Erdogan reconciles with Saudi Arabia with an eye on economy

Turkish President Recep Tayyip Erdogan is in Saudi Arabia on an official visit that stages the new stage in relations between the two countries, estranged since 2018. This trip is of utmost importance for the Turkish leader, and this is demonstrated by the high number of relevant authorities who accompanied Erdogan to Riyadh.

The delegation that travelled to Saudi Arabia with Erdogan includes Interior Minister Suleyman Soylu, Defence Minister Hulusi Akar, Justice Minister Bekir Bozdag, Health Minister Fahrettin Koca and Finance Minister Nureddin Nebati.

The Turkish delegation also includes Culture and Tourism Minister Mehmet Nuri Ersoy, Trade Minister Mehmet Muş, Justice and Development Party Vice President Binali Yildirim, Intelligence Chief Hakan Fidan and Presidential Communications Director Fahrettin Altun.

The presence of so many senior officials from different areas reflects Erdogan's intention to begin this new phase with the Kingdom by focusing on several key issues. However, if there is one that is of particular interest to the Turkish president, it is the economy. The Turkish economy has been going through difficult times since the beginning of the lira crisis at the end of 2021 caused by Erdogan's controversial monetary policies.

Government measures, strongly criticised by international economists, have caused inflation to exceed 60%. Added to this situation are the consequences of the war in Ukraine, which are also affecting other countries. The price of petrol, for example, rose by 32% in March, while prices rose by 4.7% in the same month due to problems in the supply chain of certain products from Ukraine, such as sunflower oil.

For these reasons, the economy is a key focus of Erdogan's visit to Saudi Arabia. As Al-Arab points out, Gulf political circles indicated that the Turkish leader arrived in Riyadh seeking help to pull his country's economy out of crisis. Indeed, before taking off for the Kingdom, Erdogan declared that Saudi Arabia 'has a special place in Turkey because of trade relations, investments and projects', reports the Arabic daily.

To try to strengthen this economic union and benefit from it, Erdogan will do his best to put aside the case of the murder of Saudi journalist Jamal Khasogghi, the main point of contention between Ankara and Riyadh. After years of accusing the "highest levels" of the Saudi government of the death of the Washington Post columnist, the Turkish judiciary has decided to close the case and transfer it to Saudi Arabia.

Ankara's moves on Khasoggi's murder are aimed at pleasing Saudi Arabia and securing funding from the country to boost the domestic economy. Also, with this trip, Erdogan hopes that Riyadh will lift the unofficial boycott imposed in 2020 on Turkish products. As a result of this measure, Turkish exports to Saudi Arabia decreased from $2.7bn in 2018 to $189m in 2021, according to Middle East Monitor.

According to Reuters, Ankara may seek a deal with Riyadh similar to existing currency swap agreements with China, Qatar, South Korea and the United Arab Emirates worth a total of $28bn. Days before the visit, Turkish Finance Minister Nebati said he had discussed economic and trade cooperation and exchanged views with his Saudi counterpart. 

With Riyadh, Erdogan is following the path he has taken with other countries in the region to boost bilateral ties and reach economic agreements. At the end of 2021, the Turkish president invited Sheikh Mohammed bin Zayed al-Nahyan, crown prince of Abu Dhabi and 'de facto' ruler of the United Arab Emirates, to Turkey for the first time in 10 years. During the meeting, Abu Dhabi announced a $10 billion fund to encourage investment in Turkey. Later this year, the two countries signed an agreement to promote bilateral trade. Similarly, Erdogan is working to strengthen ties with other countries in the region, such as Israel and Egypt.

Erdogan is trying to mend the economic outlook ahead of next year's presidential elections, since, according to Metropoll Research polls, the president's approval rating is the lowest since 2015, at 38.6%, according to Reuters. Another Metropoll poll showed that 36.7% of respondents believed the opposition coalition was better prepared to improve the economy compared to 35.4%, who trusted Erdogan's AKP party.