Saudi Arabia to the rescue of the Turkish economy
Saudi Arabia is considering injecting $5 billion into Turkey's Central Bank, a spokesman for the Saudi Finance Ministry has told Reuters. The senior official said they are in "final talks" with Ankara, which was also confirmed by a Turkish Finance Ministry official. "The talks have not been concluded, but they are in the final stages," he said, according to the Financial Times.
Turkey has long been mired in a severe economic crisis. The national currency, the Turkish lira, has fallen sharply, while inflation reached 85% last month. The Turkish authorities have adopted various economic measures, such as keeping interest rates low - something harshly criticised by national and international economists - but they have not been enough to improve the country's dire situation.
For this reason, Recep Tayyip Erdogan's government has reached economic agreements with major powers such as China, Qatar and the United Arab Emirates. According to Reuters, the Turkish Central Bank has exchanged currency with Beijing for 6 billion dollars, with Doha for 15 billion dollars and with Abu Dhabi for 5 billion dollars.
President Erdogan has also been trying for several months to improve relations with Saudi Crown Prince Mohammed bin Salman with the aim of reaching economic agreements. The murder in the Saudi consulate in Istanbul of journalist Jamal Khashoggi strained ties between Riyadh and Ankara. Erdogan accused the "highest levels" - alluding to the Saudi leader - of planning the death of the Washington Post columnist, causing a diplomatic rift between the two countries. The Saudi authorities opted to cease the activities of Turkish schools in the kingdom, as well as to decree an unofficial boycott of Turkish products.
However, Turkey's ailing economy has led Erdogan to reconcile with Riyadh, as well as with other countries in the region such as Egypt and Israel. Last April, the Turkish president staged a show of appeasement with the Saudi crown prince during a visit to Saudi Arabia, the first in five years. Before travelling to Riyadh, the Turkish judiciary closed the file on the Khashoggi case.
Subsequently, Mohammed bin Salman accepted an invitation from Erdogan and travelled to Ankara in June to usher in a 'new era', achieving 'complete normalisation' and 'a return to the pre-crisis period', a Turkish official told Reuters. Once this new era was opened, Riyadh lifted the undeclared embargo on Turkish goods, increasing bilateral trade. Similarly, Halil Özcan, chairman of the Turkish parliament's Turkish-Saudi Friendship Committee, noted that reconciliation between Ankara and Riyadh would contribute "strongly to regional stability".
Recently, Erdogan and Bin Salman met again in Qatar during the football World Cup. At the sporting event, the Turkish president also spoke with his Egyptian counterpart, Abdel Fattah Al-Sisi, with whom he is also seeking reconciliation after years of disagreements over Ankara's support for the Muslim Brotherhood.
President Erdogan on his meeting with Egypt’s Sisi during World Cup ceremony in Qatar:
— TRT World (@trtworld) November 21, 2022
- We've taken first step for normalisation with Egypt
- Unity of Turkish nation & Egyptian people in the past is very important to us, why not a new start
- We want to establish peace pic.twitter.com/gIECHkTLo7
The improving economy is key for Erdogan and his presidential bid ahead of next year's elections. The ruling AKP party has plummeted to historic lows due to the country's economic crisis. Those who voted for Erdogan in the last elections might not do so in June 2023, opting for other parties such as the centre-right IP or the CHP, whose leaders are in good positions in the polls.
However, nationalism and religion will continue to play an important role. "Although Turkey is becoming less religious due to the emergence of a more secular younger generation, religion remains significant," notes the Middle East Institute.
