13.08.2018 Author: Salman Rafi Sheikh

What is Turkey Signing up with China?


With Turkey’s fast run towards greater economic and strategic integration with the East, its once popular dream of integration with the West through the EU has come to a permanent end. After making defence deals with Russia, buying the state of the art S-400 missile system, and siding with Iran and Russia in Syria, Turkey has now entered into a new era of military co-operation with China, a cooperation that is already showing signs of taking place within a wider regional strategic understanding and a shared vision of an alternative world order that would encompass a lot more than just military cooperation. It wasn’t long ago when Turkey attended the BRICS plus meeting in South Africa, explicitly voicing its support for a desire to become a member of the group, making it ‘BRICST’, and now it has announced its intentions to do trade with Russia, China and Iran in local currencies, which means that Turkey has clearly signed permanently out of the Western military bloc. It will now have the means to by-pass major US policies, such as Iran sanctions, and will have more room to make independent policies, shunning NATO’s influence or the pressure of meeting its commitments.

Two things clearly indicate Turkey’s serious search for new friends. In an op-ed for New York Times on August 10, 2018, Erdogan argued that Turkey is serious in “looking for new friends and allies.” Undoubtedly now, China is atop the list of new friends. In the 100-day action plan revealed by the Turkish government last week, which is based upon the hope to implement sustainable policies in every sector, China has been mentioned in several capacities as an economic partner and a source of external investment, one that might help arrest the ‘free-fall’ Turkish Lira is currently experiencing. And unsurprisingly, in the run-up to the 100-day plan, Turkish ministry of Treasury and Finance announced to have secured a new credit line from China valuing at least at 3.6 billion dollars.

While the heavy borrowing doesn’t portray the overall economic situation in positive terms, Turkey has been left with no choices as well. Turkish companies have borrowed roughly 300 billion dollars in foreign currency, and now have to repay it in devalued Turkish lira. What adds more to the pressure is the fact that most of the debt was issued when the Turkish lira traded at less than 2 to the dollar. It now trades at more than 6 to the dollar, thus tripling the debt services to be paid back.

On top of it is the worsening impact of new US tariffs on Turkey, implying a virtual US attack on Turkey to punish it for its alignment with Russia and Iran over Syria, making the US sanctions credibly ‘weaponized’ as a tool of foreign policy and diplomatic coercion. And, if this is to be taken as a start of war, Turkey’s search for new friends in the East becomes logical and timely as well.

For China itself, Turkey, after Iran and Pakistan, is perhaps the next territorial link to complete its New Silk Roads to connect with Europe. And to strengthen its relations with China under the New Silk Roads banner, Turkey is most likely to offer its ports. China’s state-owned shipping company COSCO Pacific already owns 65% of Turkey’s third largest port, and the two countries can expand their partnerships in Turkey’s other ports, in the Mediterranean Sea, in the Aegean Sea, and at the Black Sea, linking all these ports through railway networks.

This in turn also aligns the two different territorial strategies of Turkey and China. Turkey’s own central corridor strategy that aims at linking Europe to Central Asia and to Afghanistan, Pakistan and China matches with China’s Belt and Road initiative, giving the two countries an opportunity to mutually expand their geography of trade.

While this is likely on the cards, projections in the western media that Turkey will likely be completely absorbed by China in the wake of a Chinese expansion look a bit farfetched and unfounded.

For instance, despite the growing distance between the EU and Turkey, EU remains by far the largest Turkish export market. For instance, in 2017, according to the Turkish Statistics Institute, Turkey’s total exports to China were the equivalent of – in dollar terms – only 19.4% of exports to Germany, or 33.9% of exports to the US.

As of April 2018, according to Central Bank of Turkey data, 72.1% of foreign direct investment stock in Turkey originated from Europe, and 7.6% from the United States, while China’s share stood at a minimal 1.1%.

While there is however no gainsaying that this share will jump in the coming years, Turkey’s alignment with China doesn’t mean Turkey completely shunning its trade with the West. If nothing else, the four-million strong Turkish diaspora in Europe will continue to be a permanent factor in shaping Turkish-EU economic relations in the years to come.

Both China and Turkey have their own specific reasons in enhancing their mutual relations. For China, Turkey is the last key to build New Silk Roads to connect China with Europe, the Balkans, and the Middle East; for Turkey, China is a suitable country to turn to look for investment and thus diversify Turkey’s trade and economic portfolio to minimize the impact of the US ‘trade wars’ that have started to hit every country along the line.

For Turkey, the primary purpose remains diversification and less dependence on the West. Turkey therefore isn’t going to be “consumed” by China as the western pundits seem to be hoping. On the contrary, China’s presence will help Turkey insulate itself against economic shocks from the West, particularly the US.

Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”.

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