Turkey’s geographic location makes it an ideal crossroads for the world’s air traffic, but this location has a dark side, too. Straddling two continents and bordering some of the world’s most war-torn regions, Turkey is also vulnerable to political conflicts around nearly every national border, which could have dire consequences on its ability to trade.
Recent events, for example, have strained the country’s relationships with several of its neighbors, and Turkey’s president, Recep Tayyip Erdogan, has made some controversial statements that have raised eyebrows – such as citing Hitler in response to a question about whether a strong executive presidencywas possible in Turkey. He later said this answer was misinterpreted, but the question remains: Can Turkish Cargo stay out of the fray and stick to the business at hand?
For example, to the east, Baghdad banned imports of Turkish goods to the city as of Dec. 9, 2015, after Turkey deployed 150 troops and 25 tanks to a camp in the Bashiqa region of Northern Iraq, according to the Rudaw news agency. Iraq is the second largest importer of Turkish goods, totaling close to US$11 billion in 2014, according to TurkStat figures. Other Iraqi cities have also banned imports from Turkey.
To the south, the downing of a Russian Su-24 fighter jet in November 2015 resulted in strained relations with Russia. Turkey claimed the fighter was in its airspace, but Russia has since imposed sanctions against Turkey in retaliation, including a ban on imports of fruit, vegetables and poultry, plus a halt to energy projects that were to be undertaken jointly by the two countries.
Turkey’s Deputy Prime Minister Mehmet Simsek said the worst-case scenario, which would be zero relations with Russia, would cost Turkey about $9 billion per year and would likely reduce Turkey’s annual exports by 0.4 percent. Russia was the seventh largest destination for Turkish exports in 2014, with value close to $6 billion. Russia’s sanctions may reduce Turkey’s economic growth by 0.3 to 0.7 percent this year, while the impact to Russia will be limited.
Egypt is also at odds with Turkey following the ousting of former Egyptian president, Mohamed Morsi, who was a member of the Islamist Muslim Brotherhood, with which Turkey’s ruling party is ideologically aligned. As a result, Egypt will not renew a three-year transit-trade agreement with Turkey and has banned the passage of Turkish trucks through its territory. Consequently, Turkish exports to Egypt fell to around $3.3 billion in 2014 from $6.09 billion in 2013.
Turkish Cargo declined to comment when asked about some of these potential political barriers to its business.
See Turkish Cargo’s North American plans
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