UncategorizedHalting Trade Between Turkey and Israel: Facts and Implications

22 September 2024by Ayhan YILMAZ, SMMM/CPA

In the statement made by the Ministry of Trade, it was mentioned that Turkey’s trade with Israel has been completely halted and that only humanitarian aid supplies destined for Palestine, approved by the Palestinian Ministry of National Economy, are allowed to be dispatched. However, when we look behind this statement and consider the dynamics of international trade, a broader perspective is necessary.

Although halting trade with Israel may seem like a sound decision on paper, in reality, given the dynamics of international trade, preventing this is almost impossible. After Turkey’s decision to halt trade, firms that sell to Israel have turned to other countries, while Israeli firms have started sourcing Turkish products through different countries. Due to the nature of global trade, completely halting trade with one country, while seemingly increasing trade with other countries on paper, does not result in any significant quantitative or volumetric change. Additionally, there are negative effects, such as other countries benefiting from Turkey’s share in foreign trade. Particularly in regional and sectoral terms, certain goods can only be obtained from specific countries. Israeli firms have begun importing Turkish products from countries such as Greece and Bulgaria, which purchase goods from Turkey, leading to intermediaries in these countries profiting more.

Halting Turkey’s trade with Israel may affect not only the trade between these two countries but also indirectly impact trade with other countries. This is because regional trade conducted through Israel (e.g., shipments directed to the Middle East and North Africa) may be carried out through alternative routes.

The Reality of Aid Reaching Palestine

It is claimed that humanitarian aid is reaching Palestine and that this aid is delivered directly to Palestine, not through Israel. While humanitarian aid is certainly being sent to Palestine, there are some realities that must be considered:

  • Passage Points and Logistical Issues: Geographically, Palestine is surrounded by areas under Israeli control, and particularly in the case of aid directed to Gaza, the supplies must pass through Israeli territory. Since Israel has control and oversight of these processes, it becomes difficult for Turkey to conduct continuous and effective trade with Palestine while completely bypassing Israel. This situation may negatively affect the consistent and uninterrupted flow of humanitarian aid.
  • Palestine’s Economic Capacity: Currently, Palestine is economically dependent on external sources. Even if Turkey increases the volume of aid to Palestine after cutting trade with Israel, it may be difficult for Palestine to consistently accept and process this aid in the long term due to logistical and financial limitations. Therefore, it must be recognized that the aid reaching Palestine will be limited, and consequently, it may be insufficient to fully meet the needs of the Palestinian people.

Although the Ministry of Trade’s statements indicate that trade with Israel has been completely halted, looking at the functioning of global trade, we can see that this is not practically feasible. For the following reasons, trade will continue in some form:

  • International trade can be conducted through indirect routes. That is, Turkey can continue to supply products to or from Israel through another country. Even if direct trade between the two countries has been halted, indirect trade via third countries can continue. Countries with free trade agreements, in particular, play a critical role in this indirect trade.
  • Global trade’s production and supply chains have become multilayered. For example, the components of a product can be manufactured in different countries, with the final assembly occurring in another. Therefore, Turkey’s trade with Israel may continue indirectly through global supply chains.

The claim that the Ministry of Trade has completely halted trade with Israel will not yield such definitive and sharp results in practice. Considering the dynamics of global trade, indirect trade routes, and the complexity of supply chains, it is evident that trade with Israel will continue in some form. Additionally, given the practical difficulties in consistently delivering sufficient humanitarian aid to Palestine, it appears unlikely that the needs of the Palestinian people will be fully met.

by Ayhan YILMAZ, SMMM/CPA

Born in 1986, Ayhan YILMAZ graduated from Turkey’s first English-focused vocational high school, Manisa Anatolian Trade Vocational High School, specializing in Foreign Trade. He continued his education at Muğla Sıtkı Koçman University, earning a degree in Foreign Trade, followed by studies at Muğla Sıtkı Koçman School of Foreign Languages in English Teaching and Anadolu University Faculty of Economics. In 2020, he obtained the title of Certified Public Accountant (CPA). In 2024, he began an MBA (Master’s in International Management) at the University of Lisbon, ranked 260th among the world’s best public universities. He is fluent in English and has basic proficiency in Spanish and Bulgarian. Committed to the philosophy of lifelong learning, Ayhan YILMAZ continues his professional endeavors. For more detailed information, feel free to contact him.

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