Tensions between Israel and Turkey over the war in Gaza are at risk of escalating into an all-out trade war, threatening a bilateral economic relationship that has long been nurtured even as the countries bicker over political issues.
On Tuesday, Turkey’s Trade Ministry announced new restrictions on exporting 54 product groups, including aluminum, steel, several construction products, jet fuel and chemical fertilizers, to Israel.
Some experts think Ankara has historically separated political problems from economic relations in its stance on Israel, but recent announcements show a policy shift.
“Turkey’s decision was negatively received in Israel as the two countries are important trade partners, and until now, Ankara has put a barrier between tensions on the political level and trade relations,” Gallia Lindenstrauss, a senior research fellow at the Institute for National Security Studies (INSS) in Israel, told VOA.
The restrictions came a day after Turkish Foreign Minister Hakan Fidan said Israel had prevented Turkey from airdropping aid to Gaza and vowed to take measures against Israel until there was a cease-fire and permanent flow of aid into the territory. Israel has not responded to Fidan’s statement.
Alan Makovsky, a senior fellow at the Center for American Progress, said he saw Turkey’s export restrictions as a response to domestic politics.
“I would find it hard to believe that Turkey could seriously think that Israel would approve of allowing Turkey to participate in airdrops. When there’s an airdrop, Israel does not review what is in the airdrop, so it is only countries that they would really trust from a security standpoint that they would give clearance to. At least, I believe that’s the case,” Makovsky said.
“If Turkey did apply, I am sure they knew when they applied that there was no way Israel would approve it," he said. "I suspect they used that as a cover for what is really a domestic political decision.”
Makovsky was referring to the success of the Islamist New Welfare Party (YRP) in last month’s local elections in Turkey. YRP, which came third, was vocal in criticizing Erdogan for not cutting off trade with Israel during the campaign.
Trade with Israel
In a post on X, Israeli Foreign Minister Israel Katz said, “We will respond accordingly and prepare an extended list of additional products that Israel will prevent Turkey from exporting.”
Makovsky said that trade between Israel and Turkey in recent years has become “increasingly unbalanced in Turkey’s favor.”
The two countries signed a free-trade agreement in 1996. According to the state-run Turkish Statistical Institute, Turkey’s exports to Israel were worth $5.4 billion in 2023, while Israel’s exports to Turkey were worth $1.6 billion the same year.
“In terms of replacing materials, the burden is going to be greater on Israel, but there could be economic problems for Turkey, obviously, if these sales do not go through,” Makovsky said.
“I also wonder what message it sends to international investors if Turkey suddenly prevents private contracts from being carried out for political reasons. That may not be a great thing for the Turkish economy,” he said.
Some experts said the restrictions would broadly affect Israel’s construction sector.
“Regarding some materials, such as cement, Israel is highly dependent on imports from Turkey. Israel can find alternatives, but they will cost more, and it may take time till it finds the relevant substitutes,” INSS’s Lindenstrauss told VOA.
According to the Israel Builders Association, Israel imports around 70% of its iron construction materials and about a third of its cement needs from Turkey. Turkey has also been one of the leading steel providers to Israel.
US involvement
Israeli Foreign Minister Katz said he asked “Israel’s friends in the U.S. Congress to examine Turkish violation of boycott laws against Israel and impose sanctions accordingly.”
Eugene Kontorovich, a law professor at George Mason University’s Scalia Law School, said he thought that Turkey’s action “most probably violates the World Trade Organization’s agreements,” but not U.S. federal laws.
“As for a U.S. response, it is unlikely that Turkey’s selective export restrictions on products to Israel violate U.S. federal anti-boycott laws; state laws simply do not deal with boycotts imposed by countries,” Kontorovich told VOA.
Thirty-eight U.S. states have laws prohibiting states from contracting or investing in entities that boycott Israel.
Some analysts think that given the debate in Washington over sending aid to Israel, it is unlikely that Congress will take measures against Turkey.
“They have got a lot of things on their plate, and it seems to me unlikely that punishing Turkey for sanctions against Israel is going to be high on the congressional agenda anytime soon,” Makovsky said.
