Erdogan will show 'gratitude' to Gulf states for financial support after election

Turkish President Recep Tayyip Erdogan said on Thursday that Arab Gulf states sent money to Turkey recently and that he would “show gratitude” to them after Sunday’s election.

"Our economy, banking and financial system are quite strong. Meanwhile, some Gulf states and such stocked money in our system. This is recent and this relieved our central bank and market, even if for a short while," Erdogan said in an interview with CNN Turk.

Erdogan defied analysts and pollsters by over-performing against opposition leader Kemal Kilicdaroglu in Turkey’s first-round presidential election. He heads into Sunday’s runoff in a strong position having garnered 49.5 percent of the vote and securing the backing of ultra-nationalist, third-party candidate, Sinan Ogan, who received just over five percent of the vote.

Erdogan faced the biggest political challenge of his career during the election. The rapid economic growth that defined his early years at the helm in Turkey has been replaced by an economic crisis. The Turkish lira has lost 80 percent of its value against the dollar since 2018. While annual inflation has retreated from its 80 percent peak, it still hovered at 44 percent last month.

In the lead-up to the election, Erdogan spent billions of dollars on handouts like free gas, early retirement, and wage increases to help cushion the sting of the economic crisis for ordinary Turks. The giveaways helped shore up election support but drained state coffers.

In May, Turkey's foreign currency reserves fell by $7.6bn to $60.8 bn in one week alone, according to the central bank, the biggest drop in more than two decades.

“I can’t see how Erdogan did it except with money coming from the Gulf and Russia,” Soner Cagaptay, director of the Turkish research programme at the Washington Institute for Near East Policy, previously told Middle East Eye.

Erdogan’s comments on Thursday are a rare acknowledgment that Gulf states helped shore up Turkey’s finance’s in the lead-up to the election.

MEE previously reported that if Erdogan wins reelection on Sunday, he is likely to be more dependent on Gulf powers for support. Economists say Turkey’s economic challenges are largely of Erdogan’s own making due to his unorthodox view that high-interest rates cause inflation.

“The economic crisis in Turkey is going to get worse," Gonul Tol, founding director of the Middle East Institute’s Turkey programme, previously told MEE.

'Erdogan [will be] even more dependent on autocrats in the Middle East and Russia for financial support' 

- Gonul Tol, Middle East Institute

Tol said that Erdogan’s economic views will continue to deter much-needed western investment, “making [him] even more dependent on autocrats in the Middle East and Russia for financial support". 

"After Sunday's election, you will see how these leaders will come here and how I will visit them to show gratitude," Erdogan said on Thursday.

But the comments also underline how the Middle East’s geopolitical chessboard has been scrambled by a wave of regional rapprochement that MEE reported on last year and identified as a top trend for the region going into 2023.

Following the 2011 Arab Spring, Erdogan, along with Qatar, threw their weight behind the Muslim Brotherhood, Islamists, and democratic movements in the Middle East which Saudi Arabia and the UAE consider a threat to their rule.

The enmity with Saudi Arabia reached its apex when MEE journalist Jamal Khashoggi was murdered at the Saudi consulate in Istanbul - a killing reported to have been personally ordered by the Saudi crown prince, Mohammed Bin Salman. But regional powers have since mended ties.

Erdogan paid his first official visit to the UAE in nine years in February. He followed up with a trip to Saudi Arabia in April and later hosted onetime Gulf foe, Mohammed Bin Salman, on his home turf in Ankara. 

Saudi Arabia and the UAE, along with Qatar, agreed to deposit billions of dollars in Turkey's Central Bank to prop up flagging foreign currency reserves and made investments in the country. 

Meanwhile, regional flashpoints like Libya, where Turkey and the UAE backed opposing sides, have cooled. Analysts tell MEE that Qatar has also toned down criticism of other Gulf states on state-funded news networks like Al Jazeera. Saudi Arabia has moved to restore ties with Iran, Hamas, and Syrian President Bashar al-Assad.