On March 3, 2023, the United Arab Emirates and Turkey signed a Comprehensive Economic Partnership Agreement in Abu Dhabi which aims to increase trade between the two countries to $40 billion in the next five years. The agreement, which has been in the making for some years, is expected to focus on strategic sectors such as agriculture technology, food security, clean energy, and real estate and slash tariff fees by 82 percent between the two countries. Initially, during a visit by UAE president Sheikh Mohamed bin Zayed in 2021, the UAE set up a $10 billion investment fund in Turkey. The new announcement also builds on a defense cooperation agreement and a series of economic accords signed in 2022 following a visit by Turkish president Recep Tayyip Erdogan to the UAE. Prior to the deal with Turkey, the UAE also signed free trade deals with India and Israel. It also pursued a trilateral trade agreement among Abraham Accords countries, including Israel and Morocco.
Strategically, the UAE’s deal with Turkey is part of its continued efforts to pursue and promote free trade to reaffirm itself in the global supply chain, reinforce the Abraham Accords, and solidify its position in the era of great power competition. It positions the UAE at the heart of the emerging U.S.-led trading bloc whose formation pace has been expedited in the aftermath of the pandemic and the Russian war on Ukraine. It also advances the Abraham Accords countries’ efforts to undermine political Islam in Turkey, Iran, and the Arab countries.
Specifically, the UAE’s pouring of additional investments into Turkey aims to undercut Iran’s efforts to boost trade with Turkey to $30 billion, a plan which got disrupted by sanctions and the pandemic but is now back on track according to official statements. Trade between Iran and Turkey declined from a peak of $10 billion after the United States withdrew from the Joint Comprehensive Plan of Action in 2018. Two years later, in 2020, bilateral trade had declined to $5 billion. However, Iran and Turkey have sought to rebuild their ties since then. In 2021, Iranian foreign minister Hossein Amir-Abdollahian announced Iran and Turkey will continue high-level diplomatic talks to draft a “long-term cooperation road map” to cement relations. The rejuvenated ties increased Turkish-Iranian trade to around $6 billion in 2021 and then around $10 billion in 2022, a return to pre-sanctions levels. This restoration of the ties has alarmed the UAE, which is seeking to bring Turkey closer to the Arab Gulf states, Israel, and the United States.
The UAE has another goal in mind: challenging Turkey’s ruling Justice and Development Party’s (AKP) foreign objective of building strategic relations with other like-minded Islamic regional parties, such as Hamas and the Muslim Brotherhood in Libya, Egypt, Syria, and Iraq. The UAE deems these groups as a threat to the balance of power and stability in the region. However, in the last two years, Turkey has rolled back its support to Hamas and the Muslim Brotherhood in Egypt in a bid to secure investments from the Gulf countries and Israel, which it needs to stabilize its economy before its national elections in May 2023. By building large investment ties with Turkey, the UAE and other Gulf countries hope to change Turkey’s strategic calculus toward supporting their future vision for the region.
In the aftermath of the earthquakes, which are expected to inflict over $84 billion in economic losses, the UAE would like to ensure Turkey does not feel vulnerable to the extent that it aligns with Iran via trade and investments. Turkey has already committed to trading with Iran in national currencies to overcome Western sanctions, which could empower Iran’s regional agenda that is seen as aggressive by the UAE and other regional actors. The UAE’s agreement with Turkey will make Ankara less likely to support regional policies that destabilize the creation of a new market and regional alliances.
For Turkey, the immediate need for capital injections since the earthquakes makes the UAE agreement appealing, but it is also potentially problematic for Erdogan’s political future. The UAE’s investments will help strengthen Erdogan’s image as his country’s savior, and may also stabilize Turkey’s currency and restore public and investor confidence, but it also signals the Gulf’s growing leverage over Turkey and the weakening of Erdogan’s grip on Turkey’s economic power. The Turkish opposition, which has previously highlighted Turkey’s endemic corruption and nepotism, is unlikely to let this opportunity go to waste.
From Erdogan’s point of view, the deal is a balancing act between immediate economic needs and the growing political and economic influence of the Gulf, which may restrict his ability to follow an independent foreign policy in the region. Through its engagement with Turkey, the UAE is trying to score a major victory for the Abraham Accords by attracting Turkey to the new alliance and disincentivizing Turkey’s growing ties with Iran.
Ahmed Alqarout is a London-based expert in international political economy. His research focuses on the impact of financial and economic policies on global and regional stability with a special focus on the Middle East and Africa.
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