(Updates with Obama-Erdogan phone call in 17th paragraph.)
June 21 (Bloomberg) -- Syrian refugees in Turkey are driving a wedge between Prime Minister Recep Tayyip Erdogan’s popular standing among the region’s people and his friendships with leaders targeted by revolts.
Erdogan’s Justice and Development Party, or AKP, has pursued a so-called Zero Problems foreign policy with regional neighbors. That policy may conflict with his ambition to make Turkey the most influential nation in the region and a voice for Muslims against oppression.
“Turkey is getting caught in the classic dilemma of trying to maintain relationships with existing regimes while sending signals to the opposition saying, ‘We are with you’,” said Bulent Aliriza, director of the Turkey Project at the Center for Strategic & International Studies in Washington. “You cannot improve relationships with everybody.”
Before winning a third term in June 12 elections, Erdogan had scrapped visa restrictions for travel with Syria, backed energy agreements with Iran and mended ties with Kurdish leaders in northern Iraq.
The eastward shift led the U.S. and some allies to question Erdogan’s commitment to Turkey’s traditional pro-Western policies. It also overlapped with a push by Turkish industry, as hundreds of companies expanded into Syria, Libya and other Middle Eastern markets. Their executives often traveled with Erdogan when he visited regional leaders.
Prompted by deadly crackdowns on protesters, Erdogan has turned against some of those former allies. On May 3 he demanded Libya’s Muammar Qaddafi end the “bloodshed and autocracy,” and on June 10 lambasted Syrian President Bashar Al-Assad for “savagery” by his security forces.
The shift may endanger exports. Turkey’s sales to the Middle East and North Africa rose more than sixfold, to $30 billion last year, since Erdogan’s party came to power in 2002. The region now takes 27 percent of Turkish goods sold abroad, up from 13 percent and making it the second-biggest buyer after the European Union, whose share shrank to 46 percent from 57 percent, according to Turkey’s statistics agency.
Istanbul-based businesses with regional ambitions include Tav Havalimanlari Holding AS, which runs airports in Tunisia and is bidding for one in Saudi Arabia. Its shares are up 45 percent in the past year, seven times the gain on the benchmark ISE-100 index. Builder Tekfen Holding AS has won contracts from Abu Dhabi to Morocco. Aksa Enerji Uretim AS is using one-third of its capacity to generate electricity for Syria as part of a 500 megawatt sale accord that entered force yesterday.
Turkish companies have won $40 billion of business in the region, according to the Foreign Economic Relations Board.
After conflict broke out in Libya in February, as Turkey evacuated about 25,000 citizens, Tav’s parent company Akfen Holding AS pulled out staff from two airport projects with $450 million of work remaining, while Tekfen suspended $140 million of contract work after its main site was looted. Erdogan initially opposed U.S.-led military action against Qaddafi.
In Syria, too, when protests erupted in mid-March, Erdogan urged Assad to reform, and refrained from criticizing a leader he has vacationed with. That tone has changed as Assad’s crackdown on protest intensifies nears the Turkish border.
More than 10,000 Syrians are staying in camps in Turkey after escaping a military operation in Jisr al-Shughour, and Assad’s army seized a second northwestern town, Ma’arrat an Nu’man, last week.
About 1,300 civilians and more than 300 security personnel have died in the unrest, according to the Syrian Observatory for Human Rights. Erdogan has pledged to keep Turkey’s borders open to “our Syrian brothers.”
Yet his government hasn’t cut ties with Assad and is still urging him to introduce democratic measures.
“We want a strong, stable, prosperous Syria and for that to happen wide-ranging reforms need to be enacted as per Assad’s commitment to democratization,” Foreign Minister Ahmet Davutoglu, the architect of Turkey’s policy of “zero problems” with neighbors, said after a four-hour meeting in Ankara on June 16 with Assad’s envoy Hassan Ali Turkmani.
Assad yesterday called for national dialogue and said there is “absolute conviction in the process of reform,” while continuing to blame the protests on foreign-led conspiracies.
In a phone call with Barack Obama yesterday, Erdogan told the U.S. president that Assad must respect the “legitimate demands” of his people, Erdogan’s office said on its web site.
The problems Erdogan faces in the Middle East highlight the limits of Turkish influence, said Fadi Hakura, a Turkey analyst at London-based research institute Chatham House.
“Turkish foreign policy, whether it’s soft power or zero problems, when applied in a region as fluid and unstable as the Middle East, needs constant adapting,” he said. “It’s limited to being a facilitator rather than being a dominant player.”
Meanwhile, after eight years of steady growth, exports to the Middle East are flat in 2011. The turbulence in the region is hurting trade, said Sabit Karadeniz, the founder of Gurtas Insaat Taahhut Sanayi & Ticaret Ltd., a construction, cement and asphalt company based in Hatay, near Turkey’s border with Syria.
Karadeniz said he turned down an opportunity to expand there. “I was invited to invest in Syria and there were certain incentives,” he said. “I didn’t think it right to invest in an undemocratic country that lacks basic human rights.”
--With assistance from Steve Bryant in Ankara. Editors: Ben Holland, Andrew J. Barden, Mark Bentley.
To contact the reporter on this story: Emre Peker in Ankara at firstname.lastname@example.org.
To contact the editor responsible for this story: Andrew J. Barden at email@example.com