PULSE of TURKEY No12

TURKISH-ISRAELI RELATIONS DIVERSIFIED – AT SURPRISING SPEED AND VOLUME

Mutual business volume is heading for $2 billion with a balance in favour of Israel, but promising arrangements are in the pipeline. The mutual trade volume, mostly in Turkey’s favour, is expected to reach $2 billion in 2000 and business volume much higher. Israel intends to liquidate certain industries in favour of high-tech industries which may give a boost to stagnating Israeli business in Turkey though religious prejudices are a hindrance. Third countries may be a more fruitful cooperation. Military cooperation surpasses expectations, but remain at technical level and do not move on to strategic alliance.

President Demirel’s State visit to Israel in March 1996 did not only lay the foundations of the joint work against terrorism, but also provided the infrastructure of the economic interaction with four agreements signed there. He said before flying to Israel, “Relations between Turkey and Israel have continued uninterruptedly since the foundation of Israel in 1948. We attach importance to its enlargement and diversification in every field.”

Infrastructure for economic interaction ready

The four agreements signed during the visit were for

Free trade,
Prevention of double taxation,
Mutual encouragement and protection of investments and
Scientific, technological and industrial cooperation.

Thanks to these agreements large increases have taken place in Turkish-Israeli trade in recent years and the mutual business volume is expected to reach $2 billion this year. In 1997 mutual trade reached $621 million with a 40% increase on a year before. Adding $400 million tourism income from Israel and $600 million military spending mostly from Turkey, a $2 billion business volume is already round the corner.

The trade balance is in favour of Turkey, but when Turkey’s military technology imports from that country are also included the mutual business volume tips considerably in favour of Israel.

Turkish exports to Israel were $46.5 million in 1990. They rose to $78.7m, $90.1m, $80.2m, $178.1m, $239.8m, $254.6m, and $391.5m respectively up to 1997, inclusive. Imports in the same years were $62.5m, $78.1m, $97.1m, $121.8m, $125.9m, $166.6m, $192.1m and $229.3m respectively. The trade balance tipped in favour of Turkey as from 1993 and with the free trade agreement having gone into force in 1997, this trend is expected to rise in future years.

Foreign Minister Ismail Cem’s visit to Israel in July was a turning point in shifting the emphasis from military cooperation to economic in bilateral relations. Between September 5^th-8^th, Prime Minister Mesut Yılmaz, accompanied by 100 businessmen, will pay an official visit to Jordan (5^th-6^th), Israel (7^th-8^th) and Palestine (8^th). At the end of September PM Netenyahu will return this visit and in December, State Minister Işın Çelebi will head a Turkish business delegation to Israel to cooperate with his Israeli counterpart, Natan Sharanski.

These contacts will be in addition to the Economic Summit to be held in Jerusalem between October 13^th-16^th, 1998 on the occasion of the 50^th anniversary of the proclamation of independence by Israel. A 10-member Turkish businessmen’s delegation to be headed by Işın Çelebi will represent Turkey at this summit to bring together delegations throughout the world, with the American one to be headed by Vice President Al Gore. The Turkish delegation will include top managers of big holdings such as Alarko, Profilo, Efes and Denge.

Turkey dodges American and other quota restrictions through Israel

Israel’s admitting Turkish textile exports without tariffs or quota restrictions did not only open up that country’s markets for Turkey, but also provided facilities for Turkish industrialists to outdo the quota restrictions of Europe and America in this sector as Israel is exempted from quotas in these countries. In addition to its free trade arrangements with the USA, Canada, the EU, the Czech Republic and Slovakia, Israel is working on concluding wider free trade agreements with the EU, Hungary, Poland and Jordan.

The President of the Turkish-Israeli Business Council, Ekrem Güvendirek, expects that these zero tariff concessions Israel has accorded to Turkish textiles will be extended to several other Turkish exports within the next four years.

Israeli tourists have also contributed to the Turkish economy especially at critical times of German or European cancellations of reservations for various reasons. Many Israelis who have been to Turkey are visiting for a second and third time. Turkey’s according visa exemptions to Israel increased Israeli tourists to this country by 222%. With about 300,000 tourists from Israel a year Turkey now ranks second after the United States in receiving Israeli tourists.

In the investments field, relations with Israel have not lived up to expectations. In 1997 there were about 4000 foreign companies doing business in Turkey and only 38 of them were Israeli. However, this cooperation is only new and the two countries are now preparing a comprehensive program for jointly going into third country markets, especially the Russian, Chinese and Central and South Asian ones. Latin America and South Africa are among these target regions for tripartite cooperation.

Another joint project is cooperation of Turkish and Israeli small- and medium-size enterprises for exports. There will be tripartite agreements for business ventures from the Caucasus to China. In this cooperation, resources and raw materials will be provided by the host country, technology by Israel and capital and skilled labour by Turkey. This arrangement will make big contributions to the Turkish economy, believes Güvendirek.

Religious and national fanaticism is not facilitating cooperation

If the difficulties encountered in the Middle East peace process do not give way to violence, a free trade zone may be set up by Turkey and Israel in Palestine, stretching to Jordan. All being well, it may eventually transform into the Middle East common market. At this stage, it is a distant dream, partly because of Netenyahu’s policies going as far as clashing with Washingon, partly because of religious fundamentalists in Turkey.

Political factors such as Erbakan or Netenyahu are viewed by Ankara as transitional factors slowing down the cooperation. They can, however, be overcome in time if the cooperation is based on sound grounds and rationale.

A factor adversely affecting Turkish-Israeli economic cooperation and deterring massive Israeli investments in this country, especially in GAP, is the prejudice of religious quarters in Turkey.

Business tycoon Ishak Alaton of Alarko Holding says, “We have had talks with Israeli companies for joint ventures. I do not, however, see big business opportunities for them in Turkey, because of prejudices against Israel. Israel is closely interested in the GAP project, but the Turkish public has a strange fear that Israel is going to steal GAP away. Conservative press stories are fostering these prejudices. I cannot help thinking that these people wish to keep the Southeast undeveloped. It does not seem possible to make big joint investments in Turkey as long as this strong bias exists. We must definitely expel these prejudices and take whichever course is in Turkey’s favour.”

Alaton’s worries and complaints may prove wrong as PM Yılmaz is going to arrange extensive agricultural cooperation for GAP during his forthcoming visit to Israel. As a matter of fact, technological cooperation with Israel is expected to be the driving force of this joint work. Turkey is not only interested in Israel’s missile technology, but also high-tech sectors such as biotechnology, electronics, computer technologies and telecommunication. There has been a rapid advance in Israel’s high-tech industries and research after the disintegration of the USSR. Turkey wants to share these facilities in exchange for bridging that country’s differences with the Islamic world.

Military cooperation heads for point of no return, but keeps clear of strategic alliance

Military cooperation was clearly the area which received the greatest public attention in Turkish-Israeli relations. The foundations of this cooperation were laid in 1991 with the Middle East peace process started at the Madrid conference. The Chairman of the Regional Security Committee in Madrid was David Ivry, now the Under-Secretary of Defence of Israel. His consultant was a Turk. The Chairman of the working group was Süha Umar, now the Turkish Ambassador to Jordan. Confidence building measures worked out in Madrid have gone a long way during the Middle East peace process. Even though they are encountering serious problems today, they managed to pave the way for today’s comprehensive cooperation between Turkey and Israel in both economic and military domains.

The Turkish-Israeli military cooperation agreement survived the Erbakan Government’s one year in office, despite his pledge to abolish it when he was in the opposition. Like in tourism, in military field too Turkey ranks second only after the United States, in Israel’s cooperation plans. And Turkey is almost catching up with the Americans in this field too.

As democratic, secular and developed non-Arab countries of the Middle East the two have a lot to share. At the root of this cooperation rests the Military Training and Cooperation agreement sign in Israel by the Deputy Chief, TGS, General Çevik Bir on February 23^rd, 1996 and the Defence Industry Cooperation Agreement signed in August 1996.

The first agreement calls for

Turkish and Israeli pilots’ training flights eight times a year.
Strategic dialogue and regional threat assessments twice a year.
Joint naval exercises with the participation of aircraft and other countries.
Mutual visits of commanders and warships and drawing up yearly programs.
Intelligence cooperation.

Turkey emphasizes that these arrangements are against no one. The press claims of giving Israel airbases in Eastern Turkey against Iran are strongly rebutted by Ankara. It is stressed that this is not a strategic alliance, but arrangements with a deterrent value against aggression in the region and the cooperation and joint naval exercises are open to any country to join in.

The second agreement provides for

Jet upgrading. 54 F-4E jets of Turkey will be equipped with electronic war devices by Israel for $632 million, with significant financial savings for Turkey.
Modernization of 48 F5s by an Israeli-Singapore consortium for $75 million,
Furnishing and jointly manufacturing Israeli Popeye-I and Popeye-II air-to-air missiles to Turkey within a $500 million parcel .
The newest category in developing anti-missile defences in Turkey. 500-km range Arrow missiles will jointly be manufactured.

Defence industry cooperation includes many other big projects such as the $800 million AWACS early warning aircraft, $4.5 billion combats tanks, $50 million M-60 tanks’ modernization, 10 unmanned aircraft for reconnaissance, and electronic frontier security systems to prevent terrorist infiltration into Turkey from mostly Iraq.

The list is inconclusive and tends to enlarge all the time. In short, a very promising military cooperation is underway between Turkey and Israel and it has already reached the point of no return. There have been a number of deals and potential arrangements, accompanied by a remarkable number of visits back and forth by high-ranking political and military officials.