Central Asia is a region of increasing competition between great powers such as Russia, China and the United States. Eurasian integration with active participation of Russia, China-led One Belt – One Road initiative, and the United States’ proposals such as the New Silk Road are in the focus of many studies. However, there are emerging powers, policies of which remain unobserved but gained importance for the region in the recent years. Turkey became one of the key partners of the Central Asian states. Therefore, this commentary aims to analyze trade cooperation between Turkey and Central Asia as it creates important interstate links.
Turkey’s exports to the region grew significantly (Figure 1). Its exports to Kazakhstan increased from $460 million in 2005 to $979 million in 2020. For the reported period, Turkey’s supply to Kyrgyzstan grew from $90 million to $416 million, while Tajikistan’s imports from Turkey increased from $47 million to $173 million. In 2020, Turkmenistan imported products worth $786 million, while its 2005 indicator was low and amounted to $181 million.
Figure 1. Turkey’s exports to Central Asia, million $
Source: The Author’s compilation based on the International Trade Centre (ITC, 2021) data.
Uzbekistan was a main destination for Turkey’s products in 2020. Uzbekistan’s imports from Turkey increased from $151 million to $1.15 billion demonstrating a 7.6 fold increase. This is the highest indicator for Central Asia. Therefore, in 2020 Turkey’s exports to Central Asia amounted to $3.5 billion. Its exports to the region are diversified and vary from textile products to industrial goods and machinery.
Figure 2 shows that Turkey’s imports from the countries of Central Asia also increased.
Figure 2. Turkey’s imports from Central Asia, million $
Source: The Author’s compilation based on the ITC (2021) data.
Main import partners for Turkey are Kazakhstan and Uzbekistan. Kazakhstan’s exports to Turkey grew from $559 million in 2005 to almost $1.2 billion in 2020. Imports from Kyrgyzstan surged from low $14 million to $91 million increasing by 6.5 times for the reported period. It is important to note that Kyrgyzstan’s exports to Turkey show permanent increase, while 2015 and 2020 indicators of Tajikistan demonstrate reduction compared to 2010. In 2020, imports from Tajikistan decreased to $149 million from $284 million in 2010. Turkmenistan’s 2020 exports amounted to $319 million and was lower than its 2015 indicator that was equal to $557 million. Uzbekistan, in turn, experienced substantial growth in exports to Turkey. Its indicator grew from $261 million in 2005 to $970 million in 2020 increasing by more than 3.7 times. In total, in 2020 Turkey’s imports from Central Asia amounted to $2.7 billion. Thus, Turkey has a positive trade balance with Central Asia. Its net exports to the region equaled almost $800 million in 2020. Its trade balance was negative only with Kazakhstan. Turkey’s imports from Central Asia consist of fuels, metals and agricultural products.
Figures 3-4 show that the pandemic did not affect Turkey’s exports to the region. The trade flows continued to increase in all countries except Kyrgyzstan. It is important to note that the reduction in exports to Kyrgyzstan was insignificant. The indicator decreased from $430 million in 2019 to $416 million in 2020. Turkey’s imports continue to increase from Kyrgyzstan, Tajikistan and Turkmenistan. The indicators of Kazakhstan and Uzbekistan experienced reduction. Imports from Kazakhstan decreased from almost $1.4 billion to $1.2 billion. Uzbekistan’s exports to Turkey declined from $1.1 billion to $970 million.
It should be noted that Turkey actively strengthens bilateral ties with all countries of the region. Uzbekistan’s new open economic policy had a positive impact on economic and trade cooperation with Turkey. In February 2020, the President of Uzbekistan visited Turkey and had a meeting with the President of Turkey Recep Tayyip Erdogan. Following a meeting, President Erdogan mentioned that both exports and imports exceeded $1 billion for the first time. Later, the Minister of Foreign Affairs of Turkey Mevlut Cavusoglu announced that the countries agreed to cooperate to increase bilateral trade amount to $5 billion [Kazanci, 2020].
Figure 3. Turkey’s exports to Central Asia, 2019-2020, million $
Source: The Author’s compilation based on the ITC (2021) data.
Figure 4. Turkey’s imports from Central Asia, 2019-2020, million $
Source: The Author’s compilation based on the ITC (2021) data.
There is intense competition in the Central Asian market. Russia and China are the most important trade partners for the region. Besides these powers, there are new players such as Iran, with which Turkey has to compete. It is important to note that Turkey does not have a common border with the region, which is a significant disadvantage. This fact makes Turkey dependent on transit countries. Iran is not only Turkey’s competitor in Central Asia, but also a transit country, which provides a shorter, faster and cheaper route to Central Asia. Turkey actively uses transportation through Iran. Its trade with countries of the Commonwealth of Independent States region through Iran increased from 565 thousand tons in 2016 to 1.08 million tons in 2019. Understanding the rising dependence of Turkey on its transit, Iran started to increase transit tariffs for Turkey and announced that it would no longer provide fuel to Turkish trucks. Iran aimed to increase trade costs for Turkey in order to reduce competitiveness of its goods for the Central Asian market. As a result, Turkey started to diversify transportation of its goods to Central Asia developing Trans-Caspian routes and deepening cooperation with Caspian countries [Rahimi and Heydari, 2020]. In December 2020, Turkey sent the first train to China. The train set off from Istanbul and covered a distance of 8.7 thousand kilometers across Turkey, Georgia, Azerbaijan, the Caspian Sea, and Kazakhstan to reach Xi’an city in China. It is expected that this export route will decrease trade costs and duration and increase competitiveness of Turkey’s producers [Daily Sabah, 2020].
Beside transportation, mutual business interactions, implementation of joint projects and economic performance of the countries are important for bilateral trade. For instance, Turkey’s companies are active players in Turkmenistan’s market. They implement different projects varying from industry to infrastructure. As a result, these companies significantly contributed to the trade growth as shown on the example of Turkey’s exports to Turkmenistan, which peaked in 2014 exceeding $2.2 billion. However, the economic slowdown in Turkmenistan negatively affected bilateral trade figures. Turkish construction companies claimed that Turkmenistan’s government was not able to pay for finished contracts. As a result, they had to stop many important infrastructural projects such as construction of the highway from Ashgabat to Turkmenbashi [Putz, 2018].
Thus, despite there are no common borders with Central Asia, Turkey is becoming one of the most important trade partners of the region. It substantially increased its exports and started to purchase more goods from Central Asia. It has a positive trade balance with the region. Turkey successfully diversified transportation routes in order to decrease dependence on single transit countries, as many of them compete with Turkey for the regional market. It is important to note that it continues to use traditional routes while discovering other alternatives. Involvement of Turkey’s business in the implementation of the important industrial and infrastructural projects positively influences bilateral trade. Trade with Turkey is also beneficial for Central Asia as Turkey is an increasing market. They also can gain from new transportation routes and increase their exports. Moreover, they can consider Turkey as one of alternatives to diversify imports. Therefore, it is important for the countries of the region and Turkey to start free trade agreement negotiations separately and within the Eurasian integration.
References:
Daily Sabah (2020). Turkey plans new trips as 1st export train completes landmark trip to China. Retrieved from https://www.dailysabah.com/business/transportation/turkey-plans-new-trips-as-1st-export-train-completes-landmark-trip-to-china. Accessed on 18.02.2021.
International Trade Centre (2021). Turkey’s profile. Retrieved from https://www.trademap.org/Country_SelProductCountry_TS.aspx?nvpm=1%7c792%7c%7c%7c%7cTOTAL%7c%7c%7c2%7c1%7c1%7c2%7c2%7c1%7c2%7c1%7c1%7c1. Accessed on 20.02.2021.
Kazanci, Handan (2020). Turkey, Uzbekistan vow to boost trade volume. Retrieved from https://www.aa.com.tr/en/economy/turkey-uzbekistan-vow-to-boost-trade-volume/1925050. Accessed on 18.02.2021.
Putz, Catherine (2018). Turkish Company Complains about Turkmenistan’s Empty Pockets. Retrieved from https://thediplomat.com/2018/06/turkish-company-complains-about-turkmenistans-empty-pockets/. Accessed on 18.02.2021.
Rahimi, Omid and Ali Heydari (2020). How Iran and Turkey Compete in Central Asian Trade. Retrieved from https://thediplomat.com/2020/02/how-iran-and-turkey-complete-in-central-asian-trade/. Accessed on 16.01.2021.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.