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GCC sees Erdoğan as best bet for Turkish president

However, concerns remain over Turkey's wider economic policy

Turkey Erdogan Umit Turhan Coskun/NurPhoto
The second round of elections to choose between Recep Tayyip Erdoğan and Kemal Kılıçdaroğlu will be held on May 28

Turkey’s President Erdoğan has defied the polls that suggested he would lose to his rival Kemal Kılıçdaroğlu in Sunday’s presidential election to secure first place with 49.5% of the popular vote.

Instead, momentum has shifted emphatically in his favour for the second round to be held on May 28. Erdoğan’s alliance also defied the survey polls to take a majority in the parliament.

The elections have been watched closely in GCC capitals where it is believed that the outcome will have significant ramifications for their investments and the environment that Erdoğan has curated for them.

Following years of tense political wrangling, Turkey reconciled with Saudi Arabia and the UAE last year.

In a gesture of good will, Saudi Arabia deposited $5 billion into Turkey’s central bank to stem the depletion of the country’s reserves. The UAE moved to accelerate bilateral trade by beginning negotiations over a $2 billion Bayraktar drone deal, signing a $40 billion trade agreement and announcing a $10 billion investment fund that will focus on acquisitions in Turkey.

Qatar, a long-time ally of Erdoğan, has invested billions of dollars in Turkey, most recently purchasing shares in the Eurasia tunnel. The two countries are reportedly in negotiations over a further USD 10 billion fund from Qatar.

Many of these investments have been actively encouraged by Erdoğan through personal diplomacy with these countries and their leaderships.

Questions over Kılıçdaroğlu

Kılıçdaroğlu, however, has been seen as less favourable to the GCC.

Anti-Arab sentiment is seen to be rife in his camp. This was reinforced during the election when a video showing a Turkish journalist for Aljazeera being abused verbally and harassed by members of Kılıçdaroğlu’s allied IYI party for speaking Arabic to the camera went viral. Kılıçdaroğlu has also made anti-refugee sentiment a central pillar of his campaign.

Officials from Kılıçdaroğlu’s Republican People’s Party (CHP) have also indicated that, if they come to power, GCC states will not receive preferential treatment and the priority will be to focus on Europe and the US.

Kılıçdaroğlu himself was accused of threatening Gulf investors last year when he publicly opposed Abu Dhabi’s plans to purchase shares in Istanbul’s new airport.

For these reasons, there is a consensus in GCC capitals that Erdoğan is the preferable candidate.

However, concerns remain over wider economic policy.

Over the past two years Erdoğan has sought to drive down interest rates forcibly, leading to rapid currency depreciation and inflation. While economists have urged Erdoğan to reverse course, the Turkish President has only been more assertive in his insistence on it.

Moreover, the deposits from GCC states into the Turkish central bank have been more a reflection of goodwill in a spirit of geopolitical reconciliation than a vote of confidence in economic policy or the trajectory of the economy. Markets reacted negatively to Erdoğan’s surprise vote share win, and the lira dropped again.

Military matters

However, GCC states may be encouraged by signs of change in Erdoğan’s approach, or at least suggestions that there may be a revision of policy.

Mehmet Simsek, a former finance minister seen as friendly to markets, was seen at Erdoğan’s campaign rallies, suggesting he may be brought back into the fold if Erdoğan wins the presidency and that there may be changes to economic policy.

Moreover, although Erdogan’s alliance won a majority in parliament, his AK Party lost 30 seats, fuelling speculation that there may be serious policy discussion during the party’s assessment of its performance.

It is also important to note that GCC concerns over the Turkish economy are mitigated by the necessity of working with Erdoğan on geopolitical issues, and also a keen desire by GCC capitals to access and acquire the increasingly popular array of Turkish arms and weapons.

Bayraktar drones, in particular, have proven effective and decisive on battlefields in Libya, Azerbaijan, Ukraine and Ethiopia. Turkey has also been touted as a potential long-term alternative security partner to the US, which has been vocal in its desire to de-prioritise the region in its foreign policy.

The country has also already expanded its military base in Qatar, which was set up after Doha questioned US commitment to its security during the standoff with Saudi Arabia and the UAE. Ankara under Erdoğan will consider the possibility of expanding its security footprint in the region.

GCC states are keen to access Turkish military technology and hardware and believe that Erdoğan will continue to push and encourage these sectors to be competitive.

In this regard, the GCC may well conclude that the Turkish economy, or rather Erdoğan, is worth investing in, particularly if he offers access to these sectors. 

Sami Hamdi is managing director of global risk and intelligence company The International Interest

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