Guest author Menashe Carmon, chairman of the Israel-Turkey Business Council and Chamber of Commerce & Industry, analyzes the state of Israel-Turkey economic relations.
Following their exchange of mutual diplomatic recognition in 1949, the relationship between Turkey and Israel has undergone multiple upheavals. These primarily stemmed from the negative effects of the Arab-Israeli conflict, and therefore the trend began to improve following the official launch of the peace process between Israel and the Palestine Liberation Organization (PLO) in 1991. Correspondingly with this new zeitgeist the relations between Ankara and Jerusalem were upgraded to a new level of partnership, albeit one mostly focused on the defense sector. However, with the 2002 rise to power of the Justice and Development Party (Adalet ve Kalkınma Partisi – AKP), relations began to gradually deteriorate. In 2010, they reached an unprecedented low following the Mavi Marmara flotilla incident.
Ironically, in spite of the above, it is significant to note that the bilateral economic relations between the two nations were not affected by the various political crises. Over the last 15 years, bilateral economic relations between Turkey and Israel have developed and enjoyed a high rate of growth, including a significant trade volume.Certainly, the prospering economies of the two countries, globalization, and a mutual interest in defense industry cooperation has manifested itself as steady bilateral trade growth. As can be seen in the chart below, in 2014 Turkey became Israel’s number six trade partner with a volume of $5.5 billion. Over the last 3 years, this volume has been affected from changes in oil prices and currency exchange rates, but has remained stable in real terms.
It is crucial to note that this picture was achieved not only thanks to a process of liberalization and the introduction of Western standards on the Turkish economy, but also is due to the complementary structures of these two economies and societies. Turkey’s developed industry is based on manpower. It provides mass and extended industrial production capabilities that perfectly dovetail with the needs of the Israeli economy, which is based on advanced technologies and which continually seeks to penetrate into new global markets in order not to be confined to Israel. Significantly contributing to this picture is the differing international trade goals, products, and targeted export markets of Turkey and Israel, combined with their high capability of data collection, their flexibility, their experience and their young and dynamic work forces.
The high Gross Domestic Product (GDP) per capita in Israel allows high consumption rates that were, and still are, a significant target for Turkish exporters in all sectors. As can be seen in the chart below, the annual Israeli GDP and also the Private Sector Consumption (PSC) are more than 30 percent higher than Turkey’s GDP, even though Israel’s population is only a tenth of Turkey’s.
Menashe Carmon is the chairman of Israel-Turkey Business Council and Chamber of Commerce & Industry.
- Israel, Central Bureau of Statistics – Israel-Turkey Trade – 2013-2017. Table D.4 Imports and Exports by Commodity Groups.
- Israel Export Institute – Trade Figures 2017
- Türkiye Cumhuriyeti Ekonomi Bakanlığı, Ekonomik Görünüm, Subat 2018
- TUIK, Türkiye Istatistik Kurumu, December 2017 (TURKSTAT, Turkish Statistical Institution)