An Arab boycott against Turkey could have serious economic, political effects
CAIRO - Given the high cost of retaliating militarily to Turkey’s incursion into northern Syria, many Arab countries appear limited to using economic sanctions as a response.
The strategy, analysts said, could both severely affect Turkey’s foundering economy and hurt Turkish President Recep Tayyip Erdogan’s credibility as a leader in the Muslim world.
The hashtag “#Erdogan_Killer” has been trending on Twitter, with many calling for boycotts of Turkish products and an end to Egyptian tourism to Turkey. These were the same calls by Citizens Against Rising Prices, an Egyptian civil organisation, and supported by the Free Egyptians Party and some businessmen.
There were official statements condemning Turkey’s military operations in Syria from all Arab countries, except Qatar and Somalia. The Arab League issued a statement condemning the Turkish incursion and warning there would be punitive economic measures against Turkey if it continued its assault.
An Arab boycott of Turkish products would significantly hurt Ankara’s economy. Turkish exports to the Arab world total more than $30 billion annually, representing 18.3% of its overall exports. Arab exports to Turkey total $6.5 billion, about 0.6% of the region’s exports, trade data website Trade Map stated.
However, some Arab countries would stand to lose from a drop in exports to Turkey. Syrian, Egyptian and Lebanese exports to Turkey represent 9.6%, 7.5% and 5.2%, respectively, of their total exports, Trade Map said.
Egypt, perhaps anticipating such a crisis, has been expanding its trade networks to Turkey’s neighbours, including Bulgaria, Romania and Ukraine, whose import needs are similar.
Egyptian President Abdel Fattah al-Sisi and other officials met with leaders of those countries in Cairo and abroad in March, June and September to discuss cooperation and bilateral trade.
A significant slash in Turkish exports to the Arab world may increase Ankara’s trade balance by 44% to $79.4 billion as the country tries to recover from a lingering economic crisis. However, sanctions are unlikely to dissuade Turkey from ending its military operation, said Mosaad Aly, an economics professor at Mansoura University.
“Economic sanctions may maximise the trade balance deficit causing a devaluation of Turkish lira and consequently a hike in inflation, putting Turkey’s economy, which is very fragile right now, in more crises but Turkey can withstand that situation for years,” he said.
“To face high inflation, Turkey will likely raise interest rates. This makes Turkey more attractive to domestic and foreign investors in debt instruments that guarantee its economy the ability to survive its crisis, despite the long-term damage of debt instruments.”
He pointed out that the devaluation of the lira could make Turkey more attractive to foreign direct investors and tourists whose foreign capital can be doubled if exchanged with local currency.
The Turkish currency’s sharp decline since 2017, including increasing inflation and rising interest rates, has been accompanied by a 28% increase in domestic and foreign investor demand for debt instruments, Turkish economists said.
The trend has been accompanied by increasing foreign direct investments to Turkey by 14%, in 2018 compared to 2017 and 6.3%, in the first half of 2019 compared to the same period in 2018, the Central Bank of Turkey and the Economic Policy Research Foundation of Turkey stated.
The effects of any Arab boycott on Turkey would go beyond the economic sphere, analysts said.
Mahmoud Zahran, a researcher specialising in Turkish affairs, said the success of boycott campaigns would reveal how unpopular Erdogan’s regime is in a region he has tried to paint himself as a leader of.
Zahran said 88% of the Arab population is Muslim and “that is the majority that Erdogan used to speak to about his dreams of restoring the caliphate to justify many interventions in the politics of the countries of the region.”
An Arab boycott could turn some Turkish businessmen against Erdogan’s regime, which is on its heels because of the deteriorating economy and poor human rights record.
Tensions between Erdogan’s regime and Turkey’s business class were evident as early as 2017 when a Turkish court issued arrest warrants for 380 businessmen for allegedly supporting the failed military coup against him.
Tensions resurfaced in May when Erdogan exchanged insults with the Turkish Industry and Business Association and its leader, billionaire Tuncay Ozilhan.
Other businessmen seem to be gaining popularity by criticising Erdogan and his Justice and Development Party (AKP) for the country’s poor economy. Turkish businessman Ekrem Imamoglu, who is a member of the opposition, defeated the AKP’s candidate for mayor of Istanbul, known as an AKP stronghold, in two rounds of elections.