Resilient Turkey must shape up its economy

Ankara’s move to thaw tensions with both Tel Aviv and Moscow could counter the negative impact of terrorist attacks on Turkey’s tourism and economy, and end its current isolation. Tuesday’s attack on Ataturk airport in Istanbul came just as Turkey is rebuilding relations with Israel and Russia.
Turkish Prime Minister Recep Tayyip Erdogan’s apology to Moscow prompted Russia’s President Vladimir Putin to lift sanctions on Ankara, a move that would shore up both economies, especially in areas of tourism and energy.
Erdogan also made a similar move to restore relations with Israel, with a focus on economy. The diplomatic relations were severed six years ago after eight Turks died in an Israeli raid on a Gaza-bound flotilla. Israel also plans to build a pipeline to Turkey to export Israeli gas. It has alternative plans to send gas to Egypt, liquefy it there and export it using ships, not pipelines. Following the news, the shares of Israeli and Turkish energy companies
advanced.
Amid uncertainty caused by the Brexit in Europe, Ankara looks forward to restoring ties with Moscow and Tel Aviv to boost its trade ties and ease political tensions. Locally, security in Turkey has deteriorated amid the spillover from Syria’s civil war and an escalating conflict with separatist Kurdish
militants.
Despite the attacks, investors cheered Turkey’s twin steps, which pave the way for Israeli gas imports and the lifting of Russian economic sanctions that have been especially damaging for Turkey’s tourism industry.
During the diplomatic row, the number of Russian tourists visiting Turkey fell 92 percent in May compared to a year ago, according to official data
published recently.
Tuesday’s attacks on Ataturk airport has left a negative impact on the country’s aviation. Turkish Airlines and airport operator TAV Havalimanlari Holding AS were the biggest drag on the Borsa Istanbul 100 Index.
Turkey’s aviation stocks fell after the attacks, threatening to deal another blow to the nation’s struggling tourism industry.
Tourist arrivals to Turkey fell almost 35 percent in May from a year earlier, the fastest drop in at least a decade and following a 28 percent decline in April. The number of Russian visitors to Antalya — one of Russians’ favourite seaside destinations — dropped 95 percent this year. The woes doubled when Turkey’s traditional tourists were hit hard as more Britons and Germans also choose to stay away because of perceived security threats. As a result, the total number of tourists is down 45 percent compared with last year.
Turkey’s reconciliation with Moscow and Tel Aviv is timely. Ankara will receive economic benefits from both. Moscow and Tel Aviv also have interests in Ankara, given its strategic political and economic status. It is an ally both sides cannot afford to lose.
Erdogan’s approaches to Moscow and Tel Aviv reflect good reading of the political and economic situation of Turkey. He plans to restore Ankara’s
regional and international status.
The airport attacks should not deter Turkey from charting a new economic course that it is treading.