The expanding war in the Middle East and surging Israeli aggression, in particular, have hit trade and energy connectivity hard. The rising tension from the Middle East to Asia Pacific and its potential impacts on energy and East-West trade needs to be reassessed. Accordingly, in this new era of reviving regional connectivity and new initiatives, security issues need to be taken more seriously.

The significance of new trade routes is constantly evolving as part of the ongoing supply chain restructurings. However, rising geopolitical tensions in Gaza, Lebanon, Ukraine and beyond are likely to disrupt existing trade routes and global trade balances once again. The stakes are high.

In the meantime, cost concerns used to be more of a priority in global supply chains and international trade discussions. That's why cheap manufacturers such as China were used effectively. In the post-pandemic, wars and tensions era, though, security is more at the forefront.

At the crossroads

Trade-wise rivalries, as part of the global power competition, are intensifying. The Development Road Initiative, for instance, is projected by Türkiye and its middle-power allies. Middle powers are effectively using their growing economic, political power, strategic and international influences in this new era of global economic and trade rivalry.

Türkiye is also repositioning itself in the global power concentration via rising trade corridor wars and connectivity competition. The country plays the most strategic role in the transportation of energy too. The Middle Corridor (the Trans-Caspian International Transport Route), for instance, aims to connect Asia and Europe, bypassing Russia, from a southern route via Türkiye.

The ongoing tension in the South also reaffirms Türkiye is the epicenter of East-West trade connectivity. Yet, regional economic powerhouses such as Iran may perceive the harsh competition from the Turkish companies as a huge threat to its strategic goal of becoming the dominant trade and economic partner in this region.

Türkiye lies at the crossroads of continents and strategic regions, hence supporting inter-regional trade and transportation projects. Yet, to that end, the country is in desperate need of new giant transportation projects with internal and international connections and new investments that facilitate transit and transportation infrastructure.

Geopolitical risks, disruptions

Following the pandemic of 2020, which caused supply chain breaks along with serious production losses, the war between Russia, a major energy exporter and Ukraine, one of the largest agricultural products exporters led to a new energy and food crisis, supply security concerns and a new inflationary process.

The ongoing tension in the Middle East is deteriorating the already weak global trade, triggering a quest for new trade routes. Global trade and trade route security has, overall, once again gained eminence thanks to the Israel-Palestine conflict and the war in Ukraine, as well as the tension in Asia Pacific.

Land and maritime trade corridors are increasingly becoming a critical instrument of connection for cross-regional commerce, transportation and energy trade, as well as the geo-strategic, geo-economic and geo-political equations. These regional and global trade routes are crucial for the efficiency and sustainability of cross-border goods and services trade.

Disruptions in land and shipping routes and sabotage of maritime activity have raised the need for alternative corridors. Security issues in escalating tensions or war risk, as in the war in Gaza or the resulting Houthi attacks in the Red Sea have all negatively impacted the connectivity lines passing through the Middle East.

Iranian disruptions in the Strait of Hormuz, the Gulf of Basra and the broader Indian Ocean; Israeli threat and the resulting security issues in the Eastern Mediterranean and the Red Sea; and the Houthi threat in the Gulf of Aden and the Bab el-Mandeb Strait as well as the Red Sea and the Indian Ocean are just some of security issues to contemplate.

Trade equations

While the global balance of power is shaking, multipolarity continues to strengthen. Not only the U.S.-centered unipolar structure but also alternatives to the rise of China-centered trade routes are also coming to light gradually. India is already replacing China and becoming a new alternative global manufacturing hub.

Asia is currently breaking its shell and more specifically the search for new markets by countries such as China and India urges countries and their partners to seek alternative trade routes. Even green transformation and zero-emission issues, which are aggressively brought to the agenda by the COP meetings, necessitate an exquisite transformation.

The Fertile Crescent between the Egypt, Türkiye and Iran triangle, which also sits at the center of the political economy of this century, is also at the center of all these trade wars. Therefore, Türkiye’s strategic importance and its indispensable role in East-West trade have been reinforced.

Türkiye already has solid commercial and economic links with Europe and has also been rapidly increasing commercial, economic and political ties with rising Asia. In this new framework, the country managed to reorganize supply chains and restore production. With its robust human capital, major manufacturing and logistics capabilities, and strategic intercontinental advantages, Türkiye serves as the natural intersection for all trade routes and supply chains.

Geopolitical tensions do not just jeopardize peace in the regions they unfold, they also affect the rest of the world. Regional economies and the global economy are at a dangerous juncture today. The tension in the Middle East could lead to huge infrastructure, energy and trade, inflation, human and geopolitical costs to the global economy as well as growing political polarization.

The war in the Middle East could be another catalyst for the deglobalization trend, reduced trade flows, fewer tourists, and less political and economic cooperation. Rising tension and risks require a reassessment of the meddling in global trade and energy connectivity. Türkiye seems to closely follow all geopolitical and geoeconomic developments due to its strategic location. Moreover, Türkiye is a natural part of all these processes.