By Tankut Öztaş & Ferhat Polat
The report will provide an analysis of the multilayered dynamics underpinning Turkish – Libyan relations from economic, political and security perspectives.
.PART TWO
The Construction Sector: The Heart of Turkish-Libyan Economic Relations
The construction sector has a special place in Turkish-Libyan trade relations. Libya is among the first countries that Turkish contractors became active abroad. Beginning in the 1970s, Turkey gained a significant presence in the Libyan construction industry.
As discussed in the previous section, the special trade agreements signed by both countries in the late 1970s provided the groundwork for this development. Libya is the second-largest market for Turkish contractors after Russia.
Notwithstanding the fluctuations throughout the 1980s, Turkish-Libyan cooperation in the construction industry set a record in the trade when it amounted to $14.5 billion in 1993.
This number was the highest volume secured by Turkish construction companies in a foreign country. The largest share of Turkey’s construction businesses abroad from 1972 to 2010 was in Russia, where Turkish firms have completed $34.132 billion in contracts, which account for 24 percent of all completed jobs.
It was followed by Libya with $26.427 billion and 19 percent, Turkmenistan with $21.197 billion and 15 percent, and so on.
When the uprising against the Gaddafi regime started in 2011, 12 per cent of the construction contracts that Turkish firms held abroad, worth a total of $2.460 billion, was in Libya.
However, the construction sites of some of these projects were severely damaged by the raids during the uprisings or were put on hold due to Libya’s financial problems.
To prepare an effective coordination plan on how to respond to the emerging conflict in Libya and its impact on projects carried out by Turkish companies, the Turkish Trade Ministry organized a “Libya Assessment Meeting” immediately following the uprising.
High-level officials from the Turkish Ministry of Foreign Affairs, Turkish Exporters Assembly (TIM) and Turkey’s Foreign Economic Relations Board (DEIK), as well as representatives of Turkish companies operating in Libya, attended the meeting.
In the meeting, Zafer Caglayan, Turkey’s Minister of Trade at the time, said that Turkish companies had around $15.3 billion worth of projects in Libya. He added that currently over 200 Turkish firms were carrying out more than 214 projects in more than 100 construction sites.
More specifically, he pointed out that there were 28 Turkish companies in the cities of Tobruk, Benghazi and Derna alone operating on 31 different projects, worth $3 billion in total. Moreover, in cities such as Tripoli, Benghazi, and Derna, 14 out of 24 construction sites, which were operated by Turkish contractors, were severely damaged due to raids and fires set by mobs and rebels.
The Turkey-Libya Business Council chairman, Muzaffer Aksoy, in a correspondence with the TRT World Research Centre pointed out that since many of these projects were at the completion stage, Turkish companies have had to leave the country without collecting their receivables.
They also left behind equipment valued at $500 million. For instance, Turkish contractor Mesa Construction Ltd’s $200 million worth of university building sites were demolished, Arsel Construction’s six building sites were plundered, and the building site of Özaltın Holding, which had undertaken $1 billion worth of infrastructure projects, was burned to the ground.
More notably, Turkey undertook the largest evacuation in its history when violence erupted in 2011. There were some 25,000 Turkish workers and engineers stationed in Libya at that time and almost all of these workers were evacuated at the end of February 2011. Most recently, the Turkish-Libyan Contracting Joint Working Group met in Istanbul on the 31st of January 2019 to revitalize the economic relations between two countries.
The group’s meeting was co-hosted by Turkish Trade Minister Ruhsar Pekcan and Planning Minister of the GNA, Taher al-Jehaimi. The group’s meeting was held under the leadership of Trade Minister Ruhsar Pekcan and Planning Minister of the GNA, Taher al-Jehaimi.
The main topic at the meeting the initiation of a dialogue between both countries to provide a legal platform, so that Turkish companies could continue working on their unfinished projects in Libya.
Almost all major stakeholders of the trade between the two countries were present at this meeting.
These include the Turkish Contractors Association, DEİK, Turkey-Libya Business Council, the Banks Association of Turkey (TBB), the Association of Contractors Doing Business in Libya, as well as the representatives of the employer administrations running infrastructure and superstructure projects in Libya, infrastructure and transportation projects enforcement agencies, the Libyan National Audit Office and the Organization for Development of Administrative Centres (ODAC).
At the end of the meeting, a memorandum of understanding (MoU) was signed between the two countries and it was noted to be acknowledged as a framework of consensus on how firms and employers of the unfinished projects of Turkish companies in Libya should carry on their dialogue.
According to a report by Daily Sabah Business, the Turkish Contractors’ Association (TMB) Chairman, Mithat Yenigün, stated in this meeting that the MoU presented a new roadmap on how to tackle the long-standing problems of Turkish contractors within three months.
Due to the domestic turmoil in Libya, the Turkish firms’ operations were significantly affected. In a written statement released by Yenigun after the conference pointed out the total amount of unfinished projects of Turkish firms amounted to $19 billion, while non-collected accrued receivables stand at $1 billion, the collateral amount at $1.7 billion and other losses stand at about $1.3 billion.
Nevertheless, Yenigün added regarding the recent MoU: “We believe the work will be an important step toward resolving our long-standing problems” in spite of the ongoing conflict.
Today, Turkish and Libyan officials continue to work together on various policy fronts to increase common investments in the fields of energy, small and medium-sized enterprises, technology, education consultancy, banking, transportation and agriculture.
In February 2019, the committee of Libyan and Turkish businesses held a joint meeting in Istanbul to discuss and prepare an action plan to expand trade relations.
In this meeting, Turkish Trade Minister Ruhsar Pekcan emphasised the mutual benefits of a stable and growing trade volume between the two countries, highlighting that the 65.3% increase of trade volume during the previous two years had reached $1.9 billion.
Quest for Peace and Stability
Diplomatic Support
From the first day of the NATO operation in Libya in 2011, Turkey’s policy toward Libya prioritised the principle of territorial integrity, insisting on the indivisibility of natural resources and emphasising that such natural resources belonged to the Libyan people.
After the fall of Gaddafi, Turkish President Erdogan was one of the first world leaders to visit Libya. Turkey was also the first country to appoint an envoy to Tripoli in September 2011.
Turkish Foreign Affairs Minister Ahmet Davutoglu and then Prime Minister Recep Tayyip Erdogan expressed their political as well as financial support for the National Transition Council (NTC).
They kept the way open for cooperation with the future government, thus making significant efforts to support the urgent needs of the NTC. For example, along with its partners, Turkey seized Gaddafi’s assets as per UN Security Council resolutions and made these funds available to the NTC for the reconstruction and other basic needs of the country.
Turkey provided a line of credit as well as donations through the Arab Turkish Bank and a Savings Deposit Insurance Fund.
The fourth meeting of the Libya Contact Group was held in Istanbul, where Turkey occupied an active role among 37 other countries and 7 international institutions in an effort to articulate leadership mechanisms.
Despite these initial efforts, which sought to bring stability and peace to Libya, the NTC and its successor, the General National Congress (GNC), struggled to reinstate state institutions and consolidate authority.
During the following two years, the situation turned into a battle for control over Libya that crossed tribal, regional and political lines. Several coalition groups were created which sought to consolidate power and leadership in an effort to control key Libyan institutions.
To resolve the conflict, then UN Special Envoy to Libya, Bernandino Leon, succeeded by Martin Kobler, both facilitated a series of talks between conflicting parties from the Eastern, Western and Southern regions of the country.
On December 17, 2015, the talks resulted in the creation of the Libyan Political Agreement (LPA).
The later was based upon four principles: ‘ensuring the democratic rights of the Libyan people; a consensual government based on the principle of the separation of powers, oversight and balance; empowering state institutions to address the serious challenges ahead and respect for the Libyan judiciary and its independence’.
A wide range of representatives took part in the signing ceremony of the agreement. These groups included members of the Libya House of Representatives (HoR) and the GNC, as well as prominent public figures from Libyan political parties and civil society.
On February 15th, 2016, the resulting political agreement led to the establishment of a single Government of National Accord (GNA) with Fayez Al-Sarraj as Prime Minister.
While the LPA initially brought a degree of stability to Libya, this was short-lived. A major conflict has persisted between the UN-backed GNA in Tripoli, under the leadership of Sarraj, and the HoR in Tobruk, backed by the LNA, under the influence of General Khalifa Haftar.
Turkey has thrown its full support behind the program initiated by the LPA. Turkish officials believed that by the inclusion of conflictual parties in multilateral dialogue mechanisms, the agreement has the potential of enforcing de-escalation zones and bringing a sense of stability.
Haftar, who aims to rule the country by sheer force of arms rather than by seeking political solutions, however, has constantly undermined the objectives of this treaty.
He is not alone in his mission to weaken initiatives brought forward from the international community for peace and stability. He commands an army of former Gaddafi loyalists, tribal forces, Salafi militias and mercenaries, and enjoys the support of Saudi Arabia, the UAE, Egypt, France and Russia.
Muzaffer Aksoy stated that “Libya is fragmented and polarised and mired in instability and insecurity. It is therefore currently difficult for Turkish authorities and businesses to support reconstruction and development in Libya.”
As these comments illustrate, the conflict in Libya restricts the ability of advance economic ties it. His comments also validate the fact that the current situation in Libya should be dealt with collectively.
The international community should take the position of providing its full support to Libyans to reorganise their country’ institutions for a sustainable and well-functioning Libyan state. For this reason, as the friction between conflictual groups in the Libyan civil war increased, Turkey sided with the UN-backed Tripoli government.
In June 2014, the Tobruk-based HoR, under the influence of General Haftar, took a position against Turkey and forced all Turkish citizens and businesses to leave the regions under the control of his LNA forces.
Nonetheless, Turkey maintained its position and continued to support the UN-backed GNA in Tripoli.
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Tankut Oztas is a Ph.D in International Political Economy from King’s College London. He specialise in global security, geopolitical risks and the politics of transnational economic affairs.
Ferhat Polat is a Deputy Researcher at the TRT World Research Centre. He is a PhD researcher in North African Studies at the Institute of Arab and Islamic Studies in Exeter with a particular focus on Turkish Foreign Policy.
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