On March 21, 2024, the Turkish trade ministry announced that Turkey and the Gulf Cooperation Council (GCC) had agreed to start formal negotiations toward a Free Trade Agreement (FTA).
The announcement marks the latest phase in a steady rapprochement effort by the government of President Recep Tayyip Erdoğan toward the key members of the six-nation GCC, especially Saudi Arabia, Bahrain, and the United Arab Emirates.
This initiative began in late 2020 but has accelerated since Erdoğan won a second presidential term in 2023. Turkey already had very strong relations with Qatar and good relations with Kuwait and Oman. However, up to now, Turkey had been implementing this initiative at a bilateral level; thus, the announcement of negotiations toward an FTA with the GCC as a regional bloc represents an interesting new development.
The negotiations reflect the recent shift in Turkey’s foreign policy from an ideological focus to investment and trade priorities. They are part of a broader effort by Erdoğan’s government to reduce tensions not only with the Arab world but also with Europe and the United States, which Erdoğan is due to visit on May 9 in his first invitation to the White House since 2019. The GCC countries are of high priority for Turkey for economic reasons. These countries offer attractive markets for Turkish exports and are reliable sources of both energy and investment capital for the Turkish economy. From 2002-2010, relations between Turkey and these countries improved significantly and, as a result, the value of Turkish exports and imports with GCC countries, particularly the UAE and Saudi Arabia, rose sharply. These relations suffered several setbacks, however, after 2010 because of geopolitical tensions. Turkey’s intervention in Syria’s civil war and its support for Muslim Brotherhood movements in Arab countries during the 2011 Arab Spring uprisings angered Saudi Arabia and the UAE, which have long viewed such movements as a threat to their political stability. Turkey’s support for Qatar in its 2017 tensions with Saudi Arabia and UAE, and its handling of the assassination of Saudi Journalist Jamal Khashoggi at the Saudi consulate in Istanbul in 2018, led to further tensions with these two powerful Arab nations. Turkey was outraged by the killing and leaked surveillance tapes of Khashoggi entering the consulate and of a man dressed in Khashoggi’s clothes leaving the building in an effort to cover up the crime. Over time, however, Turkish anger at Saudi Arabia has been subordinated to economic needs.
Source of data: IMF-World Trade Statistics; graph generated by author.
Another factor that has played a role in the recent rapprochement between Turkey and key Arab states is Turkey’s response to the Gaza war. On one hand, Turkey’s strong condemnation of Israel for its heavy response in Gaza has made it more popular in the Arab world. On the other hand, instead of adopting an independent and uncoordinated policy toward the crisis, Erdoğan has embraced a response that complements and supports the policies of key Arab countries including Egypt and Saudi Arabia. This posture has produced a more welcoming attitude from Arab countries toward Erdoğan’s recent rapprochement initiatives.
The Turkey-GCC negotiations also reflect the visible improvement in intra-GCC relations, which has made it possible for member states to negotiate with the rest of the world as a regional bloc. Ever since the GCC was created in 1981 in the aftermath of the Iranian revolution, the members have worked toward economic integration, but the progress has been sporadic because of periodic diplomatic tensions among members and differing attitudes toward regional conflicts and actors.
The 2017 rift between Qatar, Saudi Arabia, and the UAE was a severe shock to GCC unity. Angered by Qatar’s maverick foreign policy, which included support for the Muslim Brotherhood, close relations with Iran, and financial backing for the Al Jazeera network that often sharply criticized other Persian Gulf Arab monarchies, Saudi Arabia and the UAE initiated a land, sea, and air economic blockade against Qatar that obstructed GCC coordination and harmonization efforts for more than three years until it finally ended in January 2021.
A steady intra-GCC rapprochement process has been underway since then and has included several high-level diplomatic visits among the leaders of these countries. The resolution of the Qatar crisis paved the way for a resumption of GCC economic integration activities, which include a renewed effort to negotiate FTA agreements as a regional bloc. In September 2023, the GCC signed a trade agreement with Pakistan and another with South Korea in December. Simultaneously with the Turkey discussions, the GCC is engaged in FTA negotiations with several other countries and regional groups. These include talks with the European Union, China, and a more recent FTA negotiation with the United Kingdom, necessitated by the latter’s “Brexit” from the EU.
A Turkey-GCC trade agreement could have a positive impact on other Middle Eastern economies in the future. As a potential transport corridor, Iraq in particular can benefit from the expansion of tourism and the movement of goods between Turkey and GCC countries. Iraq announced the launch of a major North-South transportation project called the Development Road in May 2023. This project calls for the construction of a 1200-kilometer highway and railroad to run from the al Faw commercial port in the Persian Gulf to the Turkish border and then connect to Turkey’s east-west transportation system.
The Turkish government has expressed strong support for this initiative and the Iraqi government is trying to attract financial and diplomatic backing for this mega-project from both Turkey and the GCC countries. The Development Road will not only provide an additional route for Turkey-GCC trade but will also contribute to the stability and development of the northern regions of Iraq. While the project faces security and geopolitical challenges, deepening Turkey-GCC relations can act as an incentive for both Turkey and Persian Gulf Arabs to back this initiative and boost Iraq’s political stability.
Nader Habibi is an Iranian American economist and Henry J. Leir Professor of Practice in the Economics of the Middle East at Brandeis University.
Turkey-GCC Trade Talks Mark Another Step Toward Rapprochement with Arab World
By Nader Habibi
Middle East & North Africa
On March 21, 2024, the Turkish trade ministry announced that Turkey and the Gulf Cooperation Council (GCC) had agreed to start formal negotiations toward a Free Trade Agreement (FTA).
The announcement marks the latest phase in a steady rapprochement effort by the government of President Recep Tayyip Erdoğan toward the key members of the six-nation GCC, especially Saudi Arabia, Bahrain, and the United Arab Emirates.
This initiative began in late 2020 but has accelerated since Erdoğan won a second presidential term in 2023. Turkey already had very strong relations with Qatar and good relations with Kuwait and Oman. However, up to now, Turkey had been implementing this initiative at a bilateral level; thus, the announcement of negotiations toward an FTA with the GCC as a regional bloc represents an interesting new development.
The negotiations reflect the recent shift in Turkey’s foreign policy from an ideological focus to investment and trade priorities. They are part of a broader effort by Erdoğan’s government to reduce tensions not only with the Arab world but also with Europe and the United States, which Erdoğan is due to visit on May 9 in his first invitation to the White House since 2019. The GCC countries are of high priority for Turkey for economic reasons. These countries offer attractive markets for Turkish exports and are reliable sources of both energy and investment capital for the Turkish economy. From 2002-2010, relations between Turkey and these countries improved significantly and, as a result, the value of Turkish exports and imports with GCC countries, particularly the UAE and Saudi Arabia, rose sharply. These relations suffered several setbacks, however, after 2010 because of geopolitical tensions. Turkey’s intervention in Syria’s civil war and its support for Muslim Brotherhood movements in Arab countries during the 2011 Arab Spring uprisings angered Saudi Arabia and the UAE, which have long viewed such movements as a threat to their political stability. Turkey’s support for Qatar in its 2017 tensions with Saudi Arabia and UAE, and its handling of the assassination of Saudi Journalist Jamal Khashoggi at the Saudi consulate in Istanbul in 2018, led to further tensions with these two powerful Arab nations. Turkey was outraged by the killing and leaked surveillance tapes of Khashoggi entering the consulate and of a man dressed in Khashoggi’s clothes leaving the building in an effort to cover up the crime. Over time, however, Turkish anger at Saudi Arabia has been subordinated to economic needs.
Source of data: IMF-World Trade Statistics; graph generated by author.
Another factor that has played a role in the recent rapprochement between Turkey and key Arab states is Turkey’s response to the Gaza war. On one hand, Turkey’s strong condemnation of Israel for its heavy response in Gaza has made it more popular in the Arab world. On the other hand, instead of adopting an independent and uncoordinated policy toward the crisis, Erdoğan has embraced a response that complements and supports the policies of key Arab countries including Egypt and Saudi Arabia. This posture has produced a more welcoming attitude from Arab countries toward Erdoğan’s recent rapprochement initiatives.
The Turkey-GCC negotiations also reflect the visible improvement in intra-GCC relations, which has made it possible for member states to negotiate with the rest of the world as a regional bloc. Ever since the GCC was created in 1981 in the aftermath of the Iranian revolution, the members have worked toward economic integration, but the progress has been sporadic because of periodic diplomatic tensions among members and differing attitudes toward regional conflicts and actors.
The 2017 rift between Qatar, Saudi Arabia, and the UAE was a severe shock to GCC unity. Angered by Qatar’s maverick foreign policy, which included support for the Muslim Brotherhood, close relations with Iran, and financial backing for the Al Jazeera network that often sharply criticized other Persian Gulf Arab monarchies, Saudi Arabia and the UAE initiated a land, sea, and air economic blockade against Qatar that obstructed GCC coordination and harmonization efforts for more than three years until it finally ended in January 2021.
A steady intra-GCC rapprochement process has been underway since then and has included several high-level diplomatic visits among the leaders of these countries. The resolution of the Qatar crisis paved the way for a resumption of GCC economic integration activities, which include a renewed effort to negotiate FTA agreements as a regional bloc. In September 2023, the GCC signed a trade agreement with Pakistan and another with South Korea in December. Simultaneously with the Turkey discussions, the GCC is engaged in FTA negotiations with several other countries and regional groups. These include talks with the European Union, China, and a more recent FTA negotiation with the United Kingdom, necessitated by the latter’s “Brexit” from the EU.
A Turkey-GCC trade agreement could have a positive impact on other Middle Eastern economies in the future. As a potential transport corridor, Iraq in particular can benefit from the expansion of tourism and the movement of goods between Turkey and GCC countries. Iraq announced the launch of a major North-South transportation project called the Development Road in May 2023. This project calls for the construction of a 1200-kilometer highway and railroad to run from the al Faw commercial port in the Persian Gulf to the Turkish border and then connect to Turkey’s east-west transportation system.
The Turkish government has expressed strong support for this initiative and the Iraqi government is trying to attract financial and diplomatic backing for this mega-project from both Turkey and the GCC countries. The Development Road will not only provide an additional route for Turkey-GCC trade but will also contribute to the stability and development of the northern regions of Iraq. While the project faces security and geopolitical challenges, deepening Turkey-GCC relations can act as an incentive for both Turkey and Persian Gulf Arabs to back this initiative and boost Iraq’s political stability.
Nader Habibi is an Iranian American economist and Henry J. Leir Professor of Practice in the Economics of the Middle East at Brandeis University.
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