Israel plans to scrap the free trade agreement with Turkey until Erdogan is replaced
\n JERUSALEM
\nIsraeli-Turkish trade has weathered many bilateral diplomatic storms over the decades and stayed on course, reaching billions of dollars a year, but Israelis fear it may not survive the latest rift over the war in Gaza.
\nTurkey this month halted all bilateral trade with Israel until the war ends and aid can flow unhindered into Gaza. Israel said Turkey\u2019s move violated World Trade Organization rules.
\nIsraeli importers have scrambled to find alternative sources of key items ranging from cement to food and cars in response to Turkey\u2019s decision, which economists say may lead to near-term shortages but is unlikely to dent Israel\u2019s $500 billion economy.
\n\u201cTurkey is a significant trade partner of Israel but we do not rely exclusively, or even remotely exclusively, on Turkey,\u201d said Shmuel Abramzon, chief economist at Israel\u2019s Finance Ministry, who now believes Israel\u2019s 2024 economic growth will exceed his current 1.6% forecast.
\n\u201cWhile some alternatives may introduce higher costs, we do not anticipate significant or persistent disruption to the Israeli economy by Turkey\u2019s actions.\u201d
\nBilateral trade slid nearly 23% to $6.2 billion in 2023, Israeli government data shows, with Israeli imports accounting for around three quarters of that figure.
\nAfter Ankara\u2019s move, several Turkish export companies told Reuters they were seeking ways of sending goods to Israel via third countries, but exporters and importers in both Turkey and Israel have since said there is no sign of this succeeding.
\nTrade officials say Greece, Italy and others are willing to fill the vacuum left by Turkey and that deals are close but the main problem will be finding alternative destinations for more than $1.5 billion worth of displaced Israeli exports, largely fuel, chemicals and semiconductors.
\n\u201cI don\u2019t think the economy should rely on a country that says one day \u2018we want to trade with you\u2019 and on another day \u2018we don\u2019t want to trade with you\u2019\u201d,\u201d said Roey Fisher, head of the Economy Ministry\u2019s Foreign Trade Administration.
\n\u201cTrade should be reliable and sustainable … And therefore, we feel that our goal is to find reliable sources for the long term,\u201d he told Reuters.
\nFrosty ties
\nTurkish President Tayyip Erdogan has been sharply critical of Israel\u2019s military offensive in Gaza against the militant Palestinian group Hamas.
\nThe war began on Oct. 7 when Hamas gunmen stormed into Israel, killing around 1,200 people and seizing more than 250 hostages, according to Israeli tallies. Nearly 36,000 Palestinians have been killed in Israel\u2019s subsequent offensive, Gaza\u2019s health ministry says.
\nShortly before the war erupted, Erdogan and Israeli Prime Minister Benjamin Netanyahu had met in person, amid a slow improvement in ties long strained by the Palestinian issue. But their plans to visit each other\u2019s country were then shelved.
\nTurkey recalled its ambassador to Israel in November for consultations and flights between the two countries have been suspended. Erdogan has called Hamas a \u201cliberation movement\u201d and hosted its chief, Ismail Haniyeh, in Istanbul last month.
\nIn retaliation for the trade ban, Israeli Finance Minister Bezalel Smotrich said he would scrap the free trade agreement with Turkey\u2013at least until Erdogan steps down and is replaced by \u201ca leader who is sane and not a hater of Israel\u201d. The plan, he said, would be submitted to cabinet for approval.
\nTurkey is the first\u2013and so far the only\u2013major trade partner of Israel to suspend trade over the Gaza war. Turkey ranks as Israel\u2019s fifth biggest trade partner but still accounts for less than 5% of its total imports.
\n\u2018Not a catastrophe\u2019
\nHowever, Turkey has accounted for some 40% of Israel\u2019s imported cement, said Shay Pauzner, deputy director general of the Israel Builders Association.
\nWhile the industry has turned to European suppliers, he said, \u201cit will be much more expensive than from Turkey\u201d, which is known for cheap industrial products.
\n\u201cIt\u2019s a problem, not a catastrophe,\u201d he added.
\nMeanwhile, two of Israel\u2019s main auto importers said certain models of Toyota and Hyundai cars were stuck at Turkish ports due to the trade ban.
\nUnion Motors, Israel\u2019s Toyota importer, said the ban had impacted the delivery of Corolla and C-HR models and that it was seeking solutions.
\nColmobil, which imports Hyundai autos from Turkey, said it was suspending orders for some models and working with the manufacturer on supply solutions.
\nSimilarly, Diplomat\u2013one of the largest importers in Israel\u2013said it was trying to find alternatives to Turkey to bring in a range of consumer products, including brands from Heinz, Gillette, Braun and Pampers.
\nIsraeli officials say they plan to increase local production to avert shortages. An Israeli Manufacturers\u2019 Association survey last week found that 80% of manufacturers had alternatives to Turkey, while 60% said they had a three-month inventory.
\n\u201cAlthough we have become addicted to the cheap imports from Turkey … it is possible to get by fine without it,\u201d said association president Ron Tomer. \u201cAs a country, we must reduce as much as possible the dependence on hostile countries and strengthen our productive independence.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Israel plans to scrap the free trade agreement with Turkey until Erdogan is replaced JERUSALEM Israeli-Turkish trade has weathered many bilateral diplomatic storms over the decades and stayed on course, reaching billions of dollars a year, but Israelis fear it may not survive the latest rift over the war in Gaza. Turkey this month halted […]<\/p>\n","protected":false},"author":2,"featured_media":409425,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-409413","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n