Economy
Turkish defense now globally sought-after ecosystem: Erdoğan
Türkiye’s defense industry has transformed into an ecosystem that is sought after, trusted and preferred not only in its region but also globally, President Recep Tayyip Erdoğan said Friday.
Erdoğan called Türkiye “undoubtedly one of the founding actors” of the new era, where he says conventional power elements are being replaced by multilayered and integrated systems.
He was speaking at the SAHA 2026 defense trade show, which serves as a primary platform for showcasing Türkiye’s domestic defense capabilities and has, over the years, seen billions of dollars added to the country’s defense exports.
“Türkiye has proudly inscribed its name among the countries whose stars are shining brightly on a global scale in the fields of defense, aviation and space,” Erdoğan said.
In recent years, NATO member Türkiye significantly ramped up its defense industry production.
It has injected billions of dollars to transform from a nation heavily reliant on equipment from abroad to one that is a major exporter and where homegrown systems now meet almost all of its defense industry needs.
For much of the past two decades, Ankara has expressed frustration over its Western allies’ failure to provide adequate defense systems against missile threats despite Türkiye being a major NATO member.
The country currently exports more than 230 defense systems to 185 countries.
Since it started on Tuesday, the SAHA fair has seen the signing of 182 agreements with a total business volume of $8 billion (TL 362.92 billion), Erdoğan said.
“Agreements directly aimed at exports accounted for $6 billion of this figure,” he added.
Placing Türkiye among top exporters
Türkiye’s defense exports rose about 48% year-over-year in 2025 to a record of more than $10 billion.
Erdoğan said the goal is to lift this figure to $11 billion in the near term, placing Türkiye among the world’s top 10 biggest defense exporters.
The fair, organized by SAHA Istanbul, Türkiye’s and Europe’s largest defense, aviation and space industry cluster, was launched in 2018 when it hosted 180 companies from 12 countries.
The trade show has since expanded to host more than 120 countries and over 100,000 visitors.
More than 1,760 companies attended this year’s edition, including 1,500 Turkish and 263 foreign firms, Erdoğan said.
Over 200 products were showcased for the first time, he added.
“When we look at the big picture, the landscape we encounter is exactly this: the Turkish defense industry has become an ecosystem that is sought after, trusted, closely watched, and preferred not only in its region but on a global scale,” said Erdoğan.
“Behind this portrait of success lies, without a doubt, the labor of decades and the hard work of hundreds of thousands of our people who have worked with a dedicated spirit, giving their all day and night.”
Achieving this “was certainly not easy,” said Erdoğan.
“We faced countless obstacles; they tried to block our path with embargoes. We were even subjected to betrayal and conspiracies from within.”
One of the top Turkish business associations is ramping up its public diplomacy campaign and on Friday urged German Chancellor Friedrich Merz and other European leaders to revive Türkiye’s stalled European Union membership process.
“A strong Europe is impossible without Türkiye,” the Foreign Economic Relations Board (DEIK) said in a full-page open letter this week in the German newspaper Bild.
That marks the second phase of DEIK’s broader initiative timed around Europe Day. The campaign follows similar appeals published in the Financial Times in January.
DEIK says its diplomatic and commercial initiatives aim to re-energize Türkiye’s relations with the bloc, including efforts to resolve longstanding visa issues and modernize the customs union agreement.
The board called for a “paradigm shift” after years of stalled accession talks, arguing that Türkiye’s integration into the EU’s economic security and defense architecture has become a strategic necessity amid challenges including migration, demographic change, the rapid spread of artificial intelligence and the energy transition.
The letter also described Türkiye’s full integration as essential for the EU to emerge as a global power, citing what it called Merz’s visionary approach at the Munich Security Conference.
It emphasized that the Turkish business community has long been integrated into European value chains and argued that providing a credible path toward EU membership would help restore strategic clarity and mutual trust between Brussels and Ankara.
For decades, Türkiye and the bloc have enjoyed good trade ties and cooperation on migration. However, relations have been strained over multiple issues, including the prolonged process of expansion of the scope of the customs union agreement, maritime issues with Greece and Greek Cyprus, and EU policies on Syrian refugees.
On the other hand, Russia’s invasion of Ukraine has pushed the European Union to seek deeper security ties with Türkiye, a NATO ally and long a candidate to join the 27-nation bloc.
DEIK also called on the urgent modernization of the EU-Türkiye Customs Union, saying it is critical to strengthening Europe’s competitiveness amid increasing geopolitical fragmentation.
A host of disagreements over recent years have stalled the negotiations for updating the trade agreement. The deeper 1990s-era deal would be expanded to services, farm goods and public procurement. The current deal only covers a limited range of industrial products.
First implemented in 1995, the Türkiye-EU Customs Union has helped boost economic ties. But business groups have long argued that the agreement is outdated and ill-suited for today’s trade environment.
Mehmet Ali Yalçındağ, chair of DEIK’s Türkiye-Europe Business Council, said the campaign would expand with similar open letters in major newspapers across France, Italy, Belgium and the Netherlands.
“We deem the future of Türkiye-EU relations as not just an economic partnership but a strategic necessity,” he said.
Yalçındağ added that the group would continue outreach efforts with universities, civil society organizations and think tanks to promote its vision among stakeholders.
Turkish companies have signed nearly $8 billion in export contracts during the first three days of a major defense trade show, a senior official said on Friday.
Officials had expected that volume to be reached during the whole SAHA 2026 fair, which started on Tuesday and runs through Saturday.
The expo serves as a primary platform for showcasing Türkiye’s domestic defense capabilities and has, over the years, seen billions of dollars added to the country’s defense exports.
“At SAHA 2026, as a country, we achieved a historic record,” Haluk Bayraktar, chair of the SAHA Istanbul, Europe’s largest defense, aviation, and space industry cluster, said.
“In the first three days of the fair, our companies signed nearly $8 billion in export contracts,” Bayraktar wrote on the social media platform X.
In recent years, NATO member Türkiye significantly ramped up its defense industry production.
It has injected billions of dollars to transform from a nation heavily reliant on equipment from abroad to one that is a major exporter and where homegrown systems now meet almost all of its defense industry needs.
For much of the past two decades, Ankara has expressed frustration over its Western allies’ failure to provide adequate defense systems against missile threats despite Türkiye being a major NATO member.
The country currently exports more than 230 defense systems to 185 countries.
Türkiye’s defense exports rose about 48% year-over-year in 2025 to a record of more than $10 billion. The goal is to lift the full-year figure to $11 billion, placing Türkiye among the world’s top 10 biggest defense exporters, according to officials.
Contracts signed in the first four months of this year approached $7 billion, according to authorities.
Türkiye could sign a new liquefied natural gas (LNG) agreement with Algeria this year as it looks to renew and potentially expand its existing long-term gas supply contract, Energy and Natural Resources Minister Alparslan Bayraktar said on Friday.
The remarks came on the sidelines of Algerian President Abdelmadjid Tebboune’s visit to Ankara, where he, along with President Recep Tayyip Erdoğan, oversaw the signings of multiple agreements between the two countries.
Bayraktar said Türkiye and Algeria discussed broader energy cooperation, including LNG trade as well as oil and natural gas exploration activities.
“We hope to conclude a new agreement within this year,” he said, noting the current deal expires in September 2027.
Türkiye currently imports 4.4 billion cubic metres (bcm) of LNG annually from Algeria under the existing contract.
But Bayraktar said Ankara was open to increasing that volume to 6-6.5 bcm. He added that Türkiye was prepared to extend the new contract for five to 10 years.
“Europe cannot offer Algeria a long-term commitment, but we told them: don’t worry, we can,” he said.
Bayraktar also said the two countries were discussing a project under which Algerian LNG shipped to Türkiye could be regasified at Turkish facilities and partially exported onward to southeastern Europe, particularly via Bulgaria.
“The first step is for LNG to arrive in Türkiye. In the second phase, part of this LNG could be regasified at our facilities and transported to Europe,” he said.
Bayraktar said Türkiye expected its energy partnership with Algeria to deepen further through joint hydrocarbon exploration initiatives.
He said Türkiye’s state energy company, Turkish Petroleum Corporation (TPAO), was in talks with Algeria’s state-owned energy firm Sonatrach on potential joint oil and natural gas exploration projects in Algerian waters using Türkiye’s seismic and drilling vessels.
“One of the important agenda items was cooperation between TPAO and Sonatrach, using our seismic and drilling vessels to explore oil and natural gas in Algerian waters,” Bayraktar said.
President Donald Trump said on Thursday he was giving the EU until July 4 to fulfill its side of last year’s trade deal, threatening to hike U.S. tariffs to “much higher levels” if the deadline is not met.
Trump’s remarks came following what he described as a “great call” with European Commission President Ursula von der Leyen.
“I’ve been waiting patiently for the EU to fulfill their side of the Historic Trade Deal we agreed in Turnberry, Scotland, the largest Trade Deal, ever!” he said in a post on Truth Social.
“A promise was made that the EU would deliver their side of the Deal and, as per Agreement, cut their Tariffs to ZERO! I agreed to give her until our Country’s 250th Birthday or, unfortunately, their Tariffs would immediately jump to much higher levels.”
The July 4 holiday this year marks 250 years since the American colonies declared independence from British rule.
Trump on Friday had threatened to increase tariffs on EU cars and trucks to 25% this week, from 15% currently, accusing the bloc of not complying with the terms of the deal struck last July.
The EU’s implementation of the deal had slowed amid frustration over other tariff threats by Trump, including in disputes linked to his bid to annex Greenland, and legal uncertainty following a U.S. Supreme Court ruling that found many of his existing tariffs unlawful.
In late March, EU lawmakers gave their green light to the agreement, but they also sought additional safeguards.
Despite conditional approval by the European Parliament, the deal must be negotiated with EU states before it can be implemented by the bloc.
Türkiye’s central bank will maintain a tight monetary stance and will not allow a recent deterioration in inflation, driven largely by higher energy costs due to the Iran war, to worsen the medium-term outlook, its governor said on Thursday.
The war in the Middle East, unleashed on Feb. 28 by Israel and the United States against Iran, provoked reprisals from Tehran across the region and a shipping blockade in Hormuz, a crucial global trade route, leading to a significant global surge in energy prices.
Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan said higher costs linked to the conflict were continuing to pressure both consumer prices and the external balance.
But though this affected Türkiye’s disinflation process, Karahan said it did not change policymakers’ resolve.
“We will not allow the deterioration observed in inflation to spoil the medium-term outlook,” he told a summit in Istanbul.
Annual inflation rose to nearly 32.4% in April, the highest measure since October 2025, mainly driven by the energy-linked pricing pressures.
Karahan said the April data show the impacts of the war and said they expect energy-linked effects to continue in the short term.
“The reflections of these effects on the medium-term inflation outlook will take shape with our monetary policy stance, and we will carefully evaluate these factors while making monetary policy decisions in the upcoming period,” Karahan noted.
The jump in costs and the resulting inflationary pressures have curbed central banks’ room to cut interest rates.
CBRT flagged rising risks in its monetary policy committee statement last month, when it kept its benchmark policy rate steady at 37%, saying it was closely monitoring fallout from the Iran war and potential second-round effects.
Before the conflict began shifting expectations, the CBRT had been expected to continue a rate-cutting cycle that began in late 2024.
In February, the bank raised its year‑end inflation forecast range by two percentage points to 15%-21%, while keeping its interim 16% target unchanged.
It is due to present its second inflation report of the year next week. Analysts say it will likely feature a revision of both the target and forecasts.
The global shock due to the Middle East conflict will affect Türkiye’s economic program but will not cause any change in its priorities, Treasury and Finance Minister Mehmet Şimşek said on Thursday.
Şimşek acknowledged that the Iran war is likely to cause deviations in the inflation, growth and external balance targets this year due to higher energy prices.
The conflict, unleashed on Feb. 28 by Israel and the United States against Iran, provoked reprisals from Tehran across the region and a shipping blockade in Hormuz, a crucial global trade route, leading to a significant global surge in the price of hydrocarbons.
The fallout poses a challenge for import-heavy economies like Türkiye, where inflation rose to nearly 32.4% in April, the highest measure since October 2025.
Şimşek still signaled the government would maintain its disinflation and fiscal discipline agenda.
“We are facing a major global shock, but we have never envisaged any change in the program’s priorities,” he told a summit in Istanbul.
He was referring to the government’s medium-term road map that has been implemented since 2023 and has mainly centered around a tight monetary policy to curb inflation.
Şimşek acknowledged that inflation, current account deficit, budget deficit and growth outcomes were likely to diverge from official targets this year, largely due to the impact of the Iran war-linked rising energy prices.
“This is highly likely, but we are doing and will continue to do what is necessary to keep the program broadly on track,” he said.
Buffers
The shocks are significant but manageable, Şimşek said, arguing that Türkiye had built resilience through fiscal discipline and macroeconomic buffers.
He still said Türkiye could not remain insulated from global developments. “We do not live on another planet. We are part of the global economy,” he noted.
Şimşek added that Türkiye was not facing an energy supply shock thanks to its diversification of oil and natural gas suppliers and products, adding that the country was not dependent on the Strait of Hormuz.
“Our dependence on the Strait of Hormuz in energy is now almost non-existent,” he said.
He said the government had used fiscal space to cushion households and businesses from higher fuel prices.
Without intervention, gasoline prices would have risen from TL 59 ($1.30) to TL 79 per liter, he said, but were currently around TL 64-TL 65.
“Many countries saw fuel price increases of 20%-30%, and in some cases above 30%. Türkiye managed this period with an increase of around 11%,” he said.
Şimşek said Türkiye entered the current crisis with stronger macroeconomic balances, noting the current account deficit was below 2% of GDP before the shock, while foreign exchange reserves had risen from around $100 billion before the program to roughly $166 billion.
Türkiye’s long-term external debt-to-GDP ratio has also improved to around 33% from a historical average of 44%, he added.
Şimşek said the government aimed to turn the crisis into an opportunity, including efforts to position Türkiye as a global trade hub and attract multinational firms’ regional headquarters to the Istanbul Financial Center.
“We cannot waste this crisis; we will absolutely, without a doubt, turn it into an opportunity for our country.”
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