A Surprising Decision—One That Requires Conclusions: What Can We Learn From the Cessation of Trade From Turkey? | INSS
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Home Posts A Surprising Decision—One That Requires Conclusions: What Can We Learn From the Cessation of Trade From Turkey?

A Surprising Decision—One That Requires Conclusions: What Can We Learn From the Cessation of Trade From Turkey?
Galit Cohen, Amit Ashkenazi 5 May, 2024

Three months ago, we held a high-level meeting at INSS with many participants to discuss the possibility of trade being stopped from Turkey. We wanted to understand the likelihood of this happening, but more importantly, how we could prevent it or prepare for it if necessary. The meeting concluded that a trade freeze was unlikely because Turkey’s economic interests wouldn’t allow its cutting off exports to Israel. The various trade agreements signed between Turkey and Israel were seen as an effective protection mechanism against disruptions to the supply chains. However, we still recommended preparing for extreme scenarios, which unfortunately were quickly and forcefully disproved.

The cessation of trade by Turkey is just one example showing that the stability of supply chains to Israel is not guaranteed. The supply chains face increasing risks, such as geopolitical, economic, and even environmental-climatic risks. The Israeli government needs to take responsibility and manage these risks systematically instead of relying on market forces and the industry alone.

The case of Turkey highlights the importance of preparing in advance to prevent or to find substitutes for potential risks. Otherwise, there could be significant delays in the supply of raw materials and essential products, leading to increased prices passed on to the consumers or the state, or both, or in extreme cases, a halt in imports to Israel, which would disrupt the functioning of the Israeli economy.

Although we should strengthen local production in certain sectors to reduce import risks, we cannot rely solely on domestic production for all our economic needs. But, in practice, we cannot continue to have a modern and prosperous society without importing goods and raw materials. Even though there are moves to isolate Israel in various arenas, the Israeli economy continues to operate as usual, and the government does not respond to the new risks involved in continuing the fighting in Gaza. The isolation is not linear and does not progress gradually but rather happens suddenly and becomes obvious only in retrospect. As the current war continues, and Israel avoids presenting a vision for the day after, the isolation will get worse, expanding to more arenas and countries, which currently seems as extreme as the cessation of trade by Turkey three months ago.

In the past year, INSS, along with many partners, has been promoting an initiative to identify and manage the risks to Israel’s supply chains using advanced analysis tools. However, not all risks can be managed by finding alternative sources or strengthening local production and extracting the raw materials through a circular economy. Some risks can only be addressed in the political arena. Therefore, Israel must outline a clear and agreed vision for the day after, and build new partnerships with neighboring countries under the leadership of the United States. The idea that Israel can take care of itself economically, as proven in the security arena, does not hold up to reality. We must avoid deepening isolation and boycotts.

Topics: Climate, Infrastructure and Energy, Turkey
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