Complex Made Simple

Both parties stand to lose as the ‘unofficial’ Saudi trade embargo on Turkey continues

A trade war, albeit one-sided and informal, usually comes to the detriment of traders, middlemen, and various stakeholders. This potential one between Saudi and Turkey is no different

On October 3, a tweet by Council of Saudi Chambers Chairman Ajlan Al Ajlan urged a boycott of imports from Turkey Saudi and Turkish traders have speculated that Riyadh has been enforcing an informal boycott of imports from Turkey Turkish exports to Saudi amount to $3.3 bn a year while imports amounted to $3 bn

A trade war, albeit one-sided and informal, usually comes to the detriment of traders, middlemen, and various stakeholders along the value and supply chains, not to mention the countries themselves.

And this one, like the US-China or the GCC trade crisis with Qatar, is political in nature, but Turkish officials are calling for the resumption of healthy trade relations with Saudi Arabia especially that no official decree on either side has been issued to legally enforce the embargo.   

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Turkish calls to end the embargo 

According to Bloomberg, leading Turkish businessmen said Saudi authorities have stepped up efforts to block imports, warning that global supply chains are being hurt.

Heads of Turkey’s eight largest business groups cited complaints by Saudi companies that authorities forced them to sign letters committing not to import Turkish goods, and complained that Turkish contractors were excluded from major tenders.

On October 3, a tweet by Council of Saudi Chambers Chairman Ajlan Al Ajlan urged a boycott of imports from Turkey.

Said the joint statement that was signed by Turkey’s industry leaders, exporters, contractors, and unions: “Any official or unofficial initiative to block trade between the two countries will have negative repercussions on our trade relations and be detrimental to economies and people of both countries.”

The Saudi government’s center for international communication denied placing restrictions on Turkish goods in an Oct. 3 statement.

Saudi is Turkey’s 15th biggest export market, with sales led by carpets, textiles, chemicals, grains, furniture, and steel amounting to $1.91 billion in the first eight months of the year.  

“The two countries have clashed repeatedly over recent years, with relations plummeting after the 2018 murder of Washington Post columnist Jamal Khashoggi at the kingdom’s consulate in Istanbul,” said Bloomberg.

Reminiscent of the four-nation Arab alliance in the Qatar diplomatic crisis, Saudi, the United Arab Emirates, and Egypt have essentially are allied in an anti-Turkey bloc.  

For more than a year, Saudi and Turkish traders have speculated that Riyadh has been enforcing an informal boycott of imports from Turkey.

“We deeply regret the discriminatory treatment that our companies face in Saudi … We expect Saudi authorities to take concrete initiatives to resolve the problems,” said the business groups, which included the Foreign Economic Relations Board (DEIK), the Turkish Exporters’ Assembly (TIM) and the Union of Chambers and Commodity Exchanges of Turkey (TOBB).

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Trade numbers between Turkey and Saudi

It is the first time that Turkish products have been banned in Saudi Arabia in the 30 years of trade relations.

Turkish exports to Saudi amount to $3.3 bn a year while imports amounted to $3 bn. Saudi is the 15th largest exporter to Turkey.

The volume of trade exchange reached $5.59 bn in 2015, $5 bn in 2016, $4.84 bn in 2017, $4.95 bn in 2018, and $5.1 bn in 2019.

While Turkey mainly imports from Saudi various petroleum products and chemicals, the kingdom imports from Turkey cars, engines, spare parts, iron, and aluminum, as well as various foods, electrical appliances, jewelry, furniture, and clothes, according to data published by the Turkish embassy in Riyadh.

The official website of the Turkish Ministry of Trade indicates that Turkish exports to Saudi between January and August of this year amounted to $1.9 bn, a decrease of $400 million for the same period last year.  

With regard to the numbers of Saudi exports to Turkey in the same period between January and August of this year, they amounted to $1.1 bn, compared to $1.44 bn, a decrease of $350 mn. 

Mostly to blame for this decrease in numbers is COVID-19.