Qatar comes to Turkey’s ‘rescue’ amid public outcry

Turkey and Qatar on Thursday signed investment deals worth millions of dollars, as part of the developing relationship between the two countries.

The external funding will help to alleviate Turkey’s currency crisis, which has seen the lira lose about 40 percent of its value this year due to depleted foreign reserves.

But the bilateral ties have sparked a public outcry, with people criticizing the sale of strategic assets to the Gulf nation.

Turkey transferred 10 percent of shares in the Istanbul stock exchange to the Qatar Investment Authority, and the Turkish Wealth Fund’s stake in the stock exchange dropped to 80.6 percent as a result.

Qatar, having already poured $15 billion into currency swap deals, has also bought the transfer of 42 percent of shares in one of Turkey’s biggest shopping malls, Istinye Park on Qatar Street in Istanbul, for $1 billion. It has also pledged to invest in the Istanbul Golden Horn marina project.

Kemal Kilicdaroglu, the leader of the main opposition Republican People’s Party, criticized the government for signing the deals with Qatar, saying that even the sale of the presidential palace to the Gulf country would come as no surprise.

“Where does your love for Qatar come from? Everything is being sold,” he said during a TV program on Friday.

Critics see the Qatari investment money as an alarming trend for the Turkish economy, dubbing the agreements as the “best Black Friday deal.”

According to Hakan Kara, an economics professor at Bilkent University in Ankara and former chief economist at the Central Bank of Turkey, concentrated funding from a single source mostly driven by personal relationships was at odds with the Turkish government’s previous emphasis on “the need to reduce the dependence on foreign capital.”

“History shows that such reliance on personal ties may bring compromises in many other areas,” he told Arab News.

The agreements will bring $300 million of capital flows to Turkey. Total investments from Qatar to Turkey have reached $22 billion.

Dr. Robert C. Mogielnicki, a resident scholar at the Arab Gulf States Institute in Washington D.C., said while Qatari economic support for Turkey had been forthcoming in recent years, there were also political dimensions to these initiatives.

“A substantial increase in Qatari equity capital in Turkey has offset declining Saudi and Emirati investments over the years,” he told Arab News. “Qatari investments into Turkey spiked from 2015-2016, suggesting that the strengthening of this economic partnership preceded the 2017 Gulf rift and likely had its roots in the earlier 2014 regional dispute.”

Although securing new investment deals with Qatar is important for coping with the difficult economic times that Turkey is experiencing, experts have noted the need for economic diversification.

“Turkey still needs to expand and deepen its economic ties with other countries. Qatari-Turkish ties are but one of many linkages needed to support Turkey’s massive economy. A big risk for Turkey is that the politicization of its trade and investment deals today limits future opportunities,” Mogielnicki added.

According to Timothy Ash, a London-based senior emerging markets strategist at Bluebay Asset Management, the recent deals are part of the long-running strong ties between President Recep Tayyip Erdogan’s administration and Qatar.

“Although Qatar has proved to be an active and dynamic investor in Turkey, I think that the $15 billion in financing is not a game changer,” he told Arab News. “They are useful but still pale into insignificance compared to Turkey’s annual $200 billion external financing needs. Doha pledged $15 billion in support to Turkey in 2018. That was supposed to comprise $5 billion in swaps, $5 billion in loans and $5 billion in investments. In the end, the loans were converted to a total of $10 billion in swaps and I think what we are seeing this week is the investment angle rolled out. I don’t think this is new money.”