Turkey has been granted a huge economic boost from Qatar. The gas rich Gulf State, rescued by Ankara in 2017 when its neighbours plotted to overthrow the ruling Al Thani family, has provided a lifeline to the Turkish economy, offering to bolster depleted foreign currency reserves by as much as $10 billion.
The agreement means that Turkey will have tripled its existing local currency swap deal with Qatar to $15 billion; a swap agreement first struck during Turkey’s 2018 currency crisis.
Ali Bakeer, an expert on Turkey’s relations with Gulf countries, was reported in the Financial Times describing the announcement as “a significant agreement”, adding that it reflected the strength of the alliance between Ankara and Doha, which have joined forces in a number of regional disputes against Saudi Arabia and its allies.
“Some experts say that Turkey is becoming a burden on Qatar,” Bakeer said in reference to previous Qatari assistance. “But from the Qatari perspective, no matter how much [an agreement with] Turkey might cost, it will always be cheaper politically and economically than remaining alone in the region. Without Turkey, Qatar would be in a really critical situation.”
Ankara is said to have had few options on the table. Members of the G20 group of countries had been dithering on offering assistance to Turkey. The US Federal Reserve, in particular, is said to have appeared reluctant to provide assistance, despite extending swap lines to 14 countries around the world.
Doha’s intervention, in the absence of support from G20 nations, underlined the strength of the recent alliance between the two countries. President Recep Tayyip Erdogan dispatched troops to Qatar in 2017, two days after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut ties with Doha and imposed a blockade.
The coronavirus pandemic could not have come at a worse time for the Turkish economy. Ankara had been on shaky economic grounds when the virus began to spread across Europe. Nearly two years of a weakening currency, high debt, dwindling foreign reserves and growing unemployment meant that COVID-19 would threaten to inflict more harm on the country’s economy.
Forecasters predicted a tough period for Turkey’s 82 million population. “There will be hard times ahead, because Turkey was already at a macroeconomically vulnerable position before the coronavirus hit,” Can Selcuki, managing director of Istanbul Economics Research, told CNBC nearly six weeks ago when the virus began to spread.
President Erdogan has adopted a number of measures to reduce the economic impact, including taking out a World Bank loan.