Turkiye Next For BRICS?
With Turkish President Erdogan about to meet Russian President Vladimir Putin, Turkiye’s trade figures with most of the eleven BRICS members show significant growth. Getting access to NDB funding may also prove attractive for Ankara as talks are expected across a number of issues.
With the Turkish President, Recep Erdogan, meeting with Russian President Vladimir Putin in Sochi on Monday, most of the media commentary is focusing on the possibility of the currently suspended Black Sea grain agreement being reactivated. But this is not the only item on the agenda. In this article here we delved into the current Russia-Turkiye bilateral trade and investment dynamic, however another issue will also surely crop up – Turkiye’s potential membership of BRICS.
The Turkish President expressed interest in the BRICS group back in July 2018, when he surprised Turkiye’s Western allies by attending a summit of BRICS, which took place at the time in Johannesburg. Since then, the space has been quiet, with no further Turkish officials being seen at BRICS events. However, this may mask real intent – the COVID pandemic disrupted global meetings while Erdogan himself had serious economic issues – and still does – to contend with back home. Then there has been the Ukraine conflict, while Erdogan also had to fight a tough Presidential election campaign last year, with him finally being re-elected in May 2023.
Nevertheless, a Turkish element to the BRICS potentially appears on the cards. A strong Islamic bloc within BRICS is beginning to emerge, with Egypt, Saudi Arabia and the UAE all taking up membership early in 2024. Erdogan will not want Turkiye left out of that influential group. Meanwhile, with Turkiye’s economy needing export assistance and investment, he agreed a US$5 billion deposit into Turkiye’s Central bank with Saudi Arabia in March, and undertook a mini-Middle Eastern fund-raising tour in July to seek capital financing for a variety of projects. It worked – he signed over US$50 billion worth of agreements with the UAE, and a further US$9.9 billion worth of investments with Qatar.
Erdogan therefore is on the lookout for financing – and access to the BRICS New Development Bank could well be on the agenda. Turkiye has also made it clear it wants to boost its exports – it introduced significant export promotional incentives for Turkish exporters earlier this year. With the new BRICS having considerable influence over their respective regional free trade agreements, Turkiye will be eying those as potential new development markets.
We can take a quick look at Turkiye’s trade with each of the eleven BRICS countries as follows:
Turkiye – Argentina
2022 bilateral trade reached a record high of US$1.18 billion. This was a doubling of trade over 2021.
Turkiye – Brazil
2022 bilateral trade reached a record high of US$6 billion, up from US$4.6 billion in 2021.
Turkiye – China
2022 bilateral trade reached US$38.55, up from US$31.6 billion in 2021. 85% of this trade is Chinese exports. China has pledged to increase Turkish imports and to allow import payments from China in Turkish lira.
Turkiye – Egypt
Bilateral trade reached US$7.7 billion in 2022, a 14% increase from the year before.
Turkiye – Ethiopia
Trade has remained at about the US$400 million level the past three years. 2/3 of this are Turkish exports. Ethiopia has been undergoing military conflicts in recent years.
Turkiye – India
Turkiye – India bilateral trade grew to US$10.71 billion in 2022 from US$7.08 billion in 2021.
Turkiye – Iran
Turkiye’s bilateral trade with Iran rose 19% in 2022 to reach US$12.7 billion.
Turkiye – Russia
In 2022, trade between Turkiye and Russia reached US$62 billion, an increase from the US$33 billion in 2021.
Turkiye – Saudi Arabia
Turkiye and Saudi Arabian bilateral trade reached US$3.76 billion in 2021. Significant increases on this are expected for the 2022 and 2023 figures due to the two countries signing mutual, hundred-million dollar investment and trade agreements.
Turkiye – South Africa
Turkiye’s bilateral trade with South Africa reached US$1.837 billion in 2022, an increase from US$1.404 billion in 2021. Turkiye’s overall trade with the African continent increased from US$25 billion in 2020 to US$34 billion in 2021.
Turkiye – United Arab Emirates
In 2022, Turkiye was the fastest-growing of the UAE’s trading partners, with non-oil trade climbing 40% to US$18.9 billion. With the implementation of the mutual CEPA trade agreement, bilateral trade is expected to reach US$40 billion by 2027.
As can be seen, Turkiye’s trade dynamics with each of the BRICS countries (with the sole exception of Ethiopia) is highly positive. It would appear to be a common sense trade and investment move to cement that by becoming an official BRICS member state – something that could be announced at next years BRICS summit in Kazan. This would, as mentioned, also potentially free up investment capital into Turkiye via the BRICS New Development Bank – another much-needed boost for its economic and foreign investment needs.
There are other subtle pointers ahead. With the 2024 BRICS summit being held in Kazan, the capital of Russia’s Tatarstan republic, there are underlying implications. About 50% of Kazan’s population are ethnically Turkic, with Tatarstan attracting about 25% of all Turkish investment into Russia. At that event, Putin will also be unveiling the new highspeed Moscow-Kazan railway – which travels at 400kph and reduces the travelling time between the cities from 12 to 3.5 hours. That was built in conjunction with Chinese investment and technologies. Food for thought.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. He can be reached at asia@dezshira.com Dezan Shira & Associates have a partner in Turkiye and can assist foeign investment into the country. For assistance, please email turkey@dezshira.com
