Turkey and Israel sign deal to warm relations ending six-year rift

By bne IntelliNews June 28, 2016

Turkey and Israel signed on June 28 a deal to normalise relations that went sour six years ago when Israeli commandoes raided a Turkish boat bound for Gaza, killing ten Turkish activists.

The deal, initially announced on June 27 after months of negotiations, is likely driven by prospects of economic gains for Ankara and Tel Aviv. It is also part of Turkish President Tayyip Recep Erdogan’s latest diplomatic moves to mend ties with neighbours in a likely attempt to break Turkey’s diplomatic isolation at a time when the world markets are bracing for more shock waves from Brexit. 

“A deal between the two countries could pave the way for Israel to supply as much as 8bn-10bn cubic metres of gas to Turkey annually, around 20% of Turkey's consumption”, local brokerage firm DenizInvest said in an emailed note. This will lower Turkey’s energy import costs and help the country further reduce its current account deficit. It could also have a positive impact on the electricity, glass, ceramics and manufacturing companies, which rely heavily on gas for production, including Tupras and Petkim, according to the brokerage firm.

In the long run, Sabanci Holding, Turcas, Zorlu Enerji and Enka Insaat are among the companies that could potentially take part in the construction and operation of the pipeline, DenizInvest added. It also noted that trade between the two countries might accelerate as a result of the rapprochement.

According to the deal, Israel will pay $20mn in compensation to the relatives of the Mavi Marmara boad victims, the Hurriyet Daily News reported. In exchange for the compensation, all claims against Israeli soldiers in Turkey will be dropped.

Secret meetings between delegations from the two countries started in December 2015. Upon Turkey’s demand, Israel already apologised for the boat incident in 2013 but Turkey had two more demands: compensation for the victims and lifting of the blockade on Gaza. Turkey’s compensation demand has been met, but apparently the other demand related to Gaza has only been partially satisfied. Turkey will deliver aid to Palestine, with a vessel carrying 10,000 tonnes of humanitarian aid setting off on July 1 from Turkey to Israel’s Ashdod port, according to the Hurriyet Daily News. The construction of a new power station and a desalination plant for drinking water in Gaza was also among the deals agreed between Ankara and Tel Aviv.


Related Articles

Record decline in Turkish central bank’s gross forex reserves pushes holdings to $89.9bn

The Turkish central bank reported on December 7 that its gross forex reserves last week experienced a record drop, declining to $89.85bn on December 1 from $96.35bn a week earlier. ... more

EU governments reportedly agree to cut Turkey’s pre-accession funds

EU governments have agreed with the European Parliament to withdraw €105mn that would have gone to help finance political ... more

Mystery deepens over Zarrab's role in Iran sanctions case reverberating in Turkey

Reza Zarrab, the wealthy Turkish-Iranian entrepreneur who allegedly masterminded an extensive conspiracy to help Iran evade US sanctions will not stand trial in New York this week as scheduled, even ... more