Turkey has gone through significant transformations over the last decade. In this period, ongoing economic and political changes in the domestic arena were accompanied by renewed Turkish activism on the foreign policy front. Foreign Minister Ahmet Davutoğlu’s strategic formulation, "zero problems policy with neighbors", brought dynamism to Turkey’s relations with most neighboring countries, at a time when the global balance of power was shifting relatively rapidly. Throughout this period, economy and trade became the "practical hand" of Turkey’s peaceful foreign policy (for a view of the positive transformation Turkey’s economic aggregates, see Table 4). The impact of this approach is noticeable especially regarding Turkey’s relations with Middle Eastern and Asian nations.
Two major external economic developments came to the fore under the leadership of the current ruling party (the AK Party - Justice and Development Party). First, neighboring countries turned into profitable trading partners for Turkish financial and industrial firms. Parallel to the rise in Turkey’s total foreign trade (which increased from $72 billion in 2001 to $333 billion in 2008), Turkey’s total trade with Asian countries (including the Middle East) went from $18.7 billion to $131 billion, rising more than 50% faster than the average. More importantly, the neighboring countries’ relative share in Turkish foreign trade increased at the expense of the more mature EU market. Accordingly, in the period in question, the EU’s share in Turkish foreign trade declined from 51.38% to almost 42%; whereas Turkey-Asia (excl. MENA) and Turkey-Middle Eastern foreign trade increased to 26.5% and 12%, respectively.
The second economic development that improved Turkey’s visibility in foreign affairs is the changing outward Foreign Direct Investments (FDI) dynamics. Even though Turkey’s outward FDI performance is still relatively modest by international standards, Turkish institutional investors, for the first time in recent history, turned into "visible actors" in both Central Asian/Middle Eastern and European markets. Accordingly, by 2009, Turkey’s outward direct investment stock has reached $11.2 billion, $3.1 billion of which was directed to Asia (including the Middle East). In the rest of the paper, we’ll seek to understand the underlying dynamics of Turkey’s rapidly developing linkages with Central Asia’s main economies.
The Rise of Central Asia in Turkish Foreign Trade
The political independence of Central Asian countries in the early 1990s has drawn Turkey’s attention to that vast geographic area formerly part of the Soviet/Russian colonial empire, and thus brought a new "Eastern" dimension to Turkish foreign policy. Turkey was the first country to recognize the newly independent Central Asian states and the first to open embassies across the region. Turkey’s main policy towards these newly independent Central Asian republics was always centered on fostering political and economic reforms, preserving political and economic stability, contributing to the state-building process, and supporting the seamless transportation of the region’s vast energy resources to international markets, providing substitute routes if necessary.
Turkey being a founding member of NATO, Ankara’s relations with the Soviet Union weren’t favorable to an active role in the region. Things changed dramatically after 1991: the collapse of the Soviet Union brought about a power vacuum in Central Asia, that Turkey was able to fill progressively (rather slowly until the late 1990s), after some hesitations, by eventually combining diplomatic dynamism and economic development (most remarkably after 2000), with public policy makers and private sector CEOs finally uniting their efforts efficiently to seize new markets and strengthen Turkey’s position.
Initially, in the first 4 or 5 years following the fall of the Soviet Union, Turkish officials declared grand objectives for these countries that they were not able to meet: "romantic" declarations of intent based on a shared national and cultural heritage failed to materialize... From 1996 onward, corrective measures were taken progressively with Turkish policy makers shifting to a more pragmatic foreign political stance in the region. In this new policy, the relationship between Turkey and the Central Asian Republics was defined first and foremost by shared economic interests.
The poor performance of the first phase is visible: tabulated in Table 1 and Table 2, the economic relations between Turkey and the five Central Asian countries were not satisfying for both parties between 1990 and 2000. The import and export figures were clearly below Turkey’s potential. Surely, to be influential in the region, Turkey was willing to be one of the main foreign donors, but the lack of coherent foreign policy stance in Ankara, with successive coalition governments losing focus or trying different approaches to the region hindered the fulfillment of Turkeys true potential.
In retrospect, it clear that one of the main reasons for the low export figures prior to 2000 was Turkeys obsession with its economic and political relations with the European Union during the 1990s, which translated in neglect for the economic potential of Central Asia. This, at a time when countries such as China, the United States, Russia, Canada and Germany were making more investments than Turkey in the region, often seizing "early entrants" strategic positions in key economic sectors.
Today, the situation has improved substantially, and Turkey’s ranking among the regions trading partners has improved steadily (Table 3): Turkey is now among the top 6 trading partners for all Central Asian economies, with enviable positions in key sectors such as food production and conditioning, construction, hotel management, financial services, oil and gas, as well as IT and telecommunication. But, import and export figures are still below Turkey’s full, optimal, economic potential, which constitutes both a challenge (furthering existing development by competing against dynamic Chinese, Indian firms) and an opportunity (building on the impressive successes of the past 10 years).
What Next?
What ought to be done in the economic realm to avoid the failures of the 1990s and the "return of the same mistakes"? In order to improve the economic relations with Central Asian countries, Turkey should first establish a solid framework of relations, with clearly defined strategic priorities. Ankara has learned the lesson, and laid the groundwork for a more focused, more long-term oriented foreign policy. Todays Turkey is aware of the importance of the Central Asia while taking into account the existence of Russian, Iranian and Chinese interests in the region. In this perspective, Turkey should pursue and build on its pragmatic policy of the past few years by systematically privileging economic development, and thus avoid being distracted by purely political considerations.
The rise in trade and investment flows with Central Asia and Turkeys belated willingness to revive the old "Silk Road" trade routes mean that Ankara has been making real progress in the mutually beneficial economic partnerships Turkish firms have established in the five republics of Central Asia. But this does not mean in any sense that Turkey is engaging with its "Eastern" Central Asian neighbors at the expense of the "rest". Quite the contrary: Turkey aims to position itself as a "central country" at the intersection of a geographically strategic region, a key Eurasian power within the EU. Hence, Ankara acknowledges that the same democratization and Europeanization processes that have helped Turkey to achieve its remarkable economic and political developments of the past 10 years helped create spill-over commercial and diplomatic effects into its relations with its Central Asian neighbors. Finally, Turkey has brought economic and political stability to that crucial part of the world which constitutes a vital link between Western Europe and Asia. What Turkey expects from its European friends and allies is simply to be recognized as an equal, equally European, partner as it strives to further the security and welfare of the region.
Mustafa Kutlay [1] & Salih Doğan [2]
[1] mustafakutlay@gmail.com
[2] salihdogan52@gmail.com
This article was firstly published in Revue Analyse Financiere / Q1 2011. pp 34-36.
Please click here for the pdf version of the article.
Separatism in Eurasia: Grassroots growing in the wrong direction
