Israeli Industry Braces For Economic Damage Amid Turkish Trade Ban

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by Tyler Durden
Saturday, May 04, 2024 - 12:10 PM

Via Middle East Eye

Sectors across the Israeli economy are warning of wide-reaching impacts of Turkey’s decision to halt all trade with Israel, and are scrambling to find alternative sources for lost imports.

The Turkish trade ministry announced earlier this week that Ankara is halting all import and export transactions related to Israel until it "allows an uninterrupted and sufficient flow of humanitarian aid to Gaza." The ban on imports includes iron and steel products, construction materials, minerals, machinery, cars, energy products, rubber, plastics, health and agricultural products.

The construction industry is bracing for the loss of Turkish iron and steel products and building materials, as Turkey supplied 29 percent of Israel's total cement imports last year.

Construction work on the settlement of Tzofim, east of the Palestinian West Bank village of Qalqilya, on 2 January 2024 (AFP)

Last month, Israeli businessmen warned that the restrictions could drive an increase in property and rent prices. Meanwhile, Israel’s largest oil refinery, Bezan, said the ban could impact crude oil imports. 

Forty percent of Israel’s annual oil consumption is piped to the Turkish oil hub port of Ceyhan and then shipped to Israel.

Moreover, representatives of the electrical products industry are warning that the ban could lead to a 35 percent hike in prices, as the majority of domestic electrical goods in Israel are manufactured in Turkey. 

The new restrictions could force importers to import across the Red Sea, where attacks by Yemen's Houthi group have driven a spike in shipping costs.

'Dire straits'

In April, the contractors' association wrote a letter to Israeli Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich, accusing them of driving the sector to the brink of collapse.

Amit Gottlieb, chairman of the Urban Renewal Committee in the Israel Builders’ Association (ACB), said the Israeli construction industry was already in "dire straits" since Israel’s war on Gaza began, due to labor shortages resulting from Israel’s ban on Palestinian workers.

He added that alternative imports of construction materials from Germany, Great Britain, the Czech Republic, Hungary and Greece needed to be arranged "as soon as possible".

Turkey’s exports to Israel were worth $5.4bn in 2023, or 2.1 percent of its total exports, according to official data. From 2009 to 2023, trade between the two countries nearly tripled. By the end of that period, Turkey had become the fifth-largest supplier of goods imported by Israel, while Israel ranked as Turkey's 10th-largest export market, based on data from the Central Bureau of Statistics.

On Thursday, Israel’s foreign minister, Israel Katz, accused Turkey’s President Recep Tayyip Erdogan of ignoring international trade agreements and acting like a "dictator". He added that Israel would seek to replace the lost Turkish imports with locally produced goods or imports from other countries.