Turks in Tel Aviv Show Business Binds Israel to Muslim Ally in Gaza Crisis
Prime Minister Recep Tayyip Erdogan’s government has recalled Turkey’s ambassador from Israel, and threatened to sever ties unless demands for an apology and financial compensation are met. Photographer: Andrew Harrer/Bloomberg
Five miles from the center of Tel Aviv, more than a dozen Turks wearing red shirts emblazoned with their national flag work to complete a 30-story residential tower.
Manager Nissim Gayus says it’s “business as usual,” six weeks after Israeli troops killed nine Turkish activists on an aid convoy bound for the Gaza Strip. While the raid has strained a political alliance of more than half a century, commercial ties between the countries survive, according to Gayus, who works at Ankara-based Yilmazlar Construction Group.
“The private sector just hasn’t been influenced at all,” Gayus said at Yilmazlar’s Ramat Gan office outside Tel Aviv. “We’re not feeling any damage in our projects.”
Turkey is Israel’s biggest commercial partner nation in the region, with sales worth $2.5 billion last year, as well as a strategic ally. Israeli Trade Minister Binyamin Ben-Eliezer and Turkish Foreign Minister Ahmet Davutoglu met in Brussels on June 30 to discuss future relations, signaling a shared interest in repairing damage caused by the commando raid on the flotilla.
The focus on keeping trade doors open, including Turkey’s purchase of military aircraft, highlights the resilience of a partnership that extends from defense technology to construction. The cooperation contrasts with a freeze at the diplomatic level. Prime Minister Recep Tayyip Erdogan’s government has recalled Turkey’s ambassador from Israel, and threatened to sever ties unless demands for an apology and financial compensation are met.
No Apology
Israel says the Turkish aid ship ignored repeated warnings not to breach the naval blockade on Gaza, and that Israeli commandos were attacked by activists when they boarded on May 31. Israel doesn’t have “any intention to apologize,” Foreign Minister Avigdor Lieberman said last week.
Turkey says the raid outside Israel’s territorial waters violated international law, and activists aboard the ship said the Israeli soldiers instigated the violence.
Turkey was among the first majority-Muslim nations to recognize Israel after its creation in 1948. The countries are the U.S.’s main allies in the Middle East and they share military technology.
Even though Turkey canceled military exercises involving Israel after the killings, it is pushing ahead with an acquisition of 10 Heron unmanned surveillance planes made by Israel Aerospace Industries Ltd. in Tel Aviv and Elbit Systems Ltd. A Turkish delegation visited in mid-June to examine the last four drones and they’ll be brought to Turkey for final tests this month, according to Turkish and Israeli officials.
Herons Over Iraq
Turkey has taken delivery of six Herons, and started using them last month in northern Iraq to locate militants from the Kurdistan Workers’ Party, the separatist group, army chief Ilker Basbug told reporters on June 21.
Shares of Haifa-based Elbit fell 5.2 percent in the two days after the flotilla raid to 189.20 shekels. The stock closed yesterday at 198.30 shekels in Tel Aviv trading.
Metals, petrochemicals and textiles are also key components of trade. Iron and steel were Turkey’s main exports to Israel in 2009, making up about one-seventh of the $1.5 billion total.
Oil Refineries Ltd., based in Haifa, said in a June 2 filing that it expects Turkey sales to be 7 percent to 9 percent of this year’s total revenue, which analysts estimate at 8 billion shekels( $2.1 billion). That’s a similar share to 2009.
‘Business as Usual’
Menashe Carmon, chairman of the Tel Aviv-based Israel- Turkey Business Council and owner of Overseas Export-Import Ltd., which buys yarns and fibers from Turkey, said his operations have been stable in the past six weeks.
“When it comes to imports and exports, joint ventures, and mutual investments between Turkish and Israeli businesses, it’s business as usual,” he said.
What has changed is that security advisers are deterring Israelis from traveling to Turkey, Carmon said. After thousands of Turks took to the streets chanting anti-Israeli slogans to protest the aid ship killings, Israel’s Foreign Ministry issued a travel warning classifying Turkey as a “very high and concrete threat” for Israeli travelers.
Carmon said he has received complaints from metal importers who can’t send staff to Turkey to carry out compliance tests, and from Israeli exporters who can’t send technicians to install or service machines.
Israeli companies, especially in the agricultural and water technology industry, that have provided equipment to Turkish local governments may find they lose out on contracts, said Doron Abrahami, Israel’s trade attaché in Istanbul, in an interview yesterday. He said at least one Turkish municipality has told its Israeli supplier that future bids won’t be welcome, without giving further details.
Meeting Canceled
A planned meeting of top executives from the biggest Turkish and Israeli companies was canceled last month after the flotilla raid, Istanbul-based Referans newspaper reported citing Zeynep Silahtaroglu Baykal, a director of the Turkish business group Tusiad.
Travel companies say Israelis are no longer taking the one- hour flight from Tel Aviv to Antalya, the popular Turkish resort on the Mediterranean.
“No one is coming from Israel” and all charter flights since May 31 have been canceled, said Arkin Senol, deputy head of Antalya-based Kalanit Tours. “We were planning for at least 50,000 passengers for June, July and August, and so far, nothing.”
The loss for local tourism companies will be about $80 million, Senol said.
‘Very Harmful’
“The Israelis felt very close to Turkey,” said Oktay Eryener, whose Polente Tour has brought Israelis to Turkey for 20 years and now can’t find customers. “Many had been coming here for years, they have ties, know people.” Eryener said he has had to fire all but two of his dozen Hebrew-speaking Turks.
Israeli tour companies also are suffering. The slump in travel to Turkey has been “very harmful” for Tel Aviv-based travel agent Aviation Links Ltd., Vice-President Avi Raz said by telephone. The company’s shares have slumped 28 percent since the raid, while the benchmark TA-100 Index rose 1.1 percent.
Turkish billionaire Ahmet Nazif Zorlu, whose energy company has contracts to build four gas-fired power plants in Israel, said in an interview with Bloomberg HT television last week that the venture is still on course, though its fate may ultimately hinge on politics.
“We’ll continue, in line with the Turkish government’s decisions about Israel,” Zorlu said of the $1-billion plan.
Shares of Zorlu Enerji Elektrik Uretim AS have fallen 3.6 percent since May 31, compared with the 5.5 percent advance of the ISE-100 index of the biggest Turkish companies.
Not Tough Enough
There are political as well as economic ramifications for Erdogan, who must run for re-election next year in a country where almost two-thirds of the public say his response to the Gaza deaths wasn’t tough enough, according to a June 3 survey of 1,000 people by Ankara-based Metropoll.
Anti-Israel rhetoric has won Erdogan votes in the past, said Adil Gur, head of Istanbul-based pollster A&G Arastirmalar. When the premier stormed out of a Davos meeting with Israeli President Shimon Peres in January last year, telling him: “You know very well how to kill,” it boosted his support in local elections two months later, Gur said in a phone interview.
For Israel-Turkey projects such as those of builder Yilmazlar, the key to sustaining business lies in easing the tensions between the two governments.
“As long as Turkey doesn’t escalate the political tension with Israel, then we don’t expect there to be any changes to the current status,” said Gayus, the company’s general consultant and representative in Israel.
To contact the reporters on this story: Ben Holland in Istanbul at bholland1@bloomberg.net; David Wainer in Tel Aviv at dwainer1@bloomberg.net.
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