What does it mean to be Turkish? It’s a question that its leaders have grappled with for centuries, thanks to the country’s location on the continental boundary between Asia and Europe. The answer is becoming more pressing in a multipolar world marked by new geopolitical rivalries. Turkey’s current Erdogan-led government is all too aware that the decisions it makes could contribute to shifts in the balance of power between the competing players, as well as impacting on their trade and investment ties with Turkey too.
Some archaeologists argue that the Turkic people’s homeland 5,000 years ago was in Mongolia. If so, should the Turks pivot eastwards to their ancestral pastures and take more advantage of China’s Belt and Road Initiative (BRI), as well as joining the Shanghai Cooperation Organisation (China’s Eurasian security alliance), with which it flirted in 2016?
Or should the country turn westwards? After all, that was the direction that the republic’s founder, Mustafa Kemal Ataturk, chose to face. In this scenario, Turkey would retain its NATO membership (Turkey protects the association’s southern flank) and press further to become a member of the EU.
In recent years, the Erdogan regime has sought to secure an advantage through friendships with all or – depending on your point of view – by trying to play one geopolitical rival off against another. The results have been mixed, mind you, and ties with the Chinese have ebbed and flowed too.
In one of the latest chapters in relations, the relationship has been coloured by the aborted sale of the operator of two key infrastructure projects to Chinese buyers. Jiemian.com reports the cancellation of the sale of a majority stake in the infrastructure firm, the builder and operator of the third crossing of the Bosphorus (the Yavuz Sultan Selim Bridge) and the 400km Northern Marmara Highway, which partially traverses it.
In late 2019, a consortium comprising China Merchants Expressway, China Merchants Union and four provincial expressway companies (Anhui, Jiangsu, Sichuan and Zhejiang) agreed to pay $688.5 million for a 51% stake in ICA Ictas-Astaldi. But Bloomberg says that ICA, the Turkish parent group, pulled the plug on the sale after failing to agree terms on the refinancing of $1.6 billion in outstanding loans from the Chinese. The Turkish seller wanted the full purchase amount upfront, while the Chinese buyers wanted to put the capital into an escrow account until the refinancing was agreed with creditor banks including ICBC, Bank of China and China Merchants.
The company was up for sale in the first place for familiar reasons. Since coming to power in 2003, Recep Tayyip Erdogan has unveiled one mega infrastructure project after another in support of his bid to transform Turkey into one of the world’s 10 largest economies by 2023, when it celebrates its centenary as a republic.
Less focus has been given to the financial feasibility of many of these projects. In the case of the ICA assets, the bridge-and-highway project ended up costing far more than envisaged ($8 billion more, according to a government minister earlier this year). And neither asset is generating enough revenue to cover its costs.
Turkey’s wider financial troubles are escalating: inflation is running at 18.5% and the budget deficit is growing rapidly. Its financial predicament underscores its geopolitical one. Which way should it turn?
In the case of the ICA Ictas-Astaldi deal, Chinese netizens have no sympathy for the Turkish decision to cancel the stake sale. Untrustworthy and lacking in credibility is a recurring theme in their view of Turkish businesspeople in general. “Turkey is a white-eyed wolf,” says one, in local Chinese slang for someone who fails to show gratitude.
Other netizens went back to Turkey’s decision in 2015 to cancel a recently-concluded agreement to purchase China’s Hongqi 9 air defence missile system. Turkey said that it favoured China’s technology because it was cheaper than alternatives from other providers. But Washington wasn’t happy. The Chinese system was technically incompatible with those run by NATO alliance members, it warned, and it posed a security threat.
In 2017 Turkey made the situation worse, in American eyes, by plumping for Russia’s S-400 system instead (one that has been designed to shoot down American F-35 fighter jets). Four years later, the S-400 system is still inactive as Turkey and the US try to resolve their differences. This June, Ankara rejected an American proposal to jointly run the defence system from the US-controlled Incirlik airbase on Turkey’s southern border with Syria.
As WiC has previously reported, Erdogan’s government is also keen on Chinese cash to fund its infrastructure ambitions and Beijing has been happy to talk about how it can help, seeing Turkey as a Belt and Road bridgehead from Central Asia into Europe.
China’s largest investment, to date, is the $1.7 billion Hunutlu coal plant (a Shanghai Electric joint-venture financed by China Development Bank, ICBC and Bank of China). Other investments include a 65% stake in Kumport, Turkey’s third largest container terminal on the European side of Istanbul, which is owned by a consortium including Cosco Pacific, China Merchants Holdings International and CIC Capital.
Alibaba is also the major shareholder in Turkey’s largest e-commerce platform, Trendyol.
However, tensions in Xinjiang have complicated the relationship between the two countries, with tens of thousands of Uighur refugees now living in Turkey. Beijing has pushed Ankara to do more to curtail what it sees as a safe haven for terrorist groups and Uighurs were prominent in protests in Turkey this year against a new extradition treaty between the two governments that requires the return of persons wanted on charges of criminal activity.
However, the treaty is still to be ratified by the Turkish parliament nine months after Ankara agreed it with Beijing. Opponents have alleged that Turkey was strong-armed into signing it as a precondition for shipments of Covid-19 vaccines. The public mood towards the Chinese isn’t warm either. In 2019, graffiti supporting the Uighurs was splashed over government-sanctioned posters in Istanbul celebrating China’s National Day. Polling from Pew Research in the same year showed that respondents in Turkey ranked in the bottom half of countries asked about their views on China. Only 37% had a favourable response, one percentage point more than Australia.
There’s plenty of history to explain why, including an affinity for the Uighurs on grounds of ethnicity (they’re both Turkic peoples), religion (Islam) and language (there’s about a 60% overlap).
The Turkic relationship with the Chinese dates back to the first Khaganate (empire), which stretched from Manchuria to the Black Sea. In the late sixth century, its ruler Ishbara Qaghan opted to bring peace and prosperity to his warring kingdom by becoming a vassal state of China (then ruled by the Sui Dynasty). When Ishbara died, the Sui’s Emperor Wen sent 5,000 bolts of silk as a funeral gift. But his heir stopped tribute payments to the emperor and even plotted to overthrow the Sui. The Khaganate was subsequently crushed by the Sui’s successor, the Tang.
More recent disagreements flamed again this century, when in 2009 Erdogan said there was a “genocide” occurring in Xinjiang, to the fury of Beijing. However, Turkish officials have largely abandoned public criticism of China’s Uighur policies and the Turkish government has been cracking down on some of the Uighur activists at home too.
In fact there are commonalities between the two governments in Ankara’s own sensitivities over usage of the term ‘genocide’. The Turks were furious in April when the Biden administration described the Ottoman deportation of an estimated 1.5 million Armenians in the early 20th century as genocide, for instance. Two years earlier Erdogan even threatened to shut the American airbase at Incirlik when the US Senate adopted a resolution that recognised the killing of Armenians as a genocide too, Reuters reported at the time.
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