ISTANBUL — The commercial relationship between Türkiye and Israel, spanning over 72 years, has mostly been friendly, punctuated by occasional disputes. However, recent tensions have escalated, casting a shadow over their future collaboration, except perhaps in oil and steel sectors.
Ankara has been vocally critical of Israel’s actions in Gaza, accusing its leaders of genocide, leading to a strained relationship. In response, Israel is “re-evaluating” its ties with Ankara and has recalled its diplomatic staff from Türkiye.
Türkiye was the first Muslim-majority country to recognize Israel in 1949 and established its first diplomatic office there in 1950. Since then, their bilateral relations have fluctuated between warm and cool periods.
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The trade volume between the two nations highlights their significant commercial interests. According to the Observatory of Economic Complexity (OEC), in 2021, Israel exported $2.03 billion to Türkiye, primarily in Refined Petroleum, Scrap Iron, and Propylene Polymers. Over the past 26 years, Israel’s exports to Türkiye have grown annually by 9.2 percent, from $208 million in 1995 to $2.03 billion in 2021.
Türkiye’s exports to Israel in 2021 totaled $6.31 billion, with main products including Raw Iron Bars, Cars, and Jewelry. These exports have seen an annual increase of 12.6 percent over the last 26 years, growing from $288 million in 1995 to $6.31 billion in 2021.
At A Glance Early Diplomatic Ties: Türkiye was the first Muslim-majority country to recognize Israel in 1949. Fluctuating Bilateral Relations: Türkiye-Israel relations have varied between warm and cool periods over the years. Significant Trade Volume: In 2021, Israel exported $2.03 billion to Türkiye; Türkiye's exports to Israel totaled $6.31 billion. Growing Trade Despite Tensions: Trade figures rose in 2022, with Israel exporting $2.34 billion and Türkiye exporting $7.03 billion to Israel. Impact of Gaza Conflict on Trade: Trade between the nations decreased by 50% since the recent Israel-Hamas conflict. Boycotts and Economic Backlash: Israeli and Turkish businesses engage in tit-for-tat boycotts; Turkish parliament boycotts products from companies supporting Israel. Turkish Airlines and Payment System Shifts: Turkish Airlines excludes Israeli products; shift towards domestic payment system TROY. Academic Boycotts: Turkish universities boycott Israeli educational institutions. Deep-rooted Business Ties: Despite current tensions, longstanding business and trade relations exist, like the Turkey-Israel Business Council. Key Economic Sectors: Türkiye supplies 65% of Israel's steel needs; significant Turkish investments in Israel's energy sector. Oil and Gas Dynamics: Proposed joint gas drilling operations and pipeline projects between Türkiye and Israel face uncertainty. Regional Energy Politics: Türkiye aims to reduce reliance on Russian energy; Israel seeks to expand gas exports to Europe. Continued Oil Flow: Crude oil still flows from Turkey to Israel, with Türkiye being a significant supplier. Broader Geopolitical Implications: The situation reflects broader regional dynamics, including Europe's energy strategies and the human toll of conflicts.
In 2022, the trade figures rose further. Israel’s exports to Türkiye reached $2.34 billion, while Türkiye’s exports to Israel were $7.03 billion, as per the United Nations COMTRADE database. The 2023 report from the Türkiye Exporters Assembly identified Israel as Türkiye’s 10th largest export destination in 2022.
The increase in trade was further reinforced in December 2022 during a meeting between the Federation of Israeli Chambers of Commerce and the Turkish Exporters Assembly in Turkey. The Israeli importers’ delegation, comprising 90 buyers, met with local businesspeople in Istanbul.
This year, Turkey’s total exports to Israel reached $4.15 billion up to September 2023. However, the events of October 7 in Gaza drastically altered the situation. Uriel Lynn, the president of the Israeli federation, expressed shock at the current situation, noting it could significantly impact imports to Israel. “We’re realistic people, and it’s clear that many importers will be cautious about buying in Turkey. We also don’t know if they’ll want to sell to us,” he told Israeli media.
According to Turkish Trade Minister Omer Bolat, trade between Israel and Turkey has decreased by 50 percent since the Israel-Hamas conflict began. “From October 7, we observed that mutual trade between Turkey and Israel decreased by more than 50 percent compared to last year,” Bolat stated during a news conference on an official visit to Kuwait in early November 2023.
From October 7, we observed that mutual trade between Turkey and Israel decreased by more than 50 percent compared to last year.
Turkish Trade Minister Omer Bolat
Not since 2010, when an Israeli raid on a Turkish ship attempting to deliver humanitarian supplies to Gaza resulted in the death of 10 civilians, have diplomatic relations plummeted to such lows.
Tit-for-tat boycotts ensued, with a growing number of Israeli supermarket chains, including the country’s largest chain Shufersal, as well as major competitors like Rami Levy and Yochananof, halting imports from Turkey.
Turkey, in response, has launched a comprehensive boycott against Israel and countries supporting its actions in Gaza, affecting various economic sectors and fueled by Turkish consumer backlash. The Turkish parliament announced it would no longer use products from companies that support ‘Israel’s aggression.’ This included stopping the service of Nestlé, Nescafe, and Coca-Cola products at its restaurants.
“At the TBMM (Turkish Grand National Assembly), we will not use any products from companies that support Israel’s aggression,” Numan Kurtulmus sid during an event in Ordu, a northern province of Turkey.
“We won’t buy any more and will dispose of what we’ve already purchased,” Kurtulmus added.
Turkish Airlines announced it would exclude Israeli products on its flights. At least 19 out of 39 Turkish district municipalities in Istanbul have switched to Turkey’s domestic card TROY for handling salary payments.
Turkey’s domestic payment system TROY, established by the Interbank Card Center in 2015, is seeing a surge in demand as Turkish banks report increased interest in TROY cards.
This surge is part of a movement to boycott international payment systems perceived as supporters of Israel. Turkish citizens are canceling their Visa and Mastercard accounts, according to Turkey’s Yeni Safak publication.
Other groups, like the AKP Youth, have boycotted Starbucks, and Turkish individuals have expressed anger at McDonald’s and Burger King restaurants in Istanbul. This reaction followed McDonald’s Israel franchise announcing it had waived charges for thousands of meals ordered by the Israeli army, causing discontent among Turkish residents. This is despite McDonald’s in Kuwait pledging over $160,000 to relief efforts in Gaza and McDonald’s Qatar transferring $275,000 for the same cause.
In academia, several Turkish universities have announced boycotts against Israeli educational institutions and called for halting collaborations with them.
However, it’s questionable whether these actions are enough to undo the deep ties forged over decades. Historically and strategically, the business and trade relations between countries come at great expense and substantial man-hours, where trust eventually leads to profound business and personal relationships. These relationships are often managed by political figures or leaders of vital business bodies that contribute to growing the country’s GDP.
The Turkey-Israel Business Council, dating back to 1993, currently has Turkish national İbrahim Sinan Ak as its president. Ak is also the CEO of Zorlu Energy Electricity Generation Inc., part of Zorlu, a group with significant investments in Israel, including ‘Zorlu Energy Israel Ltd.,’ established in 2017. The group operates three natural gas power plants in Israel.
Moreover, Turkey provides 65 percent of Israel’s steel needs, selling $1.2 billion worth of steel and iron to Israel in 2022. Turkish company İÇDAŞ is one of the leading steel exporters to Israel. Adnan Aslan, a member of İÇDAŞ’s board, also presides over the board of directors of the Turkish Steel Exporters’ Association.
Yılmazlar Construction Company, renowned for constructing numerous hotels, shopping malls, energy plants, and hospitals in Israel, is owned by Ahmet Reyiz Yılmaz, a prominent figure in Turkish politics. However, when push comes to shove, even these ties can be undone. The oil and gas relations, though, present a much more significant challenge.
Navigating the oil and gas dynamics
Just days before the October 7 event that preceded the Gaza war, President Erdogan announced Turkey’s agreement to joint gas drilling operations with Israel. This announcement followed bilateral talks in September 2023, focusing on broadening energy cooperation, including natural gas, between Turkish Energy Minister Alparslan Bayraktar and his Israeli counterpart, Israel Katz.
At present, Israel’s natural gas still has the green light to be transported to Europe through Turkey. In 2016, the two countries began exploring an undersea pipeline project designed to transport Israeli gas to Turkey, with a portion intended for local consumption and the remainder destined for Europe.
The nearly 3,500-kilometer pipeline was estimated to cost $1.5 billion. Ankara aims to reduce its dependence on Russian energy imports, which account for up to 45 percent of Turkey’s gas demand. The rest is sourced from Azerbaijan and Iran or purchased as LNG from suppliers in Qatar, Nigeria, Algeria, and the US.
Israel, on the other hand, is looking to expand its gas exports to Europe, where many countries are seeking to reduce their reliance on Russian gas, especially in light of Russia’s war on Ukraine.
However, the proposed natural gas exploration and pipeline construction in the Eastern Mediterranean between Turkey and Israel have been put on hold, according to Bloomberg.
Israel has proven reserves of 750 billion cubic meters of gas and produced nearly 22 billion cubic meters in 2022. Turkey is estimated to have consumed more than 63 billion cubic meters of gas in the same year.
Meanwhile, the flow of crude oil passing through Turkey en route to Israel continues to this day. Bloomberg reported that the oil tanker ‘The Seaviolet’ recently transported 1 million barrels of Azerbaijani crude from Turkey’s Ceyhan port to Israel’s Eilat Port. Up to 40 percent of Israel’s annual oil consumption is sourced through crude piped to Ceyhan for onward shipping.
Oil pipelines from Azerbaijan and Iraqi Kurdistan terminate at Ceyhan, making Turkey a significant oil supplier for Israel. It’s challenging to estimate the full extent of the damage to trade and commercial relations between Israel and Turkey as the war in Gaza continues. However, Russia, with its significant presence in the region, has not been immune to European efforts aimed at reducing the continent’s reliance on Russian energy exports, following Russia’s war on Ukraine.
The human toll of these conflicts and geopolitical shifts is immeasurable and transcends any monetary value.