In a bid to shore up Turkey’s flailing economy and rescue its nosediving currency, Turkish President Recep Tayyip Erdogan visited Doha on Monday in the hope that his Qatari allies can provide much-needed funds to help ease Turkey’s financial woes.
While in Doha, a financial bailout was not Erdogan’s only ask. According to news reports, the Turkish president hoped that his Qatari allies could arrange for him a meeting with Saudi Crown Prince Mohammed bin Salman to help repair ties with Saudi Arabia. The meeting between the two leaders did not happen, but Turkish officials hope it will take place soon.
Erdogan said he plans to mend ties with his adversaries, including oil-rich Saudi Arabia and the United Arab Emirates (UAE), in addition to Egypt and Bahrain. Regional vendettas, especially Erdogan’s support for the Muslim Brotherhood, have hurt Turkey’s foreign relations and trade.
The Turkish president has also vocally attacked the Abraham Accords for peace between Israel, the UAE, and Bahrain, despite Turkey itself maintaining ties with Israel and has been trying to increase its bilateral trade with Jerusalem.
Relations between Ankara and Riyadh suffered further in the aftermath of Jamal Khashoggi’s murder in Istanbul in 2018. Turkish exports to the Saudi market, the region’s biggest, hit an all-time low this year. Ankara’s diplomatic spats with Riyadh and Abu Dhabi have also reduced Saudi and Emirati foreign direct investment (FDI).
Turkey’s economy has come under unprecedented strain over the last few years, as Erdogan’s unorthodox policy of fighting inflation by lowering interest rates has wreaked havoc in the markets. Since 2018, Turkey’s central bank has burnt through some $140 billion of its reserves through back-door hard currency sales in an attempt to maintain the lira’s value. By doing so, the bank depleted its foreign currency reserves and eroded its ability to continue such a policy. This week, the lira fell to an all-time low of 14 to the dollar, losing nearly half of its value this year alone.
Erdogan was late to respond to Turkey’s diplomatic and economic problems and probably reasoned that with Qatar alone, another one of the oil-rich Gulf emirates, his unorthodox economic views could work, and that he could get away with his “zero friends” policy. But Erdogan was proven wrong.
Qatar is rich but too small to bail Turkey out on its own. Cutting interest rates on the Turkish lira and pumping liquidity into the markets to boost growth prompted local and global investors to dump the lira, causing its depreciation and double-digit inflation.
Erdogan might have hoped that cutting interest rates would cause limited devaluation, but the lira continues to be in freefall. This economic reality has forced the Turkish president to rethink his foreign and security policies, especially in the run up to a challenging presidential and parliamentary election in 2023. Erdogan’s popularity, moreover, has hit an all-time low this year. Having lost his strangle hold on Istanbul to the opposition in the 2019 municipal elections, Erdogan wants to avoid a repeat of that embarrassing defeat.
The Turkish president has made some progress toward patching things up with former enemies. Last month, he received the UAE’s Crown Prince Mohammed bin Zayed in Ankara, and is scheduled to visit Abu Dhabi in February. He hopes to take the next step by meeting with Saudi Crown Prince Mohammed bin Salman. But should Gulf countries turn a new page and throw the Turkish president a lifeline?
Perhaps Saudi Arabia and the UAE are better advised to wait until the 2023 elections. Following an increasingly likely opposition victory, Gulf countries can then help restore Turkey’s economy as Ankara reorients back to where it once stood: an integral part of NATO and a steadfast ally of the West.
The more Turkey distances itself away from Islamic extremism, the more America, its Gulf allies, and Israel will invest in the Turkish economy and work on restoring its trade ties and once-cordial diplomatic relations. Erdogan, reneged on past pledges of “strengthening relations with all Gulf countries.”
There is no guarantee that he will correct his course or not go back to his notorious policies once the Gulf has bailed him out in the run up to his make-or-break elections.