Turkey and the Asian Infrastructure Investment Bank: Economic Pragmatism meets Geopolitics
| DOI | http://doi.org/10.1111/1758-5899.12741 |
| Date | 01 November 2019 |
| Author | Seçkin Köstem |
| Published date | 01 November 2019 |
Turkey and the Asian Infrastructure Investment
Bank: Economic Pragmatism meets Geopolitics
Sec
ßkin K€
ostem
Bilkent University
Abstract
This article explores Turkey’s expectations for the AIIB as a new multilateral development bank (MDB) and examines the pro-
jects that the AIIB has financed in Turkey so far. The main argument is that economic pragmatism, national developmental
needs, and geopolitical motivations together explain Turkey’s interest in the AIIB. Ankara initially hoped to attract funds from
the AIIB for its connectivity projects in Eurasia. Ankara has also seen the AIIB as an important contributor to its long-standing
goal of enhancing Turkey’s national energy supply security. The Bank’s lending in Turkey has so far concentrated on energy
sector projects. As of 2019, Turkey is the third largest recipient of AIIB loans. From a geopolitical perspective, Ankara’s interest
in the AIIB is part of its recent pivot to Eurasia and its self-identification as a rising power with a growing regional and global
crossroads agenda. As such, Ankara’s expectations for the AIIB are also evolving as the Bank’s own agenda is becoming more
concrete and as Turkey makes these shifts in its geostrategic positioning.
China’s announcement in 2014 of the establishment of the
‘Asian Infrastructure Investment Bank’, came at a time when
Turkey’s ties with its traditional Western allies were deterio-
rating sharply. Turkey’s EU membership bid had come to a
halt due to a host of reasons, shortly after the accession
negotiations started in 2005. The 2008–09 global financial
crisis and the Eurozone crisis in 2011–12 added to Ankara’s
skepticism with regard to the West’sfinancial power. It was
in this context of growing uncertainty in Turkey’s relations
with the West and shifts and trouble in the global economy
that Ankara welcomed the establishment of the Asian Infras-
tructure Investment Bank (AIIB) and applied to become a
founding member of the Bank in early 2015.
Fast-forward four years later, to 2019, and AIIB senior offi-
cials refer to Turkey as a key economy for AIIB lending that
offers strong potential for investing in energy and transport
connectivity. The AIIB’s Board of Directors has approved up
to US$900 million in financing, to date, for three projects in
Turkey, the TSKB Sustainable Energy and Infrastructure On-
Lending Facility, the Tuz G€
ol€
u Gas Storage Expansion pro-
ject, and the Efeler 97.6 MW Geothermal Power Plant Expan-
sion project. As of 2019, Turkey is the third largest recipient
of AIIB loans ‘and we see many additional investment
opportunities in Turkey’, according to AIIB Vice President for
policy and strategy Joachim von Amsberg (D€
undar, 2019).
This essay investigates why Turkey is interested in the
AIIB. It explores Turkey’s expectations for the AIIB as a new
multilateral development bank (MDB) and examines the pro-
jects that the AIIB has financed in Turkey so far. The main
argument is that economic pragmatism, national develop-
mental needs, and geopolitical motivations together explain
Turkey’s interest in the AIIB. Initially, Ankara saw the AIIB as
a key lender for the Belt and Road Initiative (BRI) and a
potential source of financing for its own national and regio-
nal mega construction and development projects. Ankara
hoped to attract funds from the AIIB for its connectivity pro-
jects with the Caucasus and Central Asia regions. Ankara has
also seen the AIIB as an important contributor to its long-s-
tanding goal of enhancing Turkey’s national energy supply
security. So far, the AIIB’s lending in Turkey has been con-
centrated solely on energy sector projects, but there
appears to be potential for AIIB lending in other large-scale
infrastructure projects. Such an evolution in AIIB support to
Turkey would be warmly welcomed by Ankara. From a
geopolitical perspective, Ankara’s interest in the AIIB is part
of its recent pivot to Eurasia (Ersßen and K€
ostem, 2019), and
its self-identification as a rising power with a growing regio-
nal and global crossroads agenda. As such, Ankara’s expec-
tations for the AIIB are also evolving as the Bank’s own
agenda is becoming more concrete and as Turkey makes
these shifts in its geostrategic positioning.
Turkey’s interest in the AIIB: foreign policy,
national developmental goals and domestic
politics
Ankara welcomed China’s initial commitment to create a
new AIIB in order ‘to give adequate voice to emerging and
developing countries’(Chin, 2016, p. 12). Similar to many
other developing countries, Turkey also welcomed the AIIB’s
exclusive focus on infrastructure investments as opposed to
broader developmental issues such as socioeconomic devel-
opment and poverty reduction (Wilson, 2019). The AIIB’s
Treasury fact sheet states that ‘over the coming 3 years, AIIB
investments in the energy and transport sectors may repre-
sent between 60 per cent and 70 per cent of its exposures’
Global Policy (2019) 10:4 doi: 10.1111/1758-5899.12741 ©2019 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 10 . Issue 4 . November 2019 645
Special Section Article
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