economic relations

Seven Decades of Trading and Talking with Turkey

Turkey and Jordan recently marked seven decades of diplomatic and economic relations. The Turkish Ambassador to Jordan believes the next 70 years will be even more fruitful.

By Dina al Wakeel

Turkey’s President Recep Tayyip Erdogan held talks with HM King Abdullah in Jordan in August. After the meeting, both leaders urged the private sector to boost economic cooperation and further explore investment opportunities between the two countries.

In 2014, trade volume between Jordan and Turkey reached $1 billion before it decreased in the following two years due to border closures with Syria and Iraq. Both sides hope bilateral trade will rise to $3 billion soon.

Turkey’s Ambassador to Jordan, Murat Karagoz, said both Turkish and Jordanian governments needed to raise their game to finalize the agreement that links Aqaba to a Turkish port to increase trade volume. He also urged Jordan’s private sector to exert more effort in advertising their products in his country for better exposure.

What are the highlights of the current bilateral relations between Turkey and Jordan?

This year is of particular importance because we are celebrating the seventieth anniversary of the establishment of diplomatic relations. Since 1947 many agreements across various fields were signed. So Jordan is a very important country for turkey. Therefore we are determined to strengthen this relationship across all fields. There are currently about 40 different agreements, protocols, and memorandum of understandings between both countries, which strengthen our relations. The backbone of our relations is of course the free trade agreement which was signed in 2009 and entered into force two years after that. The FTA has changed the landscape of our economic and trade relations. In 2014, the bilateral trade volume reached $1 billion, right after that it dropped due to the developments in the region and the border closures so now it’s at around $830 million and it’s not satisfactory to us. When Prime Minister Hani Al-Mulki visited Turkey this March the two governments set the target at about $3 billion, which was confirmed later during President Recep Tayyip Erdogan’s visit to Jordan as well. Therefore it is an important agreement, but coupled with a visa free travel regime and a direct flight be it Turkish Airlines, Pegasus or RJ; these are the backbones of our relations. In addition to this FTA, there are reciprocal investments, industrial cooperation and protection of investments, which are all important agreements. But besides institutions and ministries, we also have direct relations between the chambers of commerce and industries.

Of course when we refer to economic and trade relations, we should also make reference to our transport relations because transport is very important. We do consider Jordan almost as a neighboring country; the relations are very important. We need to diversify our transport routes, primarily the connection between a Turkish port, like Mersin or Iskenderun, and Aqaba. For this to happen we need to finalize the negotiations that are ongoing and then sign the deal.

How important will that be to a city like Aqaba?

Actually it will be very important. I said previously that I would be acting as an Ambassador of Jordan for two issues; one is Aqaba and the other is tourism and I kept this promise. I have visited Aqaba three times where I had consultations with ASEZA and also visited the port and touristic facilities and I saw great potential for Turkish entrepreneurs there. It is a free trade zone and from an industrial perspective, Turkish companies could benefit from its strategic location to boost trade with the region and the GCC in particular, plus with South Africa. So we don’t consider Jordan as a standalone market of 9.5 million, but a country with bigger opportunities of about 1 billion people.

What are the most important Turkish investments in Jordan and vice-versa?

Turkey is a big economy, the sixth largest in Europe and the seventeenth largest in the world. So we are quite competitive in many sectors, including construction, textile, automotive, food, hospitality in general, and tourism and medical tourism. So when it comes to Jordan I guess the direct level of Turkish investment is a little below $300 million in various sectors, including infrastructure projects, foodstuff industries, military night goggles, plastic bottles, and garments. But we know that Jordan offers a lot and we hope that we will increase our investments here in renewable energy, transportation, tourism and recreational facilities, as well as ICT. Again we need to increase cooperation between both countries in general and companies in particular.

Jordan lost an important route to Turkey with the closure of the border crossing with Syria. Will the reopening of the border with Iraq improve trade?

We need to talk about the modalities, like technical expertise. Representatives from the Ministry of Finance and the Chamber of Commerce need to check what’s needed. In turkey we privatized most of our border checkpoints for instance; the Chamber of Commerce and Commodities created a private agency within itself and they are dealing with this on a BOT formula. Therefore we can implement that kind of formula for these kinds of borders as well. But it’s still premature to say trade will flow again and the reconstruction of Iraq and Syria will resume. It may take some time but we are quite hopeful.

What other hurdles currently prohibit boosting trade between Turkey and the Arab countries in general, including Jordan, and is the Kurdish standoff with Baghdad one of them?

Every time there are additional hurdles. In the summer they invented the Gulf crisis, for us with all due respect it’s an artificial crisis. And because Turkey enjoys good relations with Saudi Arabia as well as Qatar we are not happy at all. Then the Aqsa crisis emerged with Israel imposing metal detectors, which was followed by the Israeli embassy [crisis] here. And the Kurdish referendum created another obstacle. We declared it is nil and void from the very beginning and then what we have seen on the ground is unfortunately not in favor of the Kurdish citizens because they’re losing their strength with the disputed areas that they lost, including Kirkuk. This created a major problem and we didn’t want it to escalade.

We try to continue to talk with the central Iraqi government to establish another direct line, perhaps going through Tel afar, Mosul, and to Baghdad bypassing the KIG region.

What should both Jordan and Turkey do to enhance trade volume between both countries?

I tend to be an optimist but I won’t say that for both sides it’s enough. We need to do more and both sides must work harder. Our Jordanian friends mostly claim that the FTA is not in their favor, or that Turkey is mostly benefiting from the FTA. But if Turkey has free trade with bigger or richer states among the G8 for instance then that is the case, there will be a kind of imbalance against our interest as well. What needs to be done is not only saying that we need to review the agreement, on the contrary, we need to work harder to implement it in a better way. What I’m saying is that if Jordan gave its signature in 2009, it means that the Kingdom must have seen some kind of prospect for this and then what’s happened on the ground hasn’t been calculated of course because we didn’t have the Arab Spring at that time or the Syria war. But it will not last forever. We need to work together and invest strategically for the future.

But what many Jordanian traders have complained about regarding the FTA with Turkey has mostly been the rules of origin. Are there plans to ease these rules akin to the EU-Jordan agreement?

The agreement adapted the accumulation of origin in Turkey and Jordan based on the Barcelona declaration. Back in September the Minister of Industry, Trade and Supply led a Jordanian delegation to Ankara where both sides agreed to begin technical negotiations towards simplifying the rules of origin for Jordanian products in the near future. This is important, which is why we suggested immediately that this association committee meeting should be held in the first quarter of 2018 to discuss the best options to promote and strengthen relations.

Turkey is a major tourist destination for Jordanian tourists. How popular is Jordan for Turkish tourists and how can we increase their numbers?

Let me emphasize the importance of tourism for Mediterranean countries. It was always referred to the sea, sun and sand tourism, now this of course still exists but tourism has been so deepened and diversified in my country. Turkey is the sixth most desired destination in the world. In 2014 we welcomed 42 million tourists, including the Turks living in Germany and other European countries. And the direct income was $32 billion. Unfortunately in the past two years we were affected badly by the terrorist attacks that hit Turkey, as well as the negative developments happening in our southern borders with Iraq and Syria, and the limited Turkey-Russia crisis. But now it started to pick up and each year we will be hosting three to four million Russians. It is also a desired country for Jordanian tourists. Last year, about 210,000 Jordanians visited Turkey, a number that we need to increase. On the other hand, Jordan is not as desired a destination for Turks, but there are reasons for that. Jordan must promote itself more because for many years the Kingdom was considered a middle station on the way to Haj or on the road to Jerusalem. But Jordan has a lot more to offer. Another issue is the prices, Jordan is a very expensive country and the service sector is not that competitive.

Jordanians have also been buying real estate in Turkey. Why is that and what’s the volume?

About 40 percent of the total tourists who visit Turkey are Arabs. What’s interesting in the real estate market is for instance buying nice houses along the Bosporus, which is unique and beautiful. Some also buy summerhouses in Bodrum or Bursa. Additionally, the real estate market in Turkey is healthy; you buy an estate and make profit. Also the Arabic speaking real estate agents and architects are increasing which plays a big role. Another factor is that we passed a new law in 2012 amending the reciprocity rule, which also increased the amount of land that you can buy. Another issue is that people feel like home with the mosques, food, and architecture. Furthermore, Turkey is a safe haven for tourism investment because the economy is stable. Only last year we had this failed coup attempt and everybody expected the Turkish economy to be badly affected. It didn’t happen. Last but not least Turkey is a hub. Turkish Airlines reaches more than 220 destinations; it’s one of the fastest growing airline, which makes Istanbul very appealing.