The Qatar Crisis: New Trade Opportunities?

By: Zuhal Sari, Key Account Manager, ET2C Turkey

Doha at night

 

                    Turkish Minister of Customs Bulent Tufenkci said that since the beginning of June this year, the country has exported goods and services valued at $32.5 million to Qatar – three times more than in the same period in 2016. Out of this value, $12.5 million went on food exports.

                    What exactly is going on? Saudi Arabia, United Arab Emirates, Egypt and Bahrain have accused Qatar of supporting terrorism and unacceptable foreign policies and cut the diplomatic relations with the fellow-member of the Gulf Countries Council (GCC). The sanctions against Qatar did not involve only severing diplomatic ties: its neighbours imposed a full trade embargo. All products from Saudi Arabia, UAE, Egypt and Bahrain disappeared from the shelves of Qatari supermarkets over night. This has opened new opportunities for businesses from other markets, especially the ones politically and culturally close to Qatar like Turkey and Iran. According to the Turkish and Qatari governments, Turkish companies have exported goods valued at over $20 million with over 200 cargo flights. New joint investment projects are now being planned as well.

                   The success did not come over night though. In 2016, Turkey exported goods valued at $439 million to Qatar, while the imports from the Gulf partner were valued at $271 million, primarily in the electronics sector. Turkish exports in aviation and defense surged 400 percent to $52.2 million, with the total share of Qatari imports in this sector rising to 25 percent. In addition, in the first five months of 2017, exports of jewelry, automotive parts and ready-to-wear goods rose by 50 percent.

Turkish Chicken

                        Then in June this year new opportunities opened up. Although Qatar is a liquefied natural gas exporter, 90% of its food needs are satisfied through imports. That is why the imposed trade embargo by Saudi Arabia, UAE, Bahrain an Egypt has emptied the shelves of supermarkets in Qatar. However, it did not take long for these shelves to be filled with food and beverages from Turkey and Iran, delivered by cargo planes, invoking not so distant memory of Berlin Airlift (Jun, 1948 – Sep, 1949), during which the West Allies airlifted almost 9000 tones of goods to the residents of West Berlin which was under blockade. This does not mean that the Turkish government plans to stop at food exports. After acquiring market positions for meat, poultry, dairy products, fresh fruit and vegetables, it plans to focus on the expansion in electronics, defense and civil aviation sectors.

Opportunities for the companies based in Europe, Asia and the Americas

                        Of course, everything said above does not only refer to Turkey and the businesses based in this country. The newly-created opportunities in Qatar now exist for companies from other markets as well. Although relatively small, Qatar is one of the wealthiest countries in the region and its trade volume is significant. This is why starting and expanding business operations for companies from countries not involved in the dispute can result in acquiring market positions that are to be kept and maintained even when the crisis ends. The Qatari needs are significant: before the dispute, the imports from the GCC countries included chemical products, consumer goods, heavy machinery and metal products. The trade embargo means that these imports are not available anymore from the GCC countries, leaving the opportunity for others – Turkey, European Union, China, USA, Russia, Indonesia and others.

                       However, one has to move fast. The crisis, although not resolved yet, is not expected to last for long and the opportunity to acquire these market positions will not last for long. The Turkish government and companies have been very active in fully exploiting these opportunities. How about you?