Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich have reversed their decision to promote a full embargo on imports from Turkey, including those destined for the Palestinian Authority.
The decision was made after officials in the Finance Ministry realized that a complete ban on Turkish imports would be, as a senior official described, "utter folly that would harm the Israeli economy far more than Turkey's."
The move was also seen as counterproductive, as thousands of products and goods from Turkey intended for the Palestinian Authority were ending up in Israel, bypassing the Turkish import ban. On Sunday, the government was set to approve an extension of past decisions to ban all imports from Turkey, including those bound for the Palestinian Authority. This initiative followed Turkish President Recep Tayyip Erdoğan's announcement of a trade embargo on Israel in May.
Despite this, Turkish exports to the Palestinian Authority continued, with a significant portion making their way into the Israeli market through indirect channels. The process worked as follows: goods left Turkey with shipping documents ostensibly intended for the Palestinian Authority. Once on board, these documents were swapped for ones showing Israeli commercial recipients, with Palestinian merchants charging a 3%-5% fee for this service, allowing them to profit with minimal effort. As a result, no Turkish imports reached the Palestinian territories; instead, they went directly to Israeli ports in Ashdod and Haifa. The value of Turkish imports into Israel is currently estimated at $1.7 billion this year, compared to about $5 billion last year.
National Security Council draws up plan for embargo
The National Security Council (NSC) worked diligently in recent weeks to prepare a sweeping decision to ban all Turkish imports, including those intended for the Palestinian Authority, to stop what they saw as fraud via the swapped shipping documents.
Meanwhile, business interests pressured the Finance and Economy Ministries to halt the comprehensive ban, arguing that Israel urgently needs to import thousands of essential products and that the proposed decision would severely harm the Israeli economy.
By mid-week, senior Finance Ministry officials successfully persuaded Finance Minister Smotrich that the decision would be counterproductive and more harmful than beneficial. Following this, senior officials urgently contacted Amir Barkan, Deputy Director General of the Prime Minister's Office, asking him to intervene with Netanyahu to halt the approval of the NSC's proposal, which had been strongly supported by NSC Chief Tzachi Hanegbi and Netanyahu. Consequently, the government meeting on Friday was canceled, allowing the continued import of thousands of Turkish goods to Israel, ostensibly destined for the Palestinian Authority. It should be noted that almost all government ministers supported the idea of a total embargo on Turkish goods, and most were not informed until now that, under pressure from the Finance Ministry, the discussion and decision to expand the embargo were entirely canceled.
Shachar Turjeman, President of the Federation of Israeli Chambers of Commerce, commented on the decision: "We are grateful to the Prime Minister and the Finance Minister for deciding not to punish Israeli consumers and for abandoning the idea of a full embargo on Turkish imports. As we have said throughout, a trade war at this time is unnecessary and would ultimately accelerate the cost of living. In recent months, we have met with senior officials in the relevant ministries and demonstrated that this would be a grave mistake, a true parade of folly. We thank everyone involved for listening and choosing to prioritize the interests of Israeli citizens."