Turkey seeking to reap rewards in Libya to boost faltering economy

Turkey is getting ready to reap the benefits of its strategic move in Libya as its backing of Tripoli-based internationally-recognized Government of National Accord (GNA) puts the country on top of the list to bid for multibillion dollar contracts.

Turkish President Recep Tayyip Erdogan's deputies visited Tripoli earlier this month and met GNA officials to discuss cooperation on construction, energy and banking.  Turkish businessmen say they are looking forward to playing a key role in the rebuilding of the oil-rich North African country.

It gave strength to the GNA when it was at its weakest and I think many members of the GNA are keen to return that favour and are looking for partners that they can have a strategic relationship with," Anas el Gomati, director of Libya’s first think tank Sadeq Institute, told DW.

"Libya, the GNA are looking to Turkey to build more than just a political or a commercial relationship. They are looking for a strategic relationship" el Gomati said, adding that Turkey will most likely be at the top of the queue when Libya gets down to rebuilding itself.

Turkish contractors first began operating in Libya in 1972. Being a major player in Libya prior to the war, Turkish firms are at an advantage in the country, said Mithat Yenigun, head of the Turkish Contractors Association.

Since 1972, Turkish firms have signed around $40 billion worth of contracts in Libya's construction sector and the figure is only likely to rise in the future, according to Yenigun.

"Libya is unfortunately in ruins. There is going to be a big business opportunity in the country's construction sector. I estimate around $50 billion," said Yenigun.

Due to its track record in the war-torn country, Turkey is well-placed to win contracts in the construction sector,Dr. Karim Mezran, a senior fellow at the Atlantic Council, told DW,adding that Turkish construction firms were "highly regarded" before 2011 in Libya.

"Everybody in Libya is ready to work with Turkish companies, while making sure there is no monopoly. That’s what the Libyans are trying to make clear. The Turks seem to be aware of this and appear to be accepting it," Mezran said, but added that any future cooperation in the banking sector may prove to be difficult as Libyan Banking Law prevents foreign banks from operating "freely and effectively."

The rewards in Libya are expected to give the Turkish economy a much-needed boost at a time it is expected to witness its first annual contraction in over a decade due to the coronavirus pandemic.

The country has been battling with double-digit inflation, high unemployment and a weak Turkish lira, which fell to its lowest level against the dollar during the pandemic.

Turkey is seeking a way out of its economic woes by turning to foreign allies to boost its fast-depleting foreign reserves. It is in talks with countries such as Japan and the UK to set up currency swap lines.

Libya has stepped in to help. Al-Arabiya Net, a Middle-Eastern news portal, reported on Thursday that the governor of the Libyan central bank, Al-Siddiq Al-Kabir, has deposited $8 billion in the Central Bank of Turkey for about 4 years without interest to help stabilize the Turkish lira.

The Turkish economy would get an extra boost once Turkish firms start working in Libya, according to Yenigun.

"It will hugely benefit (the Turkish economy). When we win contracts, we will have the opportunity to export materials. Advisory firms will go there to study the projects before the contractors. We will have the opportunity to use Turkish materials. This will help boost our foreign reserves," he said.

Turkish contractors are waiting for a ceasefire and the security situation to improve in Libya so they can return to the country, said Yenigun, adding that the Libyans have already awarded contracts to Turkish firms in the past month to build five thousand prefabricated homes.