdogan, met with King Salman and Crown Prince Mohammad bin Salman (MbS) to discuss new areas of partnership. During the visit, a new agreement was signed between Ankara and Riyadh, which entails the export of Turkish-made combat drones.

The two sides also struck memoranda of understanding over direct investment and cooperation in the energy, media and defence sectors. The deal highlights how Erdoğan is taking further steps to repair Türkiye’s relationship with Saudi Arabia, which deteriorated sharply in 2018. The reconciliation with Riyadh paved the way for diplomatic normalization with other regional states.

Hence, President Erdogan’s next stop was the UAE, another influential regional competitor. During the meeting with the UAE’s President Mohammad bin Zayed (MbZ), new agreements worth $50 billion between the two countries. The agreements, estimated at $50.7 billion, are in addition to the trade deal first signed in March valued at $40 billion. It aims to diversify the UAE-Turkiye Comprehensive Economic Partnership Agreement.

While new deals also cover investments, space and defence development, and energy and natural resource projects, the two countries also agreed to establish a Joint Economic and Trade Commission.

As part of the package, the Abu Dhabi Sovereign Wealth Fund (ADQ) said it signed a memorandum of understanding (MoU) to finance up to $8.5 billion of Turkiye earthquake relief bonds. A MoU with the Export Credit Bank of Turkiye will see ADQ finance up to $3 billion in credit facilities to support Turkish exports. Following years of antagonism, Turkish-Emirati ties have improved dramatically since 2021. Consequently, total non-oil trade between the UAE and Turkey reached $19 billion in 2022, increasing 40% from the year before and 112% in 2021.

President’s final stop in the Gulf was indeed Qatar, the closest regional ally and partner of Ankara. During the tremendous geopolitical standoff in the Gulf between 2012 and 2020, Qatar and Türkiye demonstrated unique solidarity, with the latter deploying its military personnel on Qatari soil and supplying it with additional weapons. In exchange, Qatar expanded a currency swap agreement with Ankara in 2020 from $5 billion to $15 billion. Moreover, Qatari state-owned companies hold stakes in Türkiye's major business projects, including the local stock market. Such a record of trust between Ankara and Doha ensured a long-term, smooth economic and security partnership.

President Erdogan's Gulf tour was indeed critical in attracting additional investments from the wealthy Gulf monarchies, as during his recent presidential campaign, he vowed to launch economic reforms to ease the inflation rates and financial deficit. According to the local media, Türkiye’s current account deficit hit a record $37.7bn in the first five months of 2023.

Notably, the Gulf region is not the only target of the Turkish government in its quest to find new investors. The rapprochement came simultaneously with Ankara's shift in foreign policy to normalize ties with Western partners.

Ankara clearly needs better ties with the West in order to attract much-needed capital. Europe remains Turkey's most prominent business partner. Notwithstanding the aim, Ankara's partnership is unlikely to boost dramatically soon, and in this regard, the Gulf partners could provide Türkiye with the required assistance in tackling economic problems at home in the short term.