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Türkiye–Israel Trade Conflict
Context :
The escalating economic warfare and diplomatic rupture between Türkiye and Israel is reflective of the complex interplay between trade, politics and regional instability in the West Asia region.
About the Economic standoff:
- Turkish President Recep Tayyip Erdogan announced that Türkiye suspended all trade with Israel from 2 May 2024, amounting to approximately US$ 9.5 billion.
- Previously on 9 April 2024, export restrictions to Israel were imposed on 54 product groups. The restrictions covered various materials, including raw iron bars, aluminium, copper products.
- Turkish Trade Minister Bolat stated that the trade embargo will continue until Israel stops its attacks on Gaza, ensures a permanent ceasefire and uninterrupted delivery of humanitarian aid.
- Bolat announced a three-month grace period for companies to fulfil their contractual obligations.
- Israeli Response: Israeli Finance Minister Bezalel Smotrich proposed abrogating the FTA and imposing a 100% tariff on Turkish imports.
Reasons for the trade conflict:
- Political and Diplomatic Factors
- Gaza Conflict and Turkey’s Support for Palestinians:This decision was made in response to Israel’s ongoing military actions in the Gaza Strip, which Erdogan described as violations of international law and human rights.
- Domestic politics in Turkey :With the opposition party YRP taking a more hardline Islamist stance against Israel Gaza invasion ,which resonated with the public ,President Erdogan had to take a tough stance on the issue .
- Regional Rivalries and Alliances:
- Competing Regional Powers: Both Türkiye and Israel seek to assert their influence in the Middle East, often finding themselves on opposing sides of regional conflicts and political dynamics.
- Energy and Resource Conflicts:
- Eastern Mediterranean Gas Fields: The discovery of significant gas reserves in the Eastern Mediterranean has escalated tensions.
Impact of Economic standoff and associated Challenges:
- Impact :These substantial economic sanctions have inevitably disrupted supply chains for infrastructure and housing projects in Israel, increased uncertainty and strained the bilateral relationship.
- Violating WTO rules Israel faces the dilemma of Violating WTO rules with a trade embargo on Türkiye. considering Israel does not have sufficient grounds for it.
- Israel could not challenge Türkiye’s boycott at the WTO because import bans related to wartime actions are permitted under the organisation’s rules. Therefore, the predicament for Israel is that violation of WTO rules might lead to sanctions, which may further result in other countries stopping imports from Israel.
- Rising trade tensions in middle east :With the Houthis Red sea crisis already going on this conflict complicates the situation further and restricts free trade in the region.