Greece has expanded exports to Turkey as Turkish firms look to invest in its neighbour.
By Enis Senerdem for Southeast European Times in Istanbul -- 14/02/13
Greek exports to Turkey hit $3.5 billion in 2012. [AFP]
The Turkish market has become a major export destination for crisis-stricken Greece, as Greek companies find it harder to sell in the domestic market due to worsening financial conditions of the average Greek household.
Greek exports to Turkey surged to $3.5 billion (2.6 billion euros) in 2012 from $1.1 billion in 2009, according to Turkstat data. During this period, the average year-on-year increase of Greek exports hovered around 50 percent, while Turkish exports remained flat at around $1.5 billion each year.
This eye-catching shift in trade relations left Turkey as a net importer from Greece, whereas in 2007, before the Greek debt crisis, Turkey had a positive trade balance with Greece of $1.7 billion.
Archontis Pantsios, a professor of economics at The American College of Thessaloniki, said that since the onset of the crisis in Greece, Turkey has become a more suitable market for Greek companies.
"They are looking to lower the costs and exporting to Turkey is an effective option for Greek companies," Pantsios told SETimes.
Turkey's vibrant domestic demand and large market is seen as another reason for the increase in Greek exports to Turkey.
Can Baydarol, an EU expert at Wise Men Centre for Strategic Studies, an Istanbul think-tank, told SETimes that Greek companies are struggling to find buyers in the domestic market and want to expand business in the fastest growing country in the region.
Turkish investors are also interested in new opportunities in Greece.
Last year, Athens announced a 50 billion euro privatisation programme including renewable energy, manufacturing, mining, waste disposal, tourism, property and infrastructure. In March last year, business people both from Greece and Turkey gathered in Istanbul and discussed potential joint ventures concerning the privatisation programme of Athens.
Dogus Group, one of Turkey's largest conglomerates, bought a 50 percent share in Athens' biggest marina, Lamda, for 20 million euros.
"Turkish investors perceive the Greek crisis not only as a risk but also as an opportunity," Muzaffer Kutlay, a Balkan expert at the International Strategic Research Organisation, a think-tank in Ankara, told SETimes. "Turkish firms in telecommunication, transportation and infrastructure sectors are interested in investing in Greek assets."
However, according to Kutlay, there are cultural and political barriers preventing Turkish investors from entering the Greek market.
The two neighbours are still at odds over sea rights in the Aegean and Mediterranean, the divided island of Cyprus, and exploration and extraction of oil and gas deposits.
Questions remain on how much economic relations will reflect on bi-lateral political relations.
Pantsios said anything that raises the mutual costs of potential conflict, such as bilateral trade or investments, will reduce the probability of conflict between the two countries.
"Hence, it would provide them with an incentive to find mutually acceptable solutions to bilateral problems," he said.
Others are more cautious.
"Increasing bilateral dependence will push decision makers to mutual solutions. However, it is still a question mark whether the economy is a practical tool for solving deep rooted political issues," Kutlay said.
Since the onset of the Greek debt crisis, Turkey and Greece have not pushed for any concrete steps to solve the Cyprus issue or the Aegean Sea dispute. Baydarol said that because of the Greek crisis "they cannot raise their heads and look outside of their border to solve frozen conflicts like Cyprus."
While the short-term transformation in economic relations between Greece and Turkey may not be enough to solve political issues, it can "establish a platform where the parties can discuss these issues," Kutlay said.