Complex Made Simple

Heralding a new era of UAE-Turkish economic relations- Saudi next

Economic ties between the UAE and Turkey are more than breaking the ice. Trade and investments deals, at least from the UAE side, are thawing whatever issues that existed before

The two countries' trade volume increased by 21% last year and doubled in H1 of 2021 Turkey's Central Bank has swap agreements worth $6 bn with China, $15 bn with Qatar, and $2 bn with South Korea Turkey is a big market that the UAE cannot afford to ignore

Economic ties between the UAE and Turkey are more than breaking the ice. Trade and investments deals, at least from the UAE side, are thawing whatever issues that existed before.

Drumming up support for trade

Abdulla bin Touq al-Mari held a recent bilateral meeting with Turkish Trade Minister Mehmet Mus following a conclave between the Turkey-UAE Joint Economic Commission in Dubai, the UAE’s official news agency WAM reported.

Turkey and the UAE are connected by strong partnerships in almost all fields of economy, trade, and investment, al-Mari said, adding: “Today, we are starting a new era in sustainable economic partnership between the two countries.”

The two countries’ trade volume increased by 21% last year and doubled in H1 of 2021 compared to the same period of the previous year, noted WAM.

UAE’s Minister of State for Foreign Trade Thani Al-Zeyoudi drew attention to the strategic position of the two nations, stating that Turkey is an important market for Emirati products to reach Europe and some Asian countries, while the UAE links Turkish goods with the Middle East, as well as Asian and African countries.

UAE’s $10 billion and more

Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan paid an official visit to Turkey last week at the invitation of President Recep Tayyip Erdogan.  The crown prince’s brother, the UAE national security adviser Tahnoun bin Zayed Al Nahyan, visited Turkey in August as the first major step toward mending strained ties.

The UAE set aside a $10 billion fund to invest in Turkey, Chairman of Abu Dhabi Development Holding Mohammed Hassan Al Suwaidi said in a November 24 statement.

Earlier on that day, Crown Prince Sheikh Mohammed bin Zayed Al Nahyan’s visited Ankara, the first top-level meeting between the UAE and Turkey in recent years.

Agreements for cooperation in multiple fields including trade, energy, and environment, as well as agreements covering direct investments in Turkey were signed.

Investment deals were also signed between the Abu Dhabi Developmental Holding Company PJSC (ADQ), the state investment fund of the UAE, and the Turkey Wealth Fund (TWF), as well as the Presidential Investment Office.

Another agreement was signed between the Abu Dhabi Securities Exchange and Turkey’s stock exchange, Borsa Istanbul, in addition to a memorandum of understanding (MoU) with the Abu Dhabi Ports company.

The ADQ signed a cooperation agreement with Kalyon Group in the fields of energy, infrastructure and transportation, and with the CCN Group in health.

The Turkish and Emirati central banks also signed a cooperation agreement having said earlier they were holding talks about a potential swap agreement.

Turkey’s central bank has previously sought swap deals with other countries as a source of hard currency to build reserves and support the lira, which has declined as much as 45% this year.

It has swap agreements worth $6 billion with China, $15 bn with Qatar, and $2 bn with South Korea, for a total of $23 bn.

Turkey said in September it was in talks with the UAE over investments in energy such as power generation, while the UAE, whose sovereign wealth funds have made significant investments in Turkish online grocer Getir and e-commerce platform Trendyol, has said it seeks deeper trade and economic ties with Ankara.

Dr. Robert C. Mogielnicki, a 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 MENA.

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

The lira has lost 40% of its value since February,

Following the talks, Sheikh Mohammed said he had “fruitful” talks with Erdogan on strengthening ties between Turkey and the UAE.

“I look forward to exploring new cooperation opportunities to benefit our two nations and advance our mutual development goals,” he said on Twitter.

Turkish President Recep Tayyip Erdogan said he will pay a return visit to the UAE in February with a large delegation.

On November 30, 2021, Erdogan also said on state-owned news channel TRT World that Turkey will work to enhance its relations with Saudi. In May, Saudi Foreign Minister Prince Faisal bin Farhan received his Turkish counterpart Mevlut Cavusoglu in Makkah.

They agreed to work on positive issues on our common agenda and to hold regular consultations, according to Cavusoglu. 

Erdogan also said in the interview: “We will witness developments with Egypt in the near future.”