The effect of new Turkish foreign policy on international trade.

• Author: Civan, Abdulkadir
• Position: Report

Economic interests have always been one of the most important elements of foreign policy. In today's globalizing world, the significance of economic relations in foreign policy has increased even more, and the success of specific foreign policies is now measured by their economic impact. International trade has become the leading factor in international policy making, especially since the Cold War. In recent decades, policy makers of both developed and developing countries have been able to appreciate the mutual benefits of international trade to importing and exporting countries. In addition, the establishment of the World Trade Organization (WTO) and other developments in international law have liberalized and greatly reduced the barriers to international trade, thus increasing its volume and importance.

By contrast, after the foundation of the Republic in the 1920s, security concerns were the focus of Turkey's foreign policies. The decision-makers gave priority to policies that would strengthen the regime and reinforce the reforms. Turkish foreign policy continued to follow this approach even long after the establishment of the Republic. However, after the Cold War, Turkey became much more open to broad structural changes in its foreign policy framework. With Turgut Ozal's new government in the 1980s, Turkey started to put economic interests at the forefront of its foreign policy decisions. Ozal decided to reshape foreign policy in Turkey when the country could only pay for its petrol import with its export revenues. His primary concern was to ensure Turkey's productivity, and then establish a country that could sell its products in the world market. Ozal, who could read the signs of globalization very well, knew that Turkey had to cover a large distance to meet these goals, and he prioritized trade development by first improving relations with neighboring countries. Ozal's foreign policy was an "instrument of development" model based on exports. He wanted to undo economy policies based on import substitution, and continued global initiative policies by opening up relations with the Soviet Union. Preferring an aesthetic and pragmatic foreign policy, Ozal established the Black Sea Economic Cooperation Organization with the region's countries after the dissolution of the Soviet Union, and also showed interest in the republics of Middle Asia. By expanding the trade volume mutually with neighbors in the region, Ozal defended the view that regional conflicts could be solved easily and with lower risks. He emphasized that to be a regional power, it is necessary to have a strong economy and substantial economic relationships, and he attempted to reach these goals through regional peace. As can be seen, most of the successful foreign and economic policies that are on the agenda of the Justice and Development party (the AK Party) were also on Ozal's agenda. This kind of change prevents a nation's foreign policy from remaining too restricted. In order to be a more effective state in its region, Turkey has started to follow a relatively more independent and multidimensional foreign policy by putting more emphasis on bilateral relationships. However, even though there is great support for the new Turkish foreign policy, there are also critics who claim that Turkey is making an "axis shift" toward the East, and that the policy makers are driven by neo-Ottomanism rather than by Turkish national interests. (1) But approaches based on identity like Islamist preferences and ideological definitions are insufficient in explaining the present situation and can be deceptive. With the phrase "order establishing country in Ottoman geography," Ahmet Davuto?lu refers to the transformation of those countries into stabilized and competitive polities; and though he objects to the ideological concept of "neo-Ottomanism". (2)

Turkey's economy is becoming increasingly dynamic, as shown by an increase in foreign visits from decision makers and top-level leaders, as well as an increase in competition over shares in regional and world markets between Turkish investors and industrialists. Under this new and active foreign policy, the international trade of Turkey has increased significantly in the relevant period. Turkey's total international trade volume increased from $72 billion in 2001 to $389 billion in 2012. (3) In this study, the interaction between Turkish foreign policy and international trade is analyzed. It is argued that as in many other modern countries, an important dimension of the new Turkish foreign policy is that of economic benefits to the country. It is shown that this new foreign policy has benefited Turkey economically; specifically, the positive effects of diplomatic activities on international trade are estimated by using a standard trade gravity model.

The rest of the paper is organized as follows: Background information is given about Turkish foreign policy and the changes in its structure during the AK Party governments. Then a brief literature review and the empirical methodology is presented, followed by a discussion of the results.

New Turkish Foreign Policy

Turkey's new regional role embodied by Ankara, cannot be explained only by the identity preferences of the AK Party; instead, an "interest-based" approach with a perspective of economic and geopolitical acquisitions is relevant here. After Turkey gained the legal status of full membership in the EU, its economy began to be defined as safe and consistent, with the ability to make investments. Ankara, which prefers a rational foreign policy in parallel with identity-based approaches, started to form a foreign policy that gradually adopted the concept of a "trade state." (4) The AK Party, which came into power with great hopes after the economic crisis of 2001, focused on rational preferences, as it knew it would be impossible to sustain economic success using identity politics.

The AK Party shaped Turkish foreign policy with these rational goals in mind as well as the new paradigms of EU policies, emphasized above. The new foreign policy preferences of Ankara, aimed at establishing unproblematic relationships with peripheral countries, have always been economic benefits. Turkey accepted the dialogue with peripheral countries as a driving force for its economy, security policy and new image, and removed foreign policy from its priorities. By abolishing visas with most Middle East countries, Turkey's aim was to influence the culture of Arabic society while concurrently increasing foreign trade volume .

Because of the Islamist background of the AK Party government, there are analyses that interpret these preferences as idealist as well as analyses that prioritize economic rationality--which is the focus of this article.

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Why does Turkey prefer an active foreign policy? Does the Turkish Ministry of Foreign Affairs, which added 'success in foreign trade' to its performance criteria, use foreign policy as an instrument to increase trade? Are trust-based policy preferences reflected positively in Ankara's tourism and export volumes? Apart from its Western identity, Turkey discovers new markets with the help of the relationships it establishes through its Muslim counterparts; and in these new markets, it finds new zones of influence and bilateral relations. International trade is one of the leading instruments of Turkish foreign policy. This is not merely an incidental issue; it forms a new platform that accelerates bilateral relations on a real political field. Increasing mutual dependence through trade has enabled Turkey to establish more predictable and sustainable relations with other countries. (5)

The biggest risk that threatens this new and major preference of Turkish foreign policy is the presence of many regional conflicts in the Middle East and African countries. Parallel to these risks, Turkey's industrial substructure is quite weak, while the industrial and economic substructure of China - its rival in regions such as the Middle East and Africa--is developed and strong; this leads to many discussions and doubts about when and how much Turkey should rely on foreign trade. For Turkey to be able to exist in the asymmetric competition of the region, the status of a trade state should be widely accepted, supported on different levels, and practiced efficiently.

Given this environment, western neighbors of Turkey will face numerous problems due to financial crises, while the eastern neighbors will face problems due to political...