Turkey decided today (Thursday) to stop trade with Israel without officially announcing it, as revealed in Globes and later also published in the Bloomberg news agency. So what does it look like in the field? What is the volume of trade? And what are the reactions in Israel? Globes is in order.
There is no official announcement, so how does it look on the ground?
The event started gaining momentum in the morning. Suddenly, it was discovered that goods were not being loaded onto ships destined for the ports of Haifa and Ashdod. On the other hand, ships that had already left Israel and arrived at Turkish ports with the aim of unloading their contents, found themselves in an illusory situation where it was impossible to unload the goods.
What is the volume of trade between the countries?
In the framework of the trade between Israel and Turkey, the lion’s share is occupied by imports, which decreased in the past year from about 5.7 billion dollars in 2022 to about 4.6 billion. In total, according to the Turkish Bureau of Statistics, trade between the two countries amounted to 6.8 billion dollars in 2023, of which 76% were imports from Turkey.
The import mix, according to data from the economic department of the Union of Chambers of Commerce, included metals (27%), machinery and electrical equipment (13%), plastics and rubber (9%), stone, plaster, glass and cement (8%), wide tools and car parts ( 7%) and minerals (5%). On the other hand, the export mix included chemical products (44%), metals (14%), plastics and rubber (13%), machinery and electrical equipment (10%).
From the inspection of the manufacturers’ association, it appears that Turkey is the fifth largest import source in Israel. Israel has developed a particularly large dependence on cement products, where Turkish imports last year accounted for 29% of all imports. In the field of plastic and rubber products, the Turks’ share of imports reaches about 11%, and in textile products, about 10%.
Until the Turkish Ministry of Commerce announced in April the initial export limit on 54 items, most of them for the construction industry, there was actually a positive trend in trade between the countries. In March, for example, Turkish exports to Israel reached a record high since the outbreak of the “Iron Swords” war ($437 million), and imports even reached a record for an entire year ($167 million), according to the Turkish Bureau of Statistics. However, it seems that the historic defeat of the Justice and Development Party, led by President Recep Tayyip Erdogan, in the local elections at the end of March, led to panic – and the decision to align with the anti-Israeli demands of its voter base.
What are the reactions in Israel?
Foreign Minister Israel Katz attacked Turkish President Recep Tayyip Erdogan, noting that he is breaking vessels and blocking the ports for exporting and importing produce to Israel. Director General of my office to hold an immediate discussion with all relevant parties in the government to generate alternatives for trade with Turkey, at the level of local production and imports from other countries. Israel has a strong economy and a dare turned out sweet. We Win, and They Lose”.
Shahar Turgeman, president of the Association of Chambers of Commerce, said: “This is very unfortunate news, over the years the business sector in both countries has been careful not to involve economic relations with political developments and it is a shame that the Turkish authorities do not maintain this tradition. The main losers from Erdogan’s move are the Turkish merchants and not Israel’s economy is strong enough to find alternatives to imports from Turkey, and we at the Chamber of Commerce will also help all members of the Chamber who have commercial relations with Turkish industry to locate new import destinations. We all hope that this crisis will pass soon and we will return to doing business with the Turkish business sector Modi is facing crises with Erdogan and the Turkish government, and we are sure that this too will pass.”
Shay Hajaj, chairman of the regional government center and head of the Merhavim regional council: “We have warned time and time again. Israel must be independent in producing fresh food and must not be dependent on other countries. The finance policy, unfortunately, was and still is to encourage imports, which did not lower prices but hurt agriculture. The importation of tomatoes from Turkey hurt the farmers surrounding Gaza, who are responsible for growing 70% of the tomato production in Israel. and now this It’s unpleasant to say: we warned you!”.
The President of the Federation of Manufacturers and Chairman of the Presidency of Employers and Businesses in Israel, Dr. Ron Tomer said in response to the report that “for a month and a half we in the Federation of Manufacturers have been warning that this is the direction and here now Erdogan comes to a full stop – an embargo on Israel.” “Unfortunately, Israel is behaving in the ‘battered woman’ syndrome – at first she denies it, then she says it was an accident, then she ‘ran away,’ and the truth finally explodes in front of our faces,” he added.
Dr. Tomer criticized Israel’s policy and said that while Erdogan is doing, Israel is slacking off. “Already a month ago, we asked the finance and economy ministries to respond with a threat and then the implementation of the imposition of 100% protective tariffs against Turkey to signal both to Erdogan and to the world that Israel will not sit quietly on a boycott against it. Beyond the laziness and the loss of national honor – we have lost an important message to all those who seek to boycott us – That we will not accept this and every tomorrow will be punished back.”
The president of the association stated that “better late than never – we need to impose protective tariffs of 100% for three years on all imports from Turkey and for certain products to completely ban imports from there. This is the only way that Erdogan will understand that he cannot play with us and that his move will cause a long-term reaction. This It will also allow many local manufacturers who are willing to invest and establish additional production lines in Israel to maintain their productive independence because there is a future for local procurement from them. Also, it is time to strengthen our productive independence in the field of food and construction – the state must do as much as it can to encourage the establishment and expansion of food factories and construction that will increase the amount of food and construction materials produced in Israel in order to break away from dependence on Turkey.”
Which industries will be particularly affected?
The construction industry is very dependent on Turkey, when already after the export limit of 54 items – public companies such as Hamat, which deals with the import of household products, and Friedenzon, which deals with logistics, reported a possible injury. This means, of course, turning to other countries, especially Western countries, but such turning will inevitably lead to price increases. At the same time, a significant part of the products in the supermarkets are from Turkey, to an extent that is sometimes not noticed. A significant part of the private label comes from Turkey.
Does this mean we won’t see any more products made in Turkey soon?
The answer is no. Not only because it will take time for the existing goods to run out, but because already in the last few weeks they have been experimenting with detour routes. As revealed in Globes, goods from the initial list of 54 items began to be sent to the ports of Kuper or Ljubljana in Slovenia, and from there transfer to Israel. How is this possible? If on the bill of lading of those items, including for example cement, marble, steel and aluminum, a Port of Delivery in Israel appears – the shipment will indeed be blocked. But there is still no limit on the transfer of money between the countries.
In the case of Turkey and Israel, the money route is not complicated, but the paperwork and transport routes complicate the situation. If it appears on the paperwork as the Kuper destination port in Slovenia, even the Turkish customs, which is considered one of the most difficult in the world, will not be able to thoroughly investigate the final destination in practice. They do not have the ability to withstand the burden of being able to check where the payment came from for any goods that are among the 54 items that are restricted from being exported to Israel, but are routinely exported to many countries around the world.
The reason why the Israelis are looking at the Slovenian option is that Cyprus, which is closer, does not work with Turkey. On the other hand, the customs in the city of Kuper in Slovenia is considered convenient. As soon as the goods arrive in the Slovenian city or any port in another third country, the goods are taken down to the dock, whether it is a complete container or goods that filled only a part of it, and a procedure called loading is carried out. At this stage, explain to the local customs that the goods do not enter the country. At the port, the bills of lading are exchanged, loaded onto another ship – and from there to the final destination.
This procedure may double and even more the shipping costs, because these days, merchant ships move on the Turkey-Israel route routinely. The container ships do not move from point to point, but operate in the “assembly line” method. It depends on the type of line, but there are ships that arrive from Turkey to Israel in a day and some in a week. But, nevertheless, when there are Turkish suppliers who are able to produce the goods but not deliver them directly, this is a reasonable solution. The attempt to create a creative path here includes a supply chain that extends to three weeks, due to the arrival in Slovenia, unloading, loading and resending.
Were there early signs and why now?
The most significant early sign was the historic defeat in Turkey’s local elections at the end of March, in which the Justice and Development Party (AKP) lost all major cities. Also, the tiny “New Welfare” party (YRP) won in two districts that are considered to be Erdoğan’s vote centers – on the basis of a platform calling for the end of trade with Israel. About a week and a half ago, Erdogan held a joint press conference with his German counterpart, Frank-Walter Steinmeier, in which he claimed: “We no longer maintain close commercial ties with Israel, it’s over.” It is possible that when they said that “it is over”, Erdogan did mean what he said. Today, Erdogan met in Ankara with the chairman of the Republican People’s Party (CHP) and the leader of the Turkish opposition, Ozgur Ozal, and it is not inevitable that he updated him on the developments – after Ozal himself called for such measures to be taken.
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