Turkish President Recep Tayyip Erdogan is set to embark on a tour of Gulf countries, looking to attract investment and other financial resources that have all but dried up from Western countries.
Finance Minister Mehmet Simsek said Erdogan will visit the United Arab Emirates as part of the trip, and delegates from both countries are working on stronger economic ties in preparation. Turkish officials, speaking on condition of anonymity, said the president then plans to travel to Saudi Arabia and Qatar.
Erdogan’s visit to the UAE follows meetings between Simsek and Vice President Cevdet Yılmaz during their time in the Gulf country last month. Subsequently, a high-level delegation from the UAE made a return visit to discuss the details of investment cooperation between the two nations.
With Erdogan’s unorthodox policy of keeping interest rates low at the expense of inflation driving away many Western investors, the Gulf nations have emerged as contenders to bridge the investment gap — leading the president to strive to improve relations. An upshot is that the UAE, Saudi Arabia and Qatar are providing much-needed foreign exchange to the Turkish Central Bank through swap agreements and direct deposits.
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The Turkish government has set a target of attracting $25 billion in investments from Gulf countries through various channels, including privatization and acquisitions, according to officials.
Erdogan’s appointment of Simsek has been viewed as a markets-friendly move, given his background as a Merrill Lynch bond strategist. The president has said his new economic team will control inflation, while the Turkish lira has lost more than 20% against the dollar since Simsek took office.
The Gulf countries may insist on deeper economic reforms. Egypt has struggled with a similar plan to raise billions of dollars from the same nations through privatizations, partly because of disputes over valuations and the government keeping the pound at a level investors see as overvalued.
In March, Turkey sealed an agreement to double its trade volume with the UAE, highlighting the growing economic ties between the two nations.
--With assistance from Ugur Yilmaz.
