Turkish Foreign Minister Ahmet Davutoglu recently proposed a visa-free trade zone with Syria, Lebanon and Jordan. In an e-mail interview, Chatham House Associate Fellow Fadi Hakura explains Turkey’s trade relations with its Arab neighbors.
WPR: What is Turkey’s current state of trade with Syria, Lebanon and Jordan?
Fadi Hakura: Turkey engages in $3 billion of annual trade with Syria, Lebanon and Jordan collectively, representing 10 percent of Turkey’s trade volume with the Arab world, and is slightly above its $2.5 billion of annual bilateral trade with Israel. Overall, less than one-quarter of Turkish exports are destined to Arab markets, whereas Europe accounts for 50 percent of exports and 90 percent of foreign investments. Among the three Arab countries, Syria constitutes the largest market for Turkish products with the biggest potential to alleviate poverty prevalent in the impoverished eastern regions of Turkey.
WPR: How would a visa-free trade zone affect broader relations between these countries?
Hakura: Visa-free trade is expected to enlarge economic, political and cultural links between the three countries. Turkey has already scrapped visa restrictions with them, concluded free trade agreements with Jordan and Syria and is negotiating a similar agreement with Lebanon. Eliminating visas has boosted trade and contacts between Turkey and its Arab partners. A good example is the flourishing growth of Turkey-Syria tourism. With the lifting of visa requirements, the number of visits between the two countries has exceeded 100,000 monthly. There are estimates that Syria, which was visited by 20,000 Turks in 1990, will receive more than 1 million Turkish tourists in 2010. Being the most advanced of the four economies, Turkey is the dominant party, running a trade surplus against Syria, Jordan and Lebanon.
WPR: What are the obstacles to regional political and economic integration between Turkey and its Arab neighbors?
Hakura: There are many obstacles to Turkey’s ambitions for regional political and economic integration with the Arab world. Historically, the Middle East is a fractious and politically divided region, a theater for power politics and rapidly shifting alliances. Turkey, albeit a rising regional player, has to share a crowded Middle Eastern space with such countries as the U.S., Iran, Israel, Saudi Arabia, Syria, Egypt, Russia and China, to name just a few competitors.
Given this divisive competition for influence, Turkey will face serious challenges in consolidating regional ties at a time when the Arab League has patently failed to establish an Arab free trade zone and the Gulf Cooperation Council has not yet achieved a customs union between the capital-rich six Gulf Arab states. Israel-Arab disputes and Iran’s nuclear program are major complicating factors to any regional perspective.
Apart from dynamics in the Middle East, Turkey’s customs union with the European Union does not permit unilateral measures for an integrated economic space with Arab neighbors. Turkey’s free trade agreements with Arab countries match very closely the terms of European Union free trade deals with the same countries. In fact, Turkey only reached a declaration of intent — as opposed to a concrete plan — with Jordan, Syria and Lebanon to create a free trade and visa-free zone between them.
Additionally, Turkey’s domestic political and economic capacities will constrain any drive for regional leadership. Arguably, the key factor to expanding Turkish “soft-power” is constructing balanced relations with Israel, the Arab world, Iran and the U.S. while deepening democracy and civil liberties, accelerating economic and social reforms and strengthening secularism in Turkey.