Tue, May 21, 2024

Turkey Halts $7 Billion Trade with Israel Amid Gaza Crisis

Turkey leads gold purchases of Q2 by 85%

Quick Look:

  • Turkey suspends all trade with Israel, pressuring for aid flow into Gaza. 
  • Israel seeks alternative trade routes and criticises Turkey’s leadership, affecting bilateral relations and global commerce.
  • The dire humanitarian situation in Gaza, with 1.1 million people facing catastrophic hunger, international efforts to improve aid delivery.
  • The sharp increase in hostile rhetoric between Turkish and Israeli leaders worsened diplomatic ties and international relations.

Turkey has announced the suspension of all trade relations with Israel. The country cited the worsening humanitarian crisis in Gaza. This drastic measure is intended to pressure Israel for the “uninterrupted and sufficient flow” of aid into Gaza as the region faces an escalating humanitarian disaster. Last year, trade between the two nations was valued at nearly $7 billion, underscoring the economic weight of this decision.

Israel Counters Turkey’s Trade Cut with New Economic Strategies

Israel’s Foreign Minister, Israel Katz, has begun exploring alternative trade routes in retaliation. He has been attempting to boost local production to mitigate the impact of Turkey’s decision. Katz has also vocalised sharp criticism against Turkish President Recep Tayyip Erdogan. Thereby accusing him of “disregarding the interests of the Turkish people and businessmen, as well as ignoring international trade agreements. This statement highlights the broader implications of the trade halt on global commerce and bilateral relations.

The conflict has also seen an increase in hostile rhetoric. President Erdogan has condemned Israeli Prime Minister Benjamin Netanyahu. Moreover, he compared him to historical dictators and dubbed him “the butcher of Gaza.” Netanyahu sharply criticised Erdogan, accusing him of supporting Hamas, denying the Armenian genocide, and perpetrating violence against Kurds within Turkey. These exchanges mark a severe deterioration in diplomatic relations between the two nations.

Gaza’s Crisis Deepens: 1.1M Face Catastrophic Hunger

The humanitarian situation in Gaza remains dire. A UN-backed assessment last month reported that 1.1 million people are facing catastrophic hunger. Besides, such famine conditions seem to emerge in northern Gaza by May. In response to the crisis, the White House has announced the imminent opening of a US military-built pier to facilitate the flow of aid into Gaza, and Israel has reopened the Erez Crossing for aid convoys under intense international pressure.

The United Nations’ senior human rights official, Volker Türk, has suggested that there is a “plausible” case that Israel is using starvation as a weapon of war in Gaza, further complicating the international response and drawing global attention to the conflict.

Economic Fallout: Turkey and Israel Face Trade Turmoil

The suspension of trade between Turkey and Israel poses significant economic risks for both nations. Turkey’s exports to Israel represent 2.1% of its total exports, and Israel is the fifth biggest source of imports to Turkey. The broader economic context includes Turkey’s debt market, with agencies like Fitch Ratings and Standard & Poor’s recently updating Turkey’s ratings, reflecting a cautiously optimistic outlook for the country’s financial stability.

The European Bank for Reconstruction and Development (EBRD) projects steady growth in Turkey’s economy, forecasting a growth rate of 2.7% in 2024 and 3% in 2025. These projections are critical as they reflect the underlying economic resilience in the face of geopolitical and trade uncertainties.

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