ECONOMIC DIPLOMACY OF TURKEY A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF SOCIAL SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY BY BATUHAN KURTARAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN THE DEPARTMENT OF INTERNATIONAL RELATIONS AUGUST 2020 Approval of the Graduate School of Social Sciences Prof. Dr. Yaşar Kondakçı Director I certify that this thesis satisfies all the requirements as a thesis for the degree of Master of Science. Prof. Dr. Oktay Fırat Tanrısever Head of Department This is to certify that we have read this thesis and that in our opinion it is fully adequate, in scope and quality, as a thesis for the degree of Master of Science. Prof. Dr. Oktay Fırat Tanrısever Supervisor Examining Committee Members Prof. Dr. Nuri Yurdusev (METU, IR) Prof. Dr. Oktay Fırat Tanrısever (METU, IR) Assoc. Prof. Dr. Burak Tangör (Hacettepe Uni., INT) PLAGIARISM I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last name: Batuhan Kurtaran Signature: iii ABSTRACT ECONOMIC DIPLOMACY OF TURKEY Kurtaran, Batuhan M.S., Department of International Relations Supervisor: Prof. Dr. Oktay Fırat Tanrısever August 2020, 171 pages This thesis aims to clarify Turkey’s economic diplomacy in the 2000s. The main argument of this thesis is that Turkish economic diplomacy strategy in the relevant period is to have more multidirectional and more multidimensional foreign economic relations. Among the key findings of the thesis are that the relative decline in the US- led international order has provided Turkey with an external variable, that the Turkish ruling elite perception of the global changes and the increasing involvement of Turkish business community in Turkey’s foreign economic relations are internal variables in explaining Turkish economic diplomacy. The thesis is composed of five chapters. After the introductory chapter, the second chapter focuses on the US and Chinese cases and their formal structures. The third chapter scrutinizes the actors in Turkey’s economic diplomacy in the 2000s. The fourth chapter elaborates on Turkish economic diplomacy and the involvement of Turkish business community. The concluding chapter discusses the main findings of this thesis. Keywords: Economic Diplomacy, Turkey, Foreign Policy iv ÖZ TÜRKİYE’NİN EKONOMİ DİPLOMASİSİ Kurtaran, Batuhan Yüksek Lisans, Uluslararası İlişkiler Bölümü Tez Yöneticisi: Prof. Dr. Oktay Fırat Tanrısever Ağustos 2020, 171 sayfa Bu tez, 2000’li yıllarda Türkiye’nin ekonomi diplomasisini açıklamayı amaçlamaktadır. Bu tezin temel iddiası, 2000’li yıllarda Türkiye’nin ekonomi diplomasisi stratejisinin daha çok yönlü ve daha çok boyutlu dış ekonomi politikalarına sahip olmak olduğudur. Türkiye’nin ekonomi diplomasisini açıklamakta ABD önderliğindeki uluslararası sistemdeki zayıflamanın dışsal değişkeni, Türkiyeli karar alıcıların küresel sistemdeki değişikliklere ilişkin algıları ve Türk iş dünyasının dış ekonomik ilişkilere giderek daha fazla katılım göstermesinin ise içsel değişkenleri sağladığı, tezin temel bulguları arasındadır. Beş bölümden oluşan bu tezin giriş bölümünden sonra, ikinci bölümü ABD ve Çin’in ekonomi diplomasisi pratiklerini ve yapılarını incelemektedir. Üçüncü bölüm, Türkiye’nin 2000’lerdeki ekonomi diplomasisi aktörlerine odaklanmaktadır. Dördüncü bölüm, Türkiye ekonomi diplomasisine ve Türkiye iş dünyasının katılımını ele almaktadır. Sonuç bölümü ise bu tezin temel bulgularını tartışmaktadır. Anahtar Kelimeler: Ekonomi Diplomasisi, Türkiye, Dış Politika v DEDICATION To my mom, Mümine Kurtaran vi ACKNOWLEDGMENTS Firstly, I would like to express my sincere thanks and gratitude to my thesis advisor Prof. Dr. Oktay Fırat Tanrısever for his support, guidance, encouragement and patience during my writing process. I would also like to thank the members of my thesis committee, Prof. Dr. Nuri Yurdusev from Middle East Technical University and Assoc. Prof. Dr. Burak Tangör from Hacettepe University, for their time and patience in these unprecedented times. I would like to thank Rana Çağla Akduman for her unfailing support during my writing process. She has always been there for me and has never abstained from supporting and encouraging me. Without her, it would be more difficult to achieve this task. I would also like to express my deepest gratitude to my mother for providing me with continuous support and encouragement throughout my graduate study despite the disease she has been suffering from. I know if she could read this thesis, she would be proud of me. Last but not least, I am indebted to my family; my father, my aunts, my cousin, and my uncle. I need to recognize that it would not be possible to get this degree without their support and understanding. Finally, I would like to thank all those who have contributed to my life. vii TABLE OF CONTENTS PLAGIARISM ............................................................................................................ iii ABSTRACT ................................................................................................................ iv ÖZ ................................................................................................................................. v DEDICATION ............................................................................................................ vi ACKNOWLEDGMENTS .......................................................................................... vii TABLE OF CONTENTS .......................................................................................... viii LIST OF TABLES ....................................................................................................... x LIST OF ABBREVIATIONS ..................................................................................... xi CHAPTERS 1. INTRODUCTION .................................................................................................... 1 1.1. Scope and Objective .......................................................................................... 1 1.2. Research Question ............................................................................................. 1 1.3. Literature Review on Economic Diplomacy ..................................................... 2 1.4. Argument ......................................................................................................... 10 1.5. Theoretical Framework and Methodology ...................................................... 11 1.6. Structure of the Thesis ..................................................................................... 16 2. ECONOMIC DIPLOMACY PRACTICES IN A CHANGING WORLD ............ 17 2.1. Introduction ..................................................................................................... 17 2.2. The US Economic Diplomacy ......................................................................... 17 2.3. Chinese Economic Diplomacy ........................................................................ 36 2.4. Conclusion ....................................................................................................... 52 3. ACTORS OF TURKISH ECONOMIC DIPLOMACY ......................................... 53 3.1. Introduction ..................................................................................................... 53 3.2. Ministry of Foreign Affairs (MFA) ................................................................. 53 3.3. Ministry of Trade (MOT) ................................................................................ 55 3.4. Ministry of Treasury and Finance (MOTF) .................................................... 58 3.5. Turkish Cooperation and Coordination Agency (TİKA) ................................ 59 3.6. Union of Chambers and Commodity Exchanges of Turkey (TOBB) ............. 61 viii 3.7. Foreign Economic Relations Board of Turkey (DEİK) .................................. 63 3.8. Turkish Industry and Business Association (TÜSİAD) .................................. 67 3.9. Conclusion ....................................................................................................... 69 4. PRACTICE OF TURKISH ECONOMIC DIPLOMACY ..................................... 71 4.1. Introduction ..................................................................................................... 71 4.2. Turkey’s Foreign Economic Relations in the Bipolar World (1945-1990) .... 72 4.3. Turkey’s Foreign Economic Relations in Unipolar World (1990-2002) ........ 86 4.4. Turkey’s Foreign Economic Relations in Rise of the Rest Era (the 2000s) ... 92 4.5. Turkish Business Community and Economic Diplomacy in the 2000s ........ 115 4.6. Conclusion ..................................................................................................... 127 5. CONCLUSION .................................................................................................... 130 BIBLIOGRAPHY .................................................................................................... 139 APPENDICES A. TURKISH SUMMARY / TÜRKÇE ÖZET ........................................................ 160 B. THESIS PERMISSION FORM / TEZ İZİN FORMU ........................................ 171 ix LIST OF TABLES Table 1: US-China bilateral trade during the Bush administration (million USD) .... 25 Table