Military and defense equipment.. Saudi Arabia diversifies its economy with other countries besides Washington

Turkish President Recep Tayyip Erdogan embarks on a three-day Gulf tour, with Saudi Arabia as the first stop, followed by high-level meetings in Qatar and the UAE.

Economic concerns

Erdogan's visit, accompanied by a number of ministers and businessmen, aims to strengthen relations with the region while addressing international and regional issues of common interest, including Syria, Libya, Palestine and Iraq.

"Economic concerns will be a top priority for Erdogan's Gulf visit," said Robert Mogilnicki, a non-resident fellow at the Arab Gulf States Institute in Washington, noting the importance of attracting foreign investment and strategic partnerships.

Economic and commercial relations

Mogilnicki acknowledged that building closer economic and trade ties would be a gradual process with uncertain returns on investment, despite potential investment announcements or memorandums of understanding arising from this visit.

Erdogan's trip includes meetings with Saudi King Salman and Crown Prince Mohammed bin Salman.

In addition, three economic forums will be held in Jeddah, Doha and Abu Dhabi.

Attracting foreign investment

The visit is expected to result in several bilateral agreements across a wide range of sectors, including energy, pharmaceuticals, technology, food, logistics, agriculture and petrochemicals.

After going through a period of economic turmoil, Turkey's urgent need to attract foreign direct investment and boost its international currency reserves is closely related to this visit.

Erdogan turned to investors in the Gulf for outside resources before November, when the country faces several debt payments.

Professor Aylin Onver Noy of Halic University in Istanbul pointed out that various factors, such as the Abraham Accords, the change in the US administration, the 2021 AlUla Agreement, the economic impact of the COVID-19 pandemic, the war in Ukraine, and the earthquakes in southeastern Turkey, contributed to this. Normalization of relations between regional actors.

Onver Noy stressed the importance of economic issues in the new foreign policy approach of Turkey and the Gulf states.

Economic partnerships

 Aylin Onver  said “Exploring new economic partnerships is an important determinant factor of this new foreign policy approaches.

she added “Last month, Aramco met with 80 Turkish contractors to discuss $50 billion worth of potential projects in Saudi Arabia,”.

Recently, Turkish Minister of Treasury and Finance Mehmet Simsek visited Saudi Arabia, accompanied by Turkiye’s newly appointed Central Bank governor, Hafize Gaye Erkan.

various agreements

Turkish companies have signed various agreements with their Saudi counterparts in the field of engineering consultancy, construction and real estate development, which indicates the possibility of increasing cooperation.

Ahead of Erdogan's trip, Vice President Cevdet Yilmaz, a respected technocrat tasked with preparing the country's medium-term economic plan, said on Sunday that there would be more capital inflows into Turkey after this visit.

At the Saudi-Turkish Business Forum held in Istanbul on July 12, Turkish-Saudi investment opportunities were discussed, particularly in areas such as urban development, smart cities and real estate.

Real estate investments in Riyadh

Saudi Minister of Municipal, Rural Affairs and Housing Majid Al-Hogail called on Turkish companies to invest in the real estate sector in the Kingdom and to attend the global Cityscape real estate exhibition in Riyadh in September.

The volume of bilateral trade between Türkiye and Saudi Arabia

The volume of bilateral trade between Turkey and Saudi Arabia reached $6.5 billion last year and reached $3.4 billion in the first half of this year.

The short-term bilateral trade target is $10 billion, with a long-term target of $30 billion. Erdogan's previous visit to Saudi Arabia was met with the visit of Saudi Crown Prince Mohammed bin Salman to the Turkish capital, Ankara.

It is noteworthy to say that, Saudi Arabia, as part of its Vision 2030 strategy, is pursuing “check-book diplomacy” with Ankara that will include more swap lines with the Turkish Central Bank, investing in state-owned assets under the Turkish Wealth Fund, and investing in publicly listed export-driven enterprises whose share prices are at all-time lows and mega real estate projects such as Canal Istanbul.

There will also be new deals for military and defense equipment procurement as the Saudi government will want to diversify suppliers beyond the US.