Fountain of credit dries up for 6800 German companies in Turkey

There are currently 6800 German companies in Turkey. There are 6000 employees in Daimler alone, while Siemens, active in Turkey since 1856, has a total of 3000 employees.

It is unknown yet how the sanctions the German government announced against the Erdoğan regime will affect Turkey’s economy. Especially the issue of how the 6800 German companies will operate from now on is a prominent question, as the German government will no longer provide guarantees for credits for these companies.

The Merkel government announced a series of sanctions to be imposed on the Erdoğan regime after German human rights activist Peter Steudtner’s arrest in Turkey. The sanctions announced by Foreign Minister Sigmar Gabriel are centered around “economic pressure” on the Erdoğan regime.

Gabriel had stated that from now on, the German government will review providing credit guarantee for German companies planning to invest in Turkey, and said: “We can’t advise anybody to invest in a country with no legal guarantee.”

So, how will these comments reflect on the economic relations between Turkey and Germany? According to estimates from the German chambers of industry, if the Merkel government’s sanctions go into practice, there will be a 10% drop in exports.

Foreign Trade Official for the German Union of Chambers of Industry and Commerce Volker Treier spoke to the Deutschlandfunk radio and said: “In such an atmosphere, it is quite difficult to think German companies will invest in Turkey. Insecurity among German companies operating in Turkey is at a peak.”

Germany’s capacity for economic relations with Turkey is similar to Germany’s trade volume with Sweden, Denmark and Japan. Turkey sold 15 billion Euros worth of goods to Germany, while importing 22 billion Euros worth of goods from Germany. 

THE GOVERNMENT PROVIDED GUARANTEES FOR 3 BILLION EUROS IN 2 YEARS

There are currently 6800 German companies in Turkey. There are 6000 employees in Daimler alone, while Siemens, active in Turkey since 1856, has a total of 3000 employees. Minister Gabriel pointed to the credits these companies use with the German government as the guaranteer, when he said they won’t be guaranteer for credits anymore.

The Merkel government has been a guaranteer of 2.1 billion Euros in credit in 2015 and 1 billion Euros in 2016 for German companies conducting business in Turkey. For the first half of 2017, this number is at around 680 million Euros. 

New companies were expected to join the German companies already active in Turkey in the coming period, with Deutsche Post and Volkswagen expected to take the lead. Both German giants were planning investments in Turkey with the guarantee of the German government.

GERMAN INVESTORS CAUGHT UNPREPARED

German investors speaking to the German mainstream media say they did not expect the tensions between Berlin and Ankara to get this high. Germany’s Union of Wholesalers, Foreign Trade and Services (BGA) summarized the situation as “The crisis has reached top levels we did not anticipate,” while the Minister of Economy Brigitte Zypries said, “Making investments in Turkey is going to be quite difficult from now on.”