May 17, 2017

Diplomatic Row Unlikely to Impact Long-term Security Environment or Business Climate in Either Country

Executive Summary

The political row that recently erupted between the Netherlands and Turkey is already showing signs of settling into a war of words, accompanied by largely symbolic diplomatic tit-for-tat measures. Despite harshly worded threats by Turkish President Recep Tayyip Erdoğan to implement strong reprisals against the government in The Hague, Ankara is unlikely to enact serious sanctions that would severely hamper Dutch business interests in Turkey. Nevertheless, Erdoğan supporters are actively trying to muster popular backing for a grassroots boycott of Dutch goods and services; however, this effort will likely have a very limited and short-lived impact.

Demonstrations and low-level security incidents near Netherlands' diplomatic missions and major Dutch-owned companies in Turkey - as well as government facilities and Turkish missions in the Netherlands - will remain possible over the upcoming weeks, although this risk will gradually abate, with the situation returning to the normal operating status quo from a business standpoint fairly quickly. Erdoğan's campaign of rhetoric against the Netherlands likely has much less to do with Turkey's standing on the international stage than it does with the domestic political benefits that a show of strength toward the West will have in the run-up to the country's April 16 constitutional referendum. A "yes" vote in that plebiscite would enact constitutional amendments transitioning Turkey to an executive presidential system and enshrining as law broad new powers for Erdoğan.

Key Judgments:

  • Ankara's political dispute with The Hague is settling into a war of words and mostly symbolic diplomatic one-upmanship.
  • Despite President Erdoğan's strong rhetoric and threats of reprisals, the row is unlikely to have major business consequences for Dutch or other Western companies operating in Turkey.
  • Sporadic protests and low-level security incidents remain possible near Dutch interests in Turkey over the shorter term.
  • The Turkish administration likely views the confrontation more in terms of increasing political capital domestically than internationally.

The Dispute

Tensions initially flared on March 11, when the Netherlands' government revoked clearance for a plane carrying Turkish Foreign Minister Mevlüt Çavusoğlu to land in Rotterdam; Çavusoğlu had been planning to address a rally of Turkish expatriates to garner support for a "yes" vote in Turkey's April 16 constitutional referendum. Dutch officials contended that the Turkish foreign minister misrepresented the purpose of his visit, and that allowing such a gathering would disrupt public order in the city. The row escalated later that same day, when Rotterdam police officers ejected Turkish Families and Social Policy Minister Fatma Betül Sayan Kaya, who had driven to the city from Germany to speak to a crowd of Turkish expatriates who had assembled in front of Turkey's consulate.

Demonstrations by Turkish expatriates subsequently erupted in both Rotterdam and Amsterdam, prompting Netherlands security officers to disperse the unruly protests by force; at least 12 people were arrested in Rotterdam and nine in Amsterdam during the incidents. At the same time, in Turkey, several thousand supporters of the ruling Justice and Development Party (AKP) protested in front of the Embassy of the Netherlands in Ankara, while a much smaller gathering took place at the Consulate General of the Netherlands in central Istanbul. Turkish police sealed off both of the Dutch diplomatic missions due to security concerns. No violence was reported at the rallies in Turkey.

In retaliation, President Erdoğan publicly labeled the government in The Hague "fascists" and "Nazi remnants," demanding an apology and threatening to make the Netherlands "pay the price" for the perceived slight against Ankara's ministers. Apparently taking their lead from Erdoğan's strong language, Turkish activists immediately launched a social media campaign of staunchly anti-Netherlands and anti-EU rhetoric, organized around several inflammatory hashtags on Twitter. On March 14, a spokesperson for the Turkish administration announced that Turkey was preventing flights carrying Dutch diplomats and envoys from landing in the country or using its airspace - a move that also prevents Netherlands Ambassador Kees Cornelis van Rij, who was on leave when the dispute began, from returning to his posting at the embassy in Ankara. Turkish officials have also said that high-level discussions between the two countries would be suspended and suggested that economic sanctions could follow.

Major Business Impact Unlikely

Regardless of the accusations that Turkey and the Netherlands have exchanged, and the threats of strong reprisals that have come out of Ankara, the stand-off between the two nations will likely remain within the political sphere - a war of words accompanied by mostly symbolic diplomatic posturing, that will not become a major impediment to Dutch businesses or joint ventures operating in Turkey. The Turkish government will likely be very reluctant to enact real economic sanctions against the Netherlands, given that such a strategy could easily backfire. The Netherlands constitutes the largest single source of foreign direct investment (FDI) in Turkey, amounting to 17 percent of total FDI inflows. Given that Turkey's economy is already struggling from significant losses in tourism revenues, Ankara can ill afford to impose robust sanctions against the Netherlands, and risk drawing retaliation in kind, while The Hague holds a position of economic strength.

Pro-government activists in Turkey have been working to marshal popular support for a grassroots boycott of Dutch products and services. However, this campaign appears poorly coordinated, and is unlikely to have a broad impact. While some Dutch consumer goods brands - particularly those well-known to be of Netherlands origin - may register a small drop in their Turkish sales, these should remain limited in scope and of short duration.

The wave of anti-Netherlands and, more broadly, anti-Western outrage that dominated Turkish social media over the weekend of March 11-12 very quickly diminished to a fraction of its intensity within a few days. Still, sentiment against the Netherlands remains generally elevated, suggesting the continued possibility of protests or low-level security incidents near Dutch interests in Turkey. Dutch nationals in the country may also experience a higher frequency of displays of such sentiment, including rudeness or harassment. This risk likely will gradually abate as the row between the two countries fades from the public eye.

Playing to the Domestic Audience

Erdoğan's harsh rhetoric vis-à-vis the Netherlands may very well be designed more to gain domestic political capital than to tout Turkish influence in the international arena. On April 16, Turks will go to nationwide polls to vote in a referendum on a set of constitutional amendments that, if approved, would transition Turkey from a parliamentary system of government to an executive presidential system, granting the presidency broad new powers. With his AKP campaigning for a "yes" vote on the argument that a strong president would bring stability and security to the country, Erdoğan's recent displays of defiance toward, and information wars against, a number of NATO partners have played well within certain segments of the populace at home. While it remains to be seen whether his strong-man tactics will sway the plebiscite in his favor, it seems clear that they are succeeding in keeping his message at the forefront of public interest in the lead-up to the vote.