How trade became a battleground in Turkey-Israel ties

Last week, Turkey introduced restrictions on trade with Israel, announcing a list of 54 products whose export it will halt until Israel declares a ceasefire in Gaza, according to the trade ministry.

Turkey and Israel restored diplomatic relations in 2022 by reinstating ambassadors following years of tension.

However, ties swiftly soured after the war in Gaza began. Turkey's official reason for introducing the trade measures is Israel’s denial of its request to join air drops of humanitarian aid to the Gaza Strip.

"Erdogan has been vocal in denouncing Israel's war in Gaza and calling for an immediate ceasefire, but has faced backlash at home for continuing trade relations and not matching rhetoric with action"

Turkish President Recep Tayyip Erdogan has been vocal in denouncing Israel's war in Gaza and calling for an immediate ceasefire but has faced backlash at home for continuing trade relations and not matching rhetoric with action.

The announcement came after months of public backlash against what some in Turkey see as the government's ambiguous stance on the conflict, making actions such as the withdrawal of respective ambassadors merely symbolic.

In Turkey's municipal elections last month, the ruling Justice and Development Party (AKP) of President Recep Tayyip Erdogan lost some of its support base to the Islamist former ally New Welfare Party, who have taken a more hardline stance against the war in Gaza.

Though other factors were at play - primarily Turkey's economic woes and rampant inflation - it contributed to the AK Party's worst-ever national electoral defeat.

The list of 54 products that Turkey announced will no longer be exported to Israel includes cement, steel, and iron, which constitute the majority of sales. According to the Israel Builders Association, Israel imports about 70 percent of its iron construction materials and a third of its cement from Turkey.

The association's deputy director, Shay Pauzner, recently told The Times of Israel the industry will have to find alternative, more expensive suppliers as a result of the restrictions, further raising construction costs at a time when the industry has already been hit by shortages of labour after Israel expelled workers from Gaza at the outset of the war.

In response to the announcement, Israel accused Turkey of unilaterally violating trade agreements, with Foreign Minister Israel Katz vowing to take “corresponding measures” against Turkey.

“I have instructed to appeal to pro-Israel countries and organisations in the US to curtail investments in Turkey and prevent the import of products from Turkey,” Katz said in a statement.

So far, Israel has not followed up on those threats.

Turkey is a key exporter to Israel. The volume of exports exceeded $5.4bn last year, making the Jewish state the country’s 13th-largest export destination, according to Turkey's trade ministry data.

It is also its fifth-largest supplier and 10th-largest export market, according to Israel's Central Bureau of Statistics.

"Critics point out that trade restrictions don't mean an outright ban, and that it remains to be seen how companies will try to circumvent them"

Despite the two countries' rocky diplomatic relations since the 2010 deadly raid by the Israeli navy on the Mavi Marmara, one of the ships in a flotilla seeking to break the Gaza blockade with aid, trade between Israel and Turkey has flourished in the past decade.

Still, export volumes from Turkey started to decline last year, with volumes down from $7.03 billion in 2022.

“Nobody has been more fierce than President Erdogan in criticising Israel,” Matthew Bryza, a former US Deputy Assistant Secretary of State for Europe and Eurasia, told The New Arab.

“But all throughout, especially in the first couple of months after October 7, you would see in the media a statement by President Erdogan and others that Turkey is ready to be involved in mediation,” he added. “So he hasn't completely burned all bridges with Israel.”

Critics also point out that trade restrictions don't mean an outright ban, and that it remains to be seen how companies will try to circumvent them.

Turkey's facilitation of crude oil exports from Azerbaijan to Israel through the Baku-Tbilisi-Ceyhan (BTC) pipeline continues, for example, with an investigative report recently highlighting the significant intertwining of civilian and military fuel supply chains.

“Azerbaijan has no closer friend or ally than Turkey. So I don't think Turkey would want to hurt Azerbaijan,” Bryza said.

Azerbaijan and Israel also enjoy close military and economic ties. “If Turkey really wanted to squeeze Israel, that's what it would do.”

Ylenia Gostoli is a reporter currently based in Istanbul, Turkey. She has covered politics, social change, and conflict across the Middle East and Europe. Her work on refugees, migration, and human trafficking has won awards and grants.

Follow her on Twitter: @YleniaGostoli