El Salvador recently announced an ambitious plan to become a logistics hub for goods in Central America, with an investment of more than US$1.6 billion to modernize two ports on the Pacific.
According to President Nayib Bukele, this is “the largest private investment ever made in El Salvador.”
Contrary to what has been happening in the region, the project will not be financed by China, which already operates some 40 ports in Latin America and the Caribbean, but by a more unexpected country: Türkiye.
The Turkish company Yilport, part of the Yildirim Holding group, will make the investment in the ports of Acajutla and La Unión to operate them for the next 50 years.
In fact, the agreement should not come as a surprise. The link between Türkiye and Latin America has grown exponentially in the past two decades, since Turkish leader Recep Tayyip Erdoğan came to power.
Both regions share much more than a talent for producing soap operas.
Bilateral trade increased 14-fold, from US$950 million in 2002 to US$13.9 billion in 2023, according to the Turkish Foreign Ministry.
And today, trading continues to grow: official figures show that volume registered a 29.8% year-on-year increase in June 2024.
According to the Turkish Statistical Institute (TUIK), 62% of this trade is made up of imports arriving in Turkey from the region. The remaining 38% are Turkish exports.
“Türkiye has a Trade deficit of US$3.36 billion with Latin America and the Caribbean,” Serpil Ata, director of the Turkey-Latin America and Caribbean Business Council of the Turkish Foreign Economic Relations Board (DEIK), told the BBC.
“Brazil accounts for US$3.3 billion of this deficit, followed by Colombia with US$632.4 million and Argentina with US$566.4 million. The country with which Turkey has the largest export surplus is Panama with US$367.5 million,” the Turkish official said.
Turkish companies
The growing Turkish commercial presence in Latin America and the Caribbean can also be seen in the number of Turkish companies operating there today.
Until almost the end of the 20th century There were no Turkish companies in this region.
It was not until the late 1990s that the first company, Kordsa, a rubber, rope and nylon manufacturer and subsidiary of Sabanci Holding, landed and set up a production plant in Buenos Aires, Argentina.
Today there is More than 20 Turkish companies in this area, mainly in the automotive, mining and transportation sectors, according to a 2023 report by the Institute of International Relations at the National University of La Plata in Argentina.
Yildirim Holdingwhich will begin operating in El Salvador through its subsidiary Yilport, is “the largest Turkish investor in the region,” Ata reports.
“Among its investments, the most notable are Puerto Bolívar in Ecuador; Puerto Quetzal in Guatemala; and Yilport Paita in Peru. These are followed by Venezuela and El Salvador,” explains the Turkish official, who says that the plan in the latter country is to “triple the capacity of the country’s largest port, Acajutla.”
Yildrim also has a mega coal project in Colombia.
Meanwhile, another Turkish company, Global Ports Holding, operates five ports in the Caribbean.
Hazelnut producer Balsu Gida announced in January the construction of a plant in Maule, Chile, and giant floating energy supplier Karpowership signed a collaboration agreement with Brazilian state oil company Petrobras last May.
Kordsa, which stopped operating in Argentina in 2014, remains in Brazil, where it has been awarded as one of the best employers in the country.
Ata points out that “an important factor in deepening the rapprochement” between Turkey and Latin America has been the presence of the flag carrier, Turkish Airlines, which currently offers direct flights to Mexico, Brazil, Cuba, Colombia, Panama and Venezuela, “and plans to launch a direct flight to Chile in December 2024.”
Although most Turkish investments are private, there is also a presence of state-owned enterprises in the region.
In April, Turkey’s largest defense, electronics and communications company, Aselsanopened its first office in Latin America in Santiago, Chile.
Meanwhile, state-owned companies Turkish Aerospace Industries (TAI) and INVAP from Argentina have been collaborating in the field of space technology since 2020, developing a new series of satellites through the joint venture GSATCOM Space Technologies.
International relations
Ata says business between the two sides has been strengthened by growing “trade diplomacy”: the Turkish Foreign Economic Relations Board (DEIK) has 11 national business councils and one regional one in Latin America.
But not only have trade relations grown. The relationship has also increased greatly. diplomatic presence from Türkiye in Central America, South America and the Caribbean countries.
While at the beginning of the century Ankara had six diplomatic missions In the region, that number has tripled.
In addition to embassies in 18 capitalsIn Brazil, the country also has a consulate general in Sao Paulo.
Ata said that 17 Latin American and Caribbean countries have embassies in Turkey: Argentina, Brazil, Ecuador, El Salvador, Dominican Republic, Guatemala, Costa Rica, Colombia, Cuba, Mexico, Panama, Paraguay, Peru, Chile, Uruguay, Nicaragua and Venezuela.
The relationship with this last country is particularly closeErdoğan traveled to Caracas in December 2018 to support Nicolás Maduro after several countries, led by Washington, rejected his re-election for a second term due to opposition allegations of fraud.
And last August it was one of the few leaders who called the Venezuelan leader after claiming another electoral victory, despite criticism from most Latin American and Western countries.
“We are pleased that the presidential elections held in Venezuela on July 28, 2024 were held in an atmosphere of peace and tranquility,” Erdoğan told his Venezuelan counterpart, according to a statement.
“We value the stability and prosperity of Venezuela and hope that the results will be beneficial for the friendly Venezuelan people.”
Meanwhile, Maduro was one of the few in that region who attended the inauguration of Erdoğan’s third term in June 2023.
Ankara also participates in various organizations and forums that bring together the various nations of the American continent, something that is “in line with Turkey’s objective of forge multilateral cooperation with a variety of partners“says Ebru Ilter Akarçay of the Department of Political Science and International Relations at Yeditepe University in Istanbul.
“From unions established by free market economies to organisations that bring together state economies, Turkey participates, and is an observer member, in Latin American cooperation and integration initiatives,” he told the BBC.
The country is an observer in the Organization of American States (OAS) since 1998 and member of the Economic Commission for Latin America and the Caribbean (ECLAC) since 2017.
It also participates as an observer in the Central American Integration System (SICA), the Association of Caribbean States (ACS) and the Southern Common Market (Mercosur).
A link that suits
According to the expert, the growing ties between Ankara and countries in the region are something that both sides have encouraged.
“The the quest for a multipolar world and the efforts to diversify partners are becoming increasingly important for Latin American governments [así como para Turquía]”, he notes.
“Latin America, which has been opposing and expressing reservations about the way the global economic and political order works since the 1970s, continues to adopt a reserved and critical attitude toward Western governments and the international regimes and organizations they defend in the 21st century,” Akarçay said, adding:
“Priorities such as the determination to adopt an autonomous stance, the search for partners outside the region, the objective of deepening the cooperation between countries of the Global Southcalls for a fairer and more symmetrical distribution of power on a global scale and the horizontalization of foreign policy formulation through the inclusion of different actors have been the rising trends in Latin America.”
“In addition to constituting a large market for Latin American producers, the Türkiye’s extensive ties spanning from the Middle East to Europe and the former Soviet republics also combine to enhance their importance in the Latin American perspective,” he concludes.
Asia and Africa
These “extensive ties with Turkey,” the academic mentions, have expanded over the past 20 years under Erdoğan, who took over as prime minister in 2003 and has been president since 2014.
The Islamist leader has sought to turn his country into an international actor and, to that end, has taken advantage of the Geopolitical advantage that Türkiye has, strategically located between Europe and Asiato extend their ties.
Erdoğa has not only promoted ties with Latin America. He has also done so – and much more – with countries in Asia and Africa.
In fact, although trade with Latin America and the Caribbean has grown a lot, the exchange It is small compared to it with that of these two closest regions.
According to the Turkish Statistical Institute, trade with Asian countries will reach US$110 billion in 2023, almost eight times the US$13.9 billion with Latin American countries.
Meanwhile, with Africa it exceeded US$31.7 billion in 2023.
From the Latin American point of view, The link with Türkiye is also smaller when compared with the main trading partners in that region.
The largest, the United States, exchanged nearly US$1.5 trillion in goods and services in 2022, according to the Inter-American Development Bank (IDB).
The second, China, reached US$500 billion (a figure 35 times larger than in 2000), according to ECLAC.
And with the European Union, trade reached US$320 billion, according to the Development Bank of Latin America and the Caribbean (CAF).
Nor is Turkish direct investment in the region significant: according to a report published by the Turkish Ministry of Trade in June 2024, it amounts to just over US$809 million, representing 1.39% of Türkiye’s total direct investments.
Giant markets
However, the relationship is beneficial to both parties.
In an article published this year on the Spanish-language site of Turkish state media outlet TRT, Latin American Studies expert Melike Hocaoglu noted that Turkey “offers access not only to its considerable domestic market, but also to the country’s economy, which is also a key element of the country’s economy.” 80 million inhabitants“.
It is also the entrance door to a regional market of “1.3 billion people and a market potential of US$28 trillion” just a few hours’ flight away, in “Europe, the Middle East, North Africa or Central Asia.”
Meanwhile, “with a combined GDP (Gross Domestic Product) of approximately US$5.5 trillion and a population exceeding 700 million inhabitants,” the 33 countries of Latin America and the Caribbean have “great economic relevance due to their rich natural resourcesits strategic business relationships and its growth potential,” Hocaoglu said.
“Latin America can meet Turkey’s needs for raw materials and, in turn, benefits from Turkey’s exports of industrial technology products,” he stressed.
The future
Ata recognizes that the link between two such distant regions has its difficultieslisting “cultural differences, language barriers, time differences, long distances, effective communication between businesspeople and differences in business processes between Turkey and Latin American countries” as potential obstacles.
Also the “political or economic uncertainties”and” changes in local legislation and regulations “in some countries.
However, she is confident that the bond will continue to grow in the future.
“There are opportunities for bilateral cooperation in sectors such as energy, renewable energy, tourism, health, mining, agriculture, defense and digitalization,” the Turkish official notes.
“Policies for the region are designed not only to increase trade volume, but also to delve deeper into areas such as technology transfer, information sharing and capacity building.”
“Our total market share with Latin American and Caribbean countries is not yet at the desired level. Our market share has potential to grow even further in the coming years,” he predicts.
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