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Qatar’s Economic Support for Erdogan

The economic relationship between Ankara and Doha is the mirror image of their military cooperation. Financially, Turkey is the endangered beneficiary, whereas Qatar plays the role of provider. Qatar’s foreign direct investment in Turkey between 2005 and 2018 stands at $1.6 billion, making it the 18th largest investor in the country.219 While Qatari inflows represent less than one percent of Turkey’s cumulative foreign direct investment, Doha’s strategic targeting of the finance, media, and defense sectors make it an indispensable partner for Erdogan.220

These investments have also created a safety net for the Turkish government after its support for the Muslim Brotherhood in the Middle East led to Turkey’s isolation and the loss of economic allies.221 Furthermore, since Turkey has a high current account deficit, Qatari injections of foreign currency are a lifeline for its balance of payments.222

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In August 2018, when Turkey suffered its worst currency crisis in decades, Qatar provided Ankara an economic lifeline of $15 billion to prop up the Turkish lira and aid the Turkish economy.223 The aid package included a mix of economic projects, currency deposits, and investments, plus a $3 billion currency swap to shore up the lira.224 Qatar’s investment – a sum equal to $420,000 per Qatari family – actually exceeded Turkey’s total inflow of foreign direct investment in 2017.225 As of early 2019, Turkish Deputy Finance Minister Osman Dincbas said “a portion of the $15 billion” had been delivered, without clarifying further.226

But Qatar’s financial dealings with Turkey have not all been philanthropic. Doha has shown interest in investing in Turkey’s financial sector since 2012, when Qatar National Bank – the emirate’s biggest lender – made a failed bid to acquire Denizbank. 227 In 2013, the Commercial Bank of Qatar228 became the first Qatari lender to enter the Turkish banking sector after becoming the primary shareholder of Alternatifbank.229

The following year, Qatar Islamic Bank sought to acquire a stake in Turkey’s Islamic lender Bank Asya,230 which was under pressure to sell off its assets after a power struggle between then-Prime Minister Erdogan and his former ally-turned-arch-nemesis, the U.S.-based cleric Fethullah Gulen.231 The Turkish government seized the bank in May 2015 and shuttered it in July 2016.232

Qatar National Bank ultimately succeeded in buying Finansbank, Turkey’s fifth-largest privately owned bank by assets.233 The purchase provided relief for Turkish markets as foreign investors withdrew some $1.5 billion from Turkish stocks and bonds in the aftermath of the snap elections in November of that year.234

Turkey’s sovereign wealth fund, which Erdogan created to shield the country’s publicly owned companies from public audits,235 could be the next major Qatari acquisition in Turkey. In June 2017, the Turkish government claimed that Qatar provided $600 million to Turkey through the sovereign wealth fund,236 although the fund’s chairman later denied it.237 In September 2017, Erdogan dismissed the chairman, which led to speculation that the reshuffle stemmed from his failure to acquire the promised funds from Qatar.238

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