As the Egyptian administration, which draws constant criticism from Turkish President Recep Tayyip Erdoğan, has announced that it will not renew a transit-trade agreement with Turkey which expires at the end of this month, Turkish exporters are looking for a way out, with the Suez Canal looking like the only alternative for transportation of goods to countries on the Arabian Peninsula despite the high cost.
When Turkish trucks had to abandon the transportation route via Syria to Jordan and countries on the Arabian Peninsula due to the civil war in Syria, Turkey signed in April of 2012 a memorandum of understanding with Egypt for the establishment of a transit transportation route connected by the Ro-Ro ships.
The Ro Ro agreement, which became active at the end of April 2012 between the two countries, allowed Turkish exporters to bypass the Suez Canal and keep the increase in their transportation costs in exports to the region at a reasonable level, with an increase of $1,000 per truck as compared to the Syrian route. The agreement expires on April 24.
Although Turkish Economy Minister Nihat Zeybekçi continues to say there are ongoing negotiations to ensure the renewal of the agreement with Egyptian officials, it does not seem likely that Egyptian President Abdel Fattah al-Sisi, who is constantly attacked by Erdoğan for being a coup perpetrator, will take any steps in Turkey’s favor. This situation leaves exporters and transporters in the country’s south in particular in a tough situation.
Around 8,000 to 10,000 trucks on average transport Turkish goods, in particular fresh fruits and textiles, to Gulf countries over this route every year. In line with the present agreement, Turkish trucks go to Egypt’s Port Said on ships from where they cover a 240-kilometer road until the Port of Adabiya, which is located at the end of the Suez Canal. From Adabiya, they board ships again to go to Saudi Arabia’s Dhiba Port and then to their customers in Gulf countries.
In October 2009, when Turkey enjoyed friendly relationships with Syrian President Bashar al-Assad, an agreement was signed between the two countries ending visa requirements. This agreement led to great commercial mobilization in the Turkish provinces that have borders with Syria.
With the increasing tourism activities in the region, businessmen in the country’s Southeast began to make new investments and increased their production capacity. When civil war broke out in Syria and relations between Syria and Turkey worsened, commercial activities in the region came to a halt. Following this, the Turkish government found a new, alternative route for the trucks over Egypt.
When the Muslim Brotherhood (MB) administration, which was strongly supported by the Justice and Development Party (AK Party) government, was toppled by Sisi in Egypt, Turkey adopted a very harsh stance against Sisi and bilateral relations became strained. Sisi’s response was also harsh. This is the main reason behind the transit-trade agreement not being renewed.
The amount of exports that is transported via the route in Egypt is around $500 million. Turkey’s failure to ensure the renewal of the transit-trade agreement with Egypt does not mean that it will lose the entire $500 million. There are some alternative routes, but each of them is costly.
Ro-Ro line was a life ring
Antalya Chamber of Commerce and Industry (ATSO) President Hikmet Çinçin said the transit-trade agreement with Egypt served as a life ring for exporters at a time when access to Middle Eastern and Gulf countries over Syria became impossible due to the civil war in the country. He said the unilateral cancellation of the transit-trade agreement by Egypt will affect the regional economy and also Turkish exports. Yet, he avoids mentioning the cost that will arise with the cancellation of this agreement.
Çinçin said ATSO has made a study on the alternative routes and come to the conclusion that reaching Saudi Arabia via the Suez Canal is the most reasonable alternative. This route will bring in an extra cost of $1,000 to $1,500 per truck. Although reaching the region from Israel is another alternative, it seems unlikely due to the diplomatic crisis Turkey has with Israel. Iran is another alternative, but since the route would be longer from there with additional costs, it is not preferable. Iraq and Syria are not even considered as alternatives due to the turmoil in these countries.
Hatay Ro-Ro executive board president İbrahim Güler has said they made their decision to use the Suez Canal as of April 24 for their commercial activities. According to Güler, this will lead to an additional cost for carriers. Businessmen who are involved in commercial activities in the Gulf and Arab countries say they will not give up exporting goods to these regions no matter what happens.