Spain and Turkey maintain stable and reliable economic and political relationships since long ago. During the last decades, good political relations, pro-friendly policies and long-lasting agreements have boosted mutual trade and strengthened cross-investment ties.
The mutual trade relevance is shown in the fact that, according to official data from 2019, Turkey represents the 13th market of exports of Spain and the 9th country of origin of our imports. Meanwhile, Spain represents the 6th destination market for all the Turkish exports, and the 10th country of origin of Turkish imports .
Both countries have actively benefited from the EU-Turkey Customs Union since 1996. Under this agreement, goods can move freely between the two countries without any sort of customs restrictions. Additionally, strategic bilateral agreements are in place between the two countries, including the protection and promotion of cross-country investments, and the prevention of double taxation. Altogether, Spain has become a relevant global value chain (GVC) partner for Turkey.
Economic ties between the two countries have become more sophisticated in recent years, due to the participation of major Spanish companies on strategic Turkish projects and shareholders’ acquisition. Notorious examples are BBVA’s 49.85% ownership of Turkey’s largest private bank Garanti Bankasi, and ENAGAS 16% participation of the TAP project (Trans Adriatic Pipeline), a Turkish-led project of “common interest” for the EU.
Meanwhile, Turkish firms are also gaining attention on the Spanish market, thanks to the emerging innovative and cost-competitive technology. A significant example is the use of Turkish Hidromek’s tunnelers and diggers on a challenging project in the Canary Islands, which is proving the success of award-winning Turkish technology in Spanish soil.
These recent moves add up to the already established network of Turkish branches of Spanish corporations. The main Spanish financial institutions have established themselves in Turkey, Banc Sabadell being the pioneer in 2006.
The Spanish business presence in Turkey is diverse in both, the sectors represented and the size of the companies. Successful cases include CASA airplane manufacturer; the engineering company Técnicas Reunidas; Fagor Industrial, hotel equipment manufacturer; Amadeus IT services; Tolsa Group mining company; Mapfre insurance services; ROCA sanitary design and materials; Barceló Hotel management; INDRA technology industries; Semillas Fitó seeds producer; BAMESA automotive industry; OHL construction; or Iberdrola renewable energy, among many others. Similarly, Turkish companies such as Ekol Logistics; Beko home appliance products manufacturer; Lassa tire producer; or Arkel lift technology, among other companies, have entered the Spanish market.
Emerging opportunities for the improvement of economic cooperation between the two countries can be reinforced through Turkey’s recent move to develop strategically renewable energies, where Spain is a powerhouse. Other sectors like agrofood industry, pharmaceutical production, public works or transport infrastructures offer wide opportunities for cooperation.
The global tendency of reshoring is bringing back to Turkey part of the production of certain Spanish fashion manufacturers -such as Inditex or Mango- had in other markets, in an effort to guarantee the quality and the logistic accessibility to the main consumer markets around Turkey.
In recent years, Turkey is making a significant, successful effort in developing its own wide tech and digital ecosystem. In this front, it has been able to attract significant global players such as Huawei, Cisco, SAP or ZTE, but at the same time has successfully developed its own multinational companies such as Türk Telekom, Türkcell, Modanisa (modest fashion online shopping) or the drone technology. This trend can offer new avenues of cooperation among companies of the technological sector, and especially to start-ups, where the Barcelona and Istanbul ecosystems are performing very successfully.
Another field where companies and business institutions from both countries could strengthen their cooperation, having a win-win impact, is by reaching third countries of mutual influence. There are growing Turkish brands that want to reach new emerging markets, being Latin America their ’last frontier’. Here, Spanish business stakeholders are extremely well established, having the capacity to help their Turkish complementary counterparts to enter there. Likewise, Turkish companies have their own economic area of influence where they could introduce Spanish products and services, namely Central Asia or certain Middle East markets.
In a context where economies are facing significant challenges, and even deep recessions, cooperation among two middle economic powers with significant complementarities can be a useful tool to overcome this situation. Here, all sort of Spanish and Turkish institutional and business stakeholders should try to go beyond politics and find niches of cooperation of mutual benefit. Universities, research centres, business support organizations, technology enabling institutions (i.e. business incubators) or transport and logistics stakeholders still have a long and fertile way to explore.
Public Affairs Experts – January 28th, 2021