The relationship between Turkey and Israel is not merely a series of ups and downs but a true roller coaster. The deterioration that began with the outbreak of the war reached a new bottom on May 3rd, when Turkish President Recep Tayyip Erdoğan announced a complete cessation of trade relations between the two countries.
This move actually began on April 9th, when the Turkish Ministry of Trade announced a partial freeze on trade, halting the supply of 54 different products to Israel, including strategic items such as cement and steel. As Erdoğan publicly acknowledged, this unilateral decision by Turkey burst the trade bubble that had reached $9.5 billion, with Turkey having a clear advantage in the balance: Turkey exported $5.4 billion to Israel, while Israel exported $4.1 billion to Turkey.
In 2022, Turkey exported $7 billion to Israel, but due to the war, export volume fell by $1.6 billion in 2023. Therefore, it is clear that Erdoğan’s decision primarily harmed Turkey.
The pan-Islamist, neo-Ottoman ideology driven by the values of the Muslim Brotherhood plays a significant role in Turkey’s decision-making. As a leader who has adopted these values, President Erdoğan does not hesitate to publicly declare his support for the terrorist organization Hamas, even after it committed crimes against humanity. In his eyes, this reviled terrorist organization is still a “political party in the style of the Muslim Brotherhood that won free elections.”
In his historic speech at the Turkish Parliament on April 21st, he praised Hamas, placing it on the same level as the irregular fighters of the Turkish War of Independence known as the “National Forces” (Kuvay-ı Milliye).
However, alongside his ideological sympathy, it is clear that the harsh results of the recent local elections also played a significant role in his decision to take operational steps against Israel. The local elections were essentially a revolt by the Islamist New Welfare Party (YRP), which directly challenged him. Opposition Islamist parties like the Felicity Party (SP) and the Future Party (GP) left Erdoğan with little room to maneuver, leading quickly to the announcement of the cessation of trade with Jerusalem.
It’s important to note that Turkey’s economic situation is already dire, and taking steps that further worsen its economy could threaten Erdoğan. However, this decision underscores that pan-Islamist ideology in Turkey poses an even greater threat. Erdoğan also risked a potential “Western retaliation” with this move, challenging the World Trade Organization’s stance against politically motivated trade disruptions. Such a move might provoke a response from the West, specifically the US and the European Union, who could punish Turkey for this extreme measure against Israel. Erdoğan, therefore, prepared the Turkish public for further deterioration in an already fragile economy.
However, as in previous instances, Erdoğan managed to turn his failures into political gains. He will likely portray this economic decline as a result of Turkey’s “independent foreign policy, which does not take orders from the West.” In other words, it is part of the price Turkey is willing to pay for its independence, effectively countering accusations that he is dancing to the American tune.
This argument may seem foreign to Western and Israeli thinking, but it resonates well within Turkish sociology, which strives to prove that Turkey operates as a global power reminiscent of the Ottoman Empire.
Mock Trial: Erdoğan Confirms It’s Okay to Clash with Him
When Erdoğan’s party came to power in 2002, Turkey was plagued by constant military interference in its decision-making process. During his first term, the European Union demanded that Turkey reduce the military’s influence on its decision-making. Erdoğan took up the challenge and passed the necessary legislation in parliament. This allowed him to weaken the Turkish military and take control of decision-making mechanisms, primarily the National Security Council (MGK). Previously, this body was seen as a “shadow cabinet” that overruled the decisions of the civilian government. The gradual weakening of the military paved the way for the strengthening of other bodies: the police and the Turkish intelligence agency (MIT).
Contrary to European expectations, Erdoğan did not act out of liberalism. That is, once he managed to weaken the Turkish military, he did not try to make decisions based on a democratic process, involving representation of all professional and political views. On the contrary, he began to concentrate political power in his hands and ousted anyone whose views did not align with his own.
Undoubtedly, the transition from a parliamentary system to a presidential one played a significant role in this process. Thanks to the extensive powers he received—including the ability to sign special decrees—Erdoğan managed to concentrate unprecedented power in his hands. By taking control of both the legislative and executive branches, he also managed to appoint most of the judges. In other words, the judiciary, which had already suffered from a lack of independence and functioned without checks and balances, became in Erdoğan’s hands a rubber stamp and a doomsday weapon against all his opponents.
Erdoğan Consolidates His Grip: Judicial “Independence” in Turkey
Erdoğan’s consolidation of power is exemplified by the imprisonment of businessman Osman Kavala, accused of supporting the 2010 Gezi Park protests, viewed by Erdoğan as an attempted coup against him, and former Kurdish party leader Selahattin Demirtaş, accused of affiliations with the PKK terrorist organization. They are prominent examples of the lack of judicial independence in Turkey. Against this backdrop, unsurprisingly, the Turkish judicial system lacks broad public trust. Foreign investors are well aware of this situation as well.
However, due to his newfound power over the Judiciary, Erdoğan occasionally attempts to blur lines, creating tensions between himself and the judiciary just for show. For instance, in a recent decision on June 5th, the court stripped Erdoğan of the ability to dismiss the central bank governor before the end of his term. This decision ostensibly demonstrated the independence of the Turkish central bank. It signaled to international markets that Turkish courts are independent and seemingly unafraid of direct confrontation with the president. Yet, considering the balance of power between authorities and the appointment of judges, most under Erdoğan’s control, it is clear that such a decision could not have been made without his prior approval.
Lowering Interest Rates – Contrary to All Economic Logic
In hindsight, it can be determined that Turkey’s decline began precisely with the 2010 Gezi Park protests. At that time, many protesters were forced to confront police repression and later arrested on baseless charges, such as planning a coup against the elected government. The severe deterioration of freedom of expression in the country created social turmoil and instability. The peak of suppression was immediately felt after the failed coup attempt in 2016. Due to political instability, arbitrary arrests, and aggressively progressive interest rate policies, the crisis intensified even further.
Erdoğan’s intervention was particularly sharp in economic matters – from 2016 to 2023, Erdoğan chose to intervene in the decision-making process of Turkey’s central bank, which is supposed to be entirely independent, as is customary in free countries. Dissatisfaction with the bank’s governors led him to replace no less than seven of them since 2016. Moreover, without hesitation, he also made public statements on matters concerning the central bank and intervened directly in their decision-making process. Through his direct interference, Erdoğan repeatedly demonstrated that even the central bank is subject to his influence.
Erdoğan took steps contrary to conservative economic principles typically adhered to by central banks and made decisions contrary to economic logic. For example, he declared that he would reduce inflation by lowering interest rates – the opposite of the known practice where inflation control is achieved by raising interest rates. As expected, this led to even sharper inflation. As a result, the purchasing power of Turkish citizens significantly declined. Turkish citizens were forced to cope with a very high rise in prices, especially in food, energy, and real estate. Economic growth plummeted, and unemployment officially reached 9.4%, although figures from the Turkish Statistical Institute as officially reported are highly questionable, likely underestimating by tens of percentage points. Part of the data distortion is attributed to the mass exodus of workers leaving Turkey to work abroad. Since 2011, Turkey has dropped 25 places in the global growth index, now ranking a very low 95th.
The Fig Tree Rises – a Competent Finance Minister
Despite all the irrational decisions, including suspending trade relations with Israel, Turkey’s economy is recovering under the current Finance Minister Mehmet Şimşek, who adheres to principles of orthodox economics. Unlike his predecessors, Şimşek secured a positive global reputation and set preconditions for Erdoğan before assuming office, ensuring the president could not interfere in the decision-making process of the central bank. Indeed, this has occurred. Upon assuming office, Şimşek had no choice but to raise interest rates to combat inflation. When he took office, the interest rate, consistently lowered by Erdoğan, stood at 8.5%. To halt the depreciation of the Turkish lira, Şimşek raised the interest rate to 50%. Such a high rate became an unprecedented burden for many Turkish consumers who could no longer repay loans and mortgages to banks.
It is important to note that Şimşek also failed to stop the depreciation of the Turkish lira. When he took office, one dollar was worth 21 Turkish lira; today, the exchange rate stands at 32.5 Turkish lira. Nevertheless, because he is seen as a finance minister trying to act in an acceptable conservative manner, international credit rating agencies consider him a bright spot in the Turkish economy. For example, Standard & Poor’s raised Turkey’s credit rating from B to B+. However, it is still not an investment grade rating, with Turkey’s external debt standing at nearly half a trillion dollars, its trade deficit shrinking, and its access to money problematic.
The social and political situation in Turkey forces President Erdoğan to prioritize Islamist ideological considerations over its economic recovery. He also refuses to relinquish absolute control over vital civic institutions— the judicial system, the central bank, and more— as well as control over freedom of speech and the right to demonstrate. In the current situation, Turkey has no chance of attracting foreign investments and improving its condition.
Therefore, it is clear that Turkey will continue its attempts to court Gulf states, China, and Russia, for whom lack of freedom of expression and judicial independence are not considerations in their relations.
Precisely because of this security blanket, Erdoğan does not feel politically threatened. The next general elections are scheduled for May 7, 2028, so the road ahead is still quite long. Considering the short memory of the Turkish people, who did not even bother to punish Erdoğan after his mishandling of the earthquake that struck the country in February last year, three months before the elections held in May of 2023, it seems likely that to a large extent, Erdoğan’s fate will be determined not by his policy but by his ineffective opposition. So far, the opposition has failed to put forward a charismatic candidate capable of defeating him. Meanwhile, for the majority of the Turkish people who supported Erdoğan in the last general elections, there is no other option but to live under his tyranny, which continues to lead Turkey towards further disaster and economic catastrophe.
