It is not surprising that economic considerations are among the major factors in shaping a new era in the Turkish-Saudi relationship, which is, by its very nature, multifaceted. From high-level reciprocal meetings to signed agreements, it has become evident that Ankara and Riyadh are engaging in solid efforts to bolster their economic ties, while placing their recent rapprochement on a more sustainable track. However, in order to understand the importance of these deals and commitments from the two sides, it is crucial to look at the challenges and opportunities for Turkiye and the Kingdom in their path to enhanced economic relations.

When states aim to rebuild relations after years of tension, heads of state pay reciprocal visits to each other, with large business delegations accompanying them. Although much of the focus is on what the leaderships say during those visits, the most important task falls to the business people behind the scenes who drive the newly restored relations.

A few days after a meeting between Turkish and Saudi trade ministers on the sidelines of the G20 ministerial summit, Ankara and Riyadh agreed to implement a “robust plan” to increase bilateral trade, especially mutual investments in diverse sectors. A memorandum of understanding is expected to be signed in this regard in coming days to advance cooperation in export strategies and sectoral partnerships.

If mutual trust is built and these MoUs turn into concrete project-based agreements and partnership deals, we are likely to see a flourishing economic relationship between Turkiye and Saudi Arabia. The two countries also signed a deal on advancing cooperation in mining of critical minerals, a follow-up to a series of deals reached on energy and oil cooperation during Turkish President Recep Tayyip Erdogan’s visit to the Kingdom.

One task, and perhaps the most important, for the two sides is to restore and maintain trust among investors who enjoyed stable economic cooperation during the 2000s.

Sinem Cengiz

One task, and perhaps the most important, for the two sides is to restore and maintain trust among investors who enjoyed stable economic cooperation during the 2000s. Both Saudi and Turkish investors, business people and companies faced tough times when the countries’ relations were strained in recent years. From the Turkish side, the unofficial embargo implemented by the Kingdom on Turkish exports and companies from 2018 until the normalization of relations adversely affected trade volume. This not only prevented Turkish companies from bidding for significant Saudi state tenders, but also caused concerns over the uncertainty of investing in the country in the long term.

From the Saudi side, the Kingdom’s business people and companies lost trust in their Turkish counterparts, who failed to go ahead with planned projects due to pressure the government faced from the opposition, which was highly critical of Gulf investments in Turkiye, ahead of the elections. The government has secured another five years in power. However, this is a short period for major projects that aim to stay in Turkiye for the long term. Predictability, both political and economic, is the most important concern for investors on both sides because negative past experience has an imprint in relations. So, long-term confidence building is the most important task for now.

Now that the elections are over in favor of the Turkish government, and the Saudi side has lifted its unofficial embargo, both sides can focus on strategies that will build and maintain investor trust. In today’s uncertain economic environment, reestablishing trust among both Turkish and Saudi investors is crucial for long-term success. Investor trust requires consistency, credibility and transparency. But, most importantly, it also requires economic and political stability. Trust is strengthened when two countries fully embrace each other’s policies, both political and economic. In this regard, it is important to understand the expectations and requirements from both sides for mutual benefit and a clear path to growth. Here, the most important point is that the confidence-building process between investors of both sides should be supported by the leaderships in Turkiye and Saudi Arabia.

Trust is strengthened when two countries fully embrace each other’s policies, both political and economic.

Sinem Cengiz

There are definitely advantages to a strong Turkish-Saudi economic relationship. As part of its Vision 2030, Riyadh is seeking socioeconomic cooperation, and Turkiye appears to be a significant market.

Turkiye and Saudi Arabia are two emerging powers with great competitive advantages, as well as complementary economic systems that provide a solid foundation for expanding investment and commercial ties. While Ankara is concerned with finding new export markets and increasing foreign investment into the Turkish economy, the Kingdom wants to reduce its dependence on hydrocarbons, and diversify its economy through investments at home and abroad.

In this regard, Saudi Arabia’s reserves offer solid ground for a synergistic investment partnership across multiple sectors to establish and transfer industrial knowledge and expertise. Industrial development is essential for the Kingdom’s economic diversification, as it has launched multiple projects in an effort to meet current and the future demands. This offers numerous investment opportunities for Turks.

Ankara and Riyadh are now preparing for a GCC-Turkiye Economic Forum to be held in November in Istanbul, which will be the first of its kind focusing on investment opportunities in trade, energy, food security and infrastructure. Improved economic cooperation is crucial to strengthening bilateral ties. But for that to happen, focus must be paid more on confidence-building strategies and expectations among investors, the key drivers for strengthening economic relations as part of long-term goals.

• Sinem Cengiz is a Turkish political analyst who specializes in Turkiye’s relations with the Middle East. Twitter: @SinemCngz