Israelis greeted prospects for renewed trade and tourism with Turkey – as well as big gas-export contracts – with restraint on Monday as the two countries reached a rapprochement agreement ending a six-year rupture. Most of the talk centered on the prospects of opening the Turkish market – the biggest one in the region – to natural gas exports from Israel’s Leviathan Mediterranean offshore field. Although the agreement makes no reference to gas, Prime Minister Benjamin Netanyahu said gas has the potential to strengthen Israel’s coffers “with a huge fortune.”
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“This is a strategic matter for Israel. This matter could not have been advanced without this agreement, and now we will take action to advance it,” Netanyahu told a news conference.
In an otherwise down market on the Tel Aviv Stock Exchange Monday, energy shares were higher. Avner gained 2.2% to 2.54 shekels (65 cents), Delek Drilling advanced 2% to 14.02, Ratio by 1.6% to 31 agorot and Isramco by 1.1% to 65 agorot. In Turkey, Zorlu Energy, which has activities in Israel, rose 11% although Noble Energy, the lead partner in Leviathan, was down 3.5% at $33.898 late afternoon local time in New York.
Turkish Prime Minister Binali Yildirim was more cautious. “Firstly let normalization begin and, after that, the level to which we cooperate on whatever subject will be tied to the efforts of the two countries,” he said. “There is no point in talking about these details now.”
The quasi-official Israel Export Institute said prospects for reviving most sectors of Israeli-Turkish trade will take time because Turkish businesses will want to see whether the rapprochement is permanent before risking deals with Israeli companies. Defense exports to Turkey, once a major business for Israel when the two countries were close partners, will take even longer due to security concerns. On the other hand, exports of petrochemicals and refined oil, which account for three quarters of Israeli exports to Turkey, will only revive with a turnaround in the world price of petroleum, the institute said. Trade in the segment is based on the price of oil, not on the ups and downs of diplomatic relations, the institute said.
Israeli exports to Turkey held up relatively well after 2010 when an Israeli commando raid on the Turkish vessel Mavi Marmara led to the death of 10 Turkish nationals. According to Israel Export Institute figures, exports not counting chemicals and refined petroleum dropped only 8% in the following four years. But last year the pace of the decline accelerated to 18%, at about $400 million. All told, Israeli exports dropped 39% last year to $1.68 billion and continued 17% lower in the first five months of this, year mainly due to the collapse of petroleum prices as well as do to a weak Turkish lira, the institute said.
Turkey was a popular vacation destination for Israelis before the Mavi Marmara, but travel agents said on Monday that news of the rapprochement hadn’t initially aroused much interest as measured by telephone inquiries and Internet searches for holiday packages. “I think any increase in reservations will be measured,” said Ronen Carasso, vice president for marketing at the travel agency ISSTA. “One is the general security situation in Turkey. The other is that the last six years have left a scar and it’s the nature of scars that they take time to heal.”
With reporting from Reuters.