Turkey’s Export Ban to Israel: A New Front in Geopolitical Tensions and Its Impact on the War-Battered Building Industry

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In an unexpected move that marks a significant departure from its previous economic policies towards Israel, Turkey has announced a ban on the export of certain construction materials to Israel. This decision comes amidst the ongoing conflict between Israel and Hamas, adding an additional layer of complexity to an already tense situation. The ban, affecting essential goods such as cement, steel, aluminum, and iron construction materials, strikes a heavy blow to Israel’s construction industry, which is crucial for the country’s infrastructure and economic stability.

Historical Context and Evolution of Turkey-Israel Relations

To understand the gravity of this development, it is essential to trace the historical contours of Turkey-Israel relations. The two countries have shared a fluctuating diplomatic relationship characterized by periods of close cooperation and times of strain. Despite political tensions, particularly during times of conflict involving Gaza, economic relations have largely remained robust. Since the mid-1990s, Turkey and Israel have benefited from a series of free trade agreements, facilitating a substantial flow of goods between the two nations and fostering economic interdependence.

However, the current imposition of trade restrictions signifies a stark deviation from this trend. Gallia Lindenstrauss, a senior researcher at the Institute for National Security Studies (INSS), highlights the abrupt shift in Turkey’s stance, noting that such actions introduce a high degree of uncertainty into the business environment, which is detrimental to sustained economic engagement.

Analysis of the Export Ban’s Immediate Impact

The immediate repercussions of the export ban are profoundly adverse for Israel’s construction sector. The industry, already reeling from the impacts of ongoing military conflicts that have exacerbated labor shortages and delayed projects, now faces a severe disruption in the supply of critical materials. With Turkey being a major source of these materials, Israeli builders must now navigate the challenges of finding alternative suppliers, likely at higher costs due to increased transportation expenses and the urgency of the needs.

Shay Pauzner, deputy director general of the Israel Builders Association, articulates the concerns of the industry, indicating that the search for alternative sources will not only be a logistical challenge but will also lead to increased costs of construction. This will invariably be passed on to consumers and could stall various infrastructure projects crucial for the nation’s development.

Broader Geopolitical Implications and International Responses

The export ban does not exist in a vacuum but is indicative of broader geopolitical dynamics. The ongoing war in Gaza has attracted international scrutiny and criticism, influencing global diplomatic and trade relations. Lindenstrauss raises concerns about the potential for a ripple effect, where other nations might emulate Turkey’s stance, leading to a more extensive economic isolation of Israel.

Moreover, the criticism regarding Israel’s handling of the conflict in Gaza has drawn sharp responses from various quarters, including Turkey, which has accused Israel of obstructing humanitarian aid. These accusations and the consequent trade sanctions underscore a deteriorating bilateral relationship that could have wider ramifications for regional stability and international diplomatic alignments.

Overview of Israel-Turkey Trade Relations

In 2023, the trade between Israel and Turkey saw a significant decrease. Turkey’s exports to Israel amounted to approximately $5.42 billion, down from $7 billion in 2022. Meanwhile, Israel’s exports to Turkey declined to $1.5 billion from $2.5 billion in the previous year. This decline is part of a broader trend that affected several of Israel’s trading relationships, not just with Turkey but also with other nations like Malaysia, Albania, Taiwan, France, the UK, and Canada.

Composition of Trade

Israel primarily imports from Turkey in categories critical for its construction industry. Over 50% of the imports fall within the quarrying, machinery, and metal sectors. Additionally, food products constitute about 8% of the imports from Turkey, underscoring the diverse nature of the goods traded between the two nations.

Alternative Markets and the Potential for Escalation

The recent restrictions have forced Israeli importers to look for alternative markets. According to Elad Barshan, CEO of the SlickChain digital supply chain platform, while alternatives exist, they come with challenges related to price and availability. Trading with East Asia involves longer supply times, potentially extending up to 60 days. European markets, while geographically closer, offer goods at significantly higher prices compared to those from Turkey.

Barshan also expressed skepticism about the potential for further escalation of trade restrictions by Turkey. Given the economic situation in Turkey, characterized by high interest rates and a need for foreign currency, industry leaders are likely to resist any government attempts to intensify economic measures against Israel.

Impact on the Turkish Economy

Despite the political tensions and the implementation of export restrictions to Israel, the overall impact on the Turkish economy appears to be limited. In 2023, Turkey’s exports reached a record high of $255.8 billion, despite a high trade deficit of $106 billion. This indicates that while the export ban to Israel is significant, it is not detrimental to Turkey’s broader economic performance.

Ongoing Maritime Trade

Interestingly, maritime trade between the two countries has continued despite the political rhetoric. Official figures from Turkey’s Ministry of Transport indicate that since the onset of the conflict on October 7, 701 Turkish ships have sailed to Israel, maintaining an average of eight ships per day. This suggests that economic interactions, particularly in maritime trade, persist even amidst heightened political tensions.

Potential Replacement Markets for Turkey

As Turkey looks to diversify its export destinations, the UAE, Russia, and Saudi Arabia have emerged as significant markets. In 2023, Turkey’s exports to these countries saw considerable increases, indicating a strategic pivot to other regional players which could potentially compensate for the reduced trade with Israel.
Israel and Turkey are competitors in several key export areas, particularly in the defense industry and in regional logistics and trade routes. Here’s a closer look at these sectors:

Defense Industry

The defense industry represents a significant area of competition between Israel and Turkey, both of which have achieved notable success in defense exports.

Israel: In 2022, Israel’s defense exports reached a record high of $12.5 billion. Prominent Israeli defense companies such as Elbit Systems, Israel Aerospace Industries (IAI), and Rafael Advanced Defense Systems have made substantial inroads in global markets. Elbit Systems was ranked 21st, IAI 29th, and Rafael 34th in Defense News’ list of the 100 largest defense companies in the world. Israel’s strength in the defense sector is augmented by its advanced technology in areas such as drones, missile defense systems, and cyber warfare capabilities.

Turkey: Turkey also set a record in defense exports with $4.4 billion last year. Turkish defense companies have been climbing in the global rankings, reflecting the country’s growing prowess in manufacturing a range of defense products, including unmanned aerial vehicles (UAVs), armored vehicles, and naval ships. Turkey had four companies listed in Defense News’ rankings, highlighting its ambition to become a major player in the global defense industry.

Regional Control of Goods and Transport Corridors

Another area of competition involves the strategic control over regional transport and logistics corridors, which are crucial for trade and military mobility.

Turkey: Historically, Turkey has positioned itself as a regional hub for trade and logistics, leveraging its geographic location straddling Europe and Asia. The Turkish government was notably upset when US President Joe Biden announced a plan for a logistics corridor that would connect Greece to India through Israel, Jordan, Saudi Arabia, and the UAE, effectively bypassing Turkey.

In response, Ankara sought to promote its own transport corridor linking Turkey with Iraq, aiming further to connect to the Persian Gulf and Indian Ocean. However, recent geopolitical developments and changes in Turkey’s export strategy, including the removal of Iraq from its list of export targets, have stalled these ambitions.

Israeli Tourism to Turkey

Tourism is another significant area where the economic interactions between Israel and Turkey manifest. Although not directly competitive, the volume of Israeli tourists visiting Turkey impacts economic relations.

Tourism Statistics: In November 2022, 68,000 Israelis visited Turkey, showcasing the country’s popularity among Israeli tourists due to its proximity, cultural attractions, and affordability. However, by November 2023, the number dramatically dropped to just 1,800. This sharp decline can be attributed to deteriorating bilateral relations and perhaps security concerns that may deter Israeli tourists. Despite this, the total number of Israeli visitors to Turkey from January to November 2023 remained high, with 762,000 tourists, slightly down from 780,000 in the same period in 2022.

These dynamics underline the complex and multifaceted nature of the competition between Israel and Turkey. Both countries continue to vie for superiority in strategic industries and regional influence, impacting their economic and political relations.

Analyzing Turkey-Israel Trade Dynamics through TurkStat Data

The data from the Turkish Statistical Institute (TurkStat) provides valuable insight into the dynamics of trade between Turkey and Israel. According to this data, Turkish exports to Israel saw a significant increase in February 2024, rising to $395.40 million from $318.77 million in January of the same year. This fluctuation in trade figures highlights the volatile nature of economic relations between the two countries, which can be influenced by various factors including political relations, economic policies, and global market conditions.

Image : 1 Year – Analysis of Trade Trends

Image : 5 Years – Analysis of Trade Trends

Analysis of Trade Trends

Historical Perspective: From 2014 to 2024, the monthly average of Turkish exports to Israel was approximately $357.43 million. This decade-long perspective shows that trade between the two countries has been substantial, underscoring the economic interdependence that exists despite political fluctuations.

Peak and Trough: The all-time high for monthly exports from Turkey to Israel was recorded in April 2022, when it reached $718.82 million. This peak period may have been influenced by specific economic agreements, high demand for certain goods, or other market dynamics. Conversely, the record low occurred in April 2021, with exports falling to $156.05 million, possibly due to the impacts of global economic conditions or significant political tensions.

Factors Influencing Trade

  • Political Relations:
    • The bilateral relations between Turkey and Israel have experienced ups and downs over the years, often reflecting in the trade volumes. Periods of tension tend to lead to decreases in trade, while diplomatic improvements often facilitate an increase in economic interactions.
  • Economic Policies:
    • Economic policies in both countries, including tariffs, trade agreements, and regulations, play a crucial role in shaping the trade landscape. For instance, changes in trade policies or the introduction of new regulations can either boost or hinder the flow of goods.
  • Global Economic Environment:
    • The global economic climate also affects bilateral trade. Economic downturns, fluctuations in global markets, or international sanctions can lead to decreases in trade volumes, as seen in the record low of April 2021.
  • Sector-Specific Dynamics:
    • The demand for specific goods, such as defense materials, construction supplies, or technological products, can vary significantly, influencing the overall trade figures between the two nations.

The trade relationship between Turkey and Israel is complex and influenced by a multitude of factors ranging from geopolitical tensions to global economic trends. The recent data from TurkStat not only provides a snapshot of this relationship but also invites deeper analysis into the factors that drive these economic exchanges. Understanding these dynamics is crucial for policymakers, businesses, and analysts who monitor and engage in the economic interactions between these two strategically positioned nations.

Legal and Economic Ramifications

The legal implications of Turkey’s export ban are also significant. The move violates existing free trade agreements between the two nations, potentially leading to legal disputes and challenges in international trade forums. Economically, while the ban primarily affects Israeli importers and consumers, it also poses risks to Turkish exporters who have relied on Israel as a key market for their products.

Long-Term Considerations and Strategic Adjustments

Looking ahead, the export ban might catalyze a strategic rethinking in Israel regarding its domestic production capabilities. As noted by Dafna Kaplansky, head of foreign trade at the Manufacturers Association of Israel, the current crisis highlights the critical need for Israel to reduce its dependence on imports, particularly from geopolitically sensitive sources. Enhancing local manufacturing capabilities could not only mitigate the risks of similar disruptions in the future but also bolster economic resilience.

In conclusion, Turkey’s export ban to Israel is a multifaceted issue with deep economic, legal, and geopolitical implications. As the situation evolves, it will be crucial for policymakers, business leaders, and international actors to navigate these complexities thoughtfully and strategically. The decisions made in response to this crisis will likely shape the regional economic landscape and influence international trade policies for years to come.


TABLE 1 – Turkey Exports to Israel

Turkey Exports to IsraelValueYear
Iron and steel$1.19B2022
Vehicles other than railway, tramway$562.98M2022
Plastics$516.24M2022
Electrical, electronic equipment$384.59M2022
Articles of iron or steel$377.22M2022
Machinery, nuclear reactors, boilers$365.08M2022
Pearls, precious stones, metals, coins$313.07M2022
Articles of apparel, not knit or crocheted$306.26M2022
Salt, sulphur, earth, stone, plaster, lime and cement$282.45M2022
Furniture, lighting signs, prefabricated buildings$229.99M2022
Paper and paperboard, articles of pulp, paper and board$210.07M2022
Aluminum$186.19M2022
Articles of apparel, knit or crocheted$159.71M2022
Stone, plaster, cement, asbestos, mica or similar materials$152.06M2022
Glass and glassware$138.50M2022
Copper$138.20M2022
Ceramic products$137.84M2022
Cereal, flour, starch, milk preparations and products$78.00M2022
Edible vegetables and certain roots and tubers$75.33M2022
Animal, vegetable fats and oils, cleavage products$71.23M2022
Other made textile articles, sets, worn clothing$67.92M2022
Carpets and other textile floor coverings$61.24M2022
Miscellanneous manufactured articles$58.93M2022
Soaps, lubricants, waxes, candles, modelling pastes$56.22M2022
Inorganic chemicals, precious metal compound, isotope$49.15M2022
Mineral fuels, oils, distillation products$49.12M2022
Edible fruits, nuts, peel of citrus fruit, melons$44.22M2022
Wood and articles of wood, wood charcoal$43.67M2022
Miscellaneous chemical products$43.51M2022
Rubbers$41.06M2022
Footwear, gaiters and the like,$39.18M2022
Vegetable, fruit, nut food preparations$38.42M2022
Fish, crustaceans, molluscs, aquatics invertebrates$37.83M2022
Essential oils, perfumes, cosmetics, toileteries$35.68M2022
Cocoa and cocoa preparations$34.23M2022
Sugars and sugar confectionery$31.55M2022
Knitted or crocheted fabric$31.55M2022
Miscellaneous edible preparations$31.24M2022
Beverages, spirits and vinegar$27.18M2022
Tanning, dyeing extracts, tannins, derivatives, pigments$24.05M2022
Manmade staple fibers$22.93M2022
Wadding, felt, nonwovens, yarns, twine, cordage$22.81M2022
Miscellaneous articles of base metal$21.78M2022
Organic chemicals$19.57M2022
Milling products, malt, starches, inlin, wheat gluten$19.30M2022
Tobacco and manufactures tobacco substitutes$18.46M2022
Manmade filaments$16.06M2022
Cereals$15.37M2022
Optical, photo, technical, medical apparatus$13.59M2022
Dairy products, eggs, honey, edible products$13.06M2022
Articles of leather, animal gut, harness, travel good$12.54M2022
Fertilizers$11.95M2022
Residues, wastes of food industry, animal fodder$11.68M2022
Meat, fish and seafood preparations$9.55M2022
Cotton$9.47M2022
Oil seed, oleagic fruits, grain, seed, fruits$8.00M2022
Toys, games, sports requisites$7.37M2022
Printed books, newspapers, pictures$6.78M2022
Albuminoids, modified starches, glues, enzymes$6.47M2022
Ores slag and ash$5.87M2022
Tools, implements, cutlery of base metal$5.40M2022
Coffee, tea, mate and spices$4.68M2022
Special woven or tufted fabric, lace, tapestry$4.65M2022
Pharmaceutical products$4.17M2022
Raw hides and skins (other than furskins) and leather$3.19M2022
Impregnated, coated or laminated textile fabric$3.10M2022
Railway, tramway locomotives, rolling stock, equipment$1.94M2022
Headgear and$1.27M2022
Explosives, pyrotechnics, matches, pyrophorics$1.18M2022
Bird skin, feathers, artificial flowers, human hair$852.94K2022
Zinc$844.49K2022
Ships, boats, and other floating structures$800.02K2022
Arms and ammunition, parts and accessories$582.38K2022
Aircraft, spacecraft$489.09K2022
Commodities not specified according to kind$472.84K2022
Clocks and watches$417.56K2022
Umbrellas, walking-sticks, seat-sticks, whips$378.70K2022
Musical instruments, parts and accessories$333.10K2022
Vegetable textile fibers not specified elsewhere, paper yarn, woven fabric$302.14K2022
Lead$225.33K2022
Live trees, plants, bulbs, roots, cut flowers$192.04K2022
Base metals not specified elsewhere, cermets.$189.38K2022
Cork and articles of cork$110.03K2022
Lac, gums, resins$95.86K2022
Meat and edible meat offal$92.12K2022
Furskins and artificial fur, manufactures$84.98K2022
Manufacturers of plaiting material, basketwork$83.42K2022
Nickel$83.11K2022
Vegetable plaiting materials, vegetable products$80.35K2022
Works of art, collectors’ pieces and antiques$75.05K2022
Wool, animal hair, horsehair yarn and fabric$72.9K2022
Products of animal origin$43.71K2022
Photographic or cinematographic goods$13.42K2022
Live animals$13.28K2022
Tin$8.70K2022
Silk$5.36K2022
Pulp of wood, fibrous cellulosic material, waste$3.69K2022

TURKEY INDICATORS

TurkeyLastPreviousHighestLowestUnit
Balance of Trade-7520.00-6770.85187.98-14289.73USD Million
Current Account-2556.00-2126.004104.00-10423.00USD Million
Current Account to GDP-5.40-0.901.90-9.00percent of GDP
Imports30100.0027852.8134115.3715.00USD Million
Exports22580.0021081.9623547.907.10USD Million
External Debt499886.00481321.00499886.0043911.00USD Million
Terms of Trade86.0884.75147.6372.34points
Capital Flows-4388.00-4010.007846.00-17427.00USD Million
Foreign Direct Investment399.00804.006571.0046.00USD Million
Remittances10.007.00574.007.00USD Million
Tourist Arrivals2294579.002047158.007148044.0024238.00
Tourism Revenues12273.0020230.0020230.00294.00USD Million
Gold Reserves540.19478.97583.30116.04Tonnes
Natural Gas Imports204441.00249731.00256824.0076260.00Terajoule
Crude Oil Production89.0085.0089.0038.00BBL/D/1K
Weapons Sales398.00438.00438.000.00SIPRI TIV Million
Terrorism Index4.175.608.184.17Points

ISRAEL INDICATORS

 ISRAELLastPreviousHighestLowest  
Currency3.773.735.012.92 apr-24
Stock Market195319862158361pointsapr-24
GDP Growth Rate-5.620.459.21-8.17percentDec/23
GDP Annual Growth Rate-43.416.34-7.86percentDec/23
GDP Growth Annualized-20.71.440.4-30.7percentDec/23
Unemployment Rate3.33.211.42.8percentfeb-24
Inflation Rate2.52.6486-2.7percentfeb-24
Interest Rate4.54.5170.1percentapr-24
Balance of Trade-2822-1799114-5178USD Millionfeb-24
Current Account10541465210541-1750USD MillionDec/23
Current Account to GDP53.95.4-8.4percent of GDPDec/23
Government Debt to GDP60.767.928458.8percent of GDPDec/22
Government Budget-4.20.62.7-16.1percent of GDPDec/23
Business Confidence1614.0544.6-39.48pointsmar-24
Consumer Confidence-25.2-27.6215.09-38.47pointsmar-24
Corporate Tax Rate23233623percentDec/23
Personal Income Tax Rate50505045percentDec/23

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