Trade relations between Israel and Turkey persisted despite diplomatic tensions between the two countries. Trade between the two countries has been going on for decades and now reaches hundreds of billions of dollars annually. However, the Israelis fear that the trade relationship will not last as a result of the deterioration of the relationship between the two countries centered on the Gaza war.
Reuters reported that Turkey has suspended trade with Israel this month. Ankara said trade with Israel would remain suspended until the war ends and aid flows unhindered to Gaza. Israel says Turkey’s move violates World Trade Organization (WTO) rules.
Following Turkey’s decision to freeze trade, Israeli importers are frantically looking for alternative import sources. These imported goods range from cement to food and even cars. Economists say that there will be a shortage of these products in Israel due to the non-arrival of these products from Türkiye. But it may not hurt Israel’s $500 billion economy.
Shmuel Abramson, Chief Economist of Israel’s Ministry of Finance, said, ‘Türkiye is Israel’s significant trade partner. But we are not completely dependent on Turkey. Imports from alternative sources may raise costs, but Turkey’s move will not cause significant or long-term disruption to the Israeli economy.’
This economist believes that actual growth will exceed the forecast of 1.6 percent economic growth in Israel in 2024.
In 2023, bilateral trade between the two countries reached $6.2 billion, which is 23 percent less than the previous year. This information is obtained from Israeli statistics. Three-quarters of this bilateral trade is Israeli imports.
After Ankara suspended trade, several Turkish exporters told Reuters they were looking for ways to send goods to Israel through third countries. However, the exporters and importers of Turkey and Israel said that they do not see any indication that there will be much success in this field.
Israeli trade officials say Greece, Italy and other countries are interested in filling the gap for Turkish goods. Agreements with these countries have also progressed. But the main problem is to find a market for the products that Israel exports to Turkey. The export amount is more than 150 million dollars. Products such as energy, chemicals and semiconductors are exported to Turkey.
“I don’t think the economy can depend on a country that one day says, ‘We’ll trade with you,’ and the next day says, ‘We don’t want to trade with you,'” Roy Fisher, head of the Foreign Trade Administration Department at the Israeli Economy Ministry, told Reuters. Trade must be reliable and sustainable. That’s why we think our goal is to find reliable sources in the long term.’
cool relationship
Turkish President Recep Tayyip Erdogan has been a vocal critic of Israel’s military operation against the Palestinian group Hamas in Gaza.
The war began on October 7, when Hamas fighters entered Israel. According to Israeli figures, Hamas killed 1,200 people and took 250 hostage that day. Since then, Israel’s offensive has killed about 36,000 Palestinians, according to the health department in Gaza.
Erdoğan and Israeli Prime Minister Benjamin Netanyahu met Sashari shortly before the start of the war. The meeting took place in the context of a slow improvement in relations between the two countries on the Palestinian issue. Both planned to visit each other’s country. However, the plan has since been put on hold.
In November, Türkiye recalled the country’s ambassador from Israel for talks. Air traffic between the two countries was also suspended. Erdogan called Hamas a ‘movement for freedom’. He welcomed Hamas chief Ismail Haniyeh to Istanbul last month.
After Turkey imposed trade sanctions, Israeli Finance Minister Bezalel Smotrich said he would cancel a free trade agreement with Turkey, at least until Erdogan leaves power and a “leader who is sane and doesn’t hate Israel” comes to power. He said, this plan to cancel the agreement will be presented to the cabinet.
Turkey is the first and only major trading partner of Israel to suspend trade since the Gaza war broke out. Türkiye is Israel’s fifth largest trading partner. However, Israel imports less than 5 percent of its needs from the country.
‘not a disaster’
However, 40 percent of the cement that Israel imports from different countries comes from Türkiye. Israel Builders Association Deputy Director She Pozon said this. He said that importing cement from other European countries is expensive compared to Turkey. “It’s a problem, but not a disaster,” he said.
Two of Israel’s biggest car importers said certain models of Toyota and Hyundai cars were stuck at Turkish ports due to export bans.
Union Motors, the Israeli importer of Toyota cars, said the ban is disrupting the supply of Corolla and C-HR models. The company is looking for a solution. Hyundai car importer Colmobil from Turkey, meanwhile, said it has suspended orders for some models and is working on a solution.
Diplomat is one of the largest Israeli companies in importing goods. Alternative sources of imports are being sought, they said. Brands of consumer goods they import include Heinz, Gillette, Braun and Pampers.
Israeli officials say that they are planning to increase local production so that there is no shortage of products in the country. A survey by the Israeli Manufacturers Association last week found that 80 percent of manufacturers felt they had an alternative to Turkey. On the other hand, 60 percent said they have three months worth of products on hand.
“While we have become accustomed to cheap imports from Turkey, it is possible that we could do without those imports,” said Ron Tomar, president of the Manufacturers Association.