Saudi Arabia has agreed to buy Turkish drones, one of several lucrative contracts President Recep Tayyip Erdogan secured for Turkey’s struggling economy as Ankara reaps the benefits of his recent diplomatic push to repair ties with Gulf Arab powers.
Erdogan arrived in Saudi Arabia on Monday, accompanied by an entourage of some 200 businesspeople, according to the Foreign Economic Relations Board of Turkey, as part of a three-stop tour of the region.
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Both countries signed several memorandums of understanding (MoUs) in many fields, including energy, direct investments and defence industries.
Erdogan and Saudi Crown Prince Mohammed bin Salman attended the signing ceremony for the drones deal between Turkish defence firm Baykar and the Saudi defence ministry, Saudi state news agency SPA reported.
Saudi Arabia will acquire the drones “with the aim of enhancing the readiness of the kingdom’s armed forces and bolstering its defense and manufacturing capabilities”, Defence Minister Prince Khalid bin Salman Al Saud said in a tweet on Tuesday.
SPA did not give details about the value of the deal.
Turkey’s economic woes
Erdogan’s visit comes as Turks are hit with sales and fuel tax hikes that Finance Minister Mehmet Simsek has said are necessary to restore fiscal discipline and bring inflation down.
The official annual inflation rate stood at 38 percent last month, down from a high of 85 percent in October.
Turkey’s current account deficit reached record levels this year – $37.7bn in the first five months – and Erdogan hopes the oil and gas-rich Gulf states will help plug the gap.
On Tuesday, the Turkish lira weakened to a record low of 26.6 against the dollar as investor attention began to focus on the central bank’s policy-setting meeting on Thursday where it is again expected to hike rates.
The lira lost as much as 0.9 percent of its value against the US currency compared with Monday’s close of 26.3505.
It has weakened nearly 30 percent so far this year.
Turkey has recently repaired ties with Saudi Arabia and the United Arab Emirates following a decade-long rift after the 2011 Arab Spring and Ankara’s support for the Muslim Brotherhood, considered a threat by some Gulf monarchies.
Worsening relations were exacerbated by a boycott of Turkish ally Qatar by Saudi Arabia, the UAE, Egypt and Bahrain in 2017.
The 2018 murder of Saudi dissident journalist Jamal Khashoggi at Saudi Arabia’s consulate in Istanbul led to a further souring of ties with Riyadh. US intelligence agencies assess that the killing was carried out on Prince Mohammed’s orders, something the kingdom denies.
Qatar and the UAE have provided Turkey with some $20bn in currency swap agreements recently, while Saudi Arabia deposited $5bn into Turkey’s central bank in March.
Days after Erdogan won re-election last month, the UAE and Turkey signed a trade deal potentially worth $40bn over the next five years.
Erdogan is due to meet Qatar’s Emir Sheikh Tamim bin Hamad Al Thani in Doha on Tuesday before visiting the UAE leader in Abu Dhabi on Wednesday.