By Bosphorus News Research Desk
Study: Financing Ambition amid Crisis: Turkey's Economic Challenges, Strategic Partnerships, and Regional Power Projection
Institution: Moshe Dayan Center for Middle Eastern and African Studies, Tel Aviv University / Turkeyscope
Date: 17 August 2026
Region / File: Türkiye / Political economy, defense exports and regional power projection
Research note: Türkiye has found ways to extend its military and political reach abroad despite persistent inflation, weak productivity and continued reliance on foreign financing, Ronen Bar-El argues in a new Turkeyscope study. The paper is a political-economy synthesis rather than an original empirical study. It draws on International Monetary Fund, World Bank, Organisation for Economic Co-operation and Development and Turkish central bank material, together with academic literature and defense, investment and macroeconomic data covering the period from the early 2000s through 2025.
Bar-El describes the model as "networked power projection." Türkiye combines domestic defense production and arms exports with military training, overseas access, investment, currency arrangements and partnerships stretching from the Gulf to Africa. A defense sale can open a relationship that continues through training, maintenance, software, spare parts and military cooperation. The paper uses Qatar, Somalia and Libya to examine how these commercial and security ties can expand Türkiye's reach without Ankara financing the entire relationship itself.
The economic record underneath that expansion is less comfortable. Bar-El traces Türkiye's move from rapid growth and strong foreign investment in the 2000s into recurring current-account pressure, heavy refinancing needs, currency depreciation and high inflation. Productivity is the deeper problem in his account. Drawing on World Bank and OECD assessments, he argues that Türkiye has struggled to move beyond capital-intensive catch-up growth toward higher productivity, advanced skills and higher-value exports.
Strategic relevance: The study puts an economic structure underneath a part of Turkish foreign policy usually discussed through drones, bases, military agreements and deployments. Türkiye's presence across the Eastern Mediterranean, Gulf, Horn of Africa, Balkans and South Caucasus does not require Ankara to fund every relationship on the model of a traditional expeditionary power. Customers buy Turkish systems, partner governments share costs and the resulting contracts can create defense relationships that last well beyond the original sale.
Developments in 2026 make that argument worth testing against a changing record. Bosphorus News reported in March that Türkiye's exports of major arms rose 122 percent in 2021-2025 compared with the previous five-year period, with Pakistan, the United Arab Emirates and Ukraine among the leading recipients. Turkish defense companies later announced nearly $8 billion in export agreements during SAHA 2026. The August 7 Mecca Joint Defense Agreement then brought Türkiye, Saudi Arabia and Pakistan into a formal mutual-defense arrangement, taking one of the Gulf relationships discussed in Bar-El's study well beyond a commercial transaction.
Bosphorus News reading: Bar-El is persuasive on the machinery behind Türkiye's overseas reach. Drones, armored vehicles, naval systems and missiles generate more than export revenue. They create training requirements, maintenance chains, software dependence and military-to-military contacts. A sale can therefore leave a Turkish institutional presence long after the equipment has been delivered.
His conclusion becomes harder to accept when external liquidity is treated as the defining limit on Turkish power projection. Foreign financing remains a constraint, but Türkiye is also building assets that generate capacity of their own. Defense manufacturing and arms exports have expanded, while Turkish Petroleum Corporation is pursuing equity stakes and active exploration from Kirkuk to Somalia, Libya and Oman. The Mecca agreement also sits awkwardly with a reading of Saudi ties as mainly transactional.
The financial ceiling identified by Bar-El is real. The open question is whether the structure beneath it is beginning to change. By 2026, Ankara is trying to add domestic industrial capacity, export income and overseas production to a model that previously depended much more heavily on imported capital.
Read the study: Financing Ambition amid Crisis: Turkey's Economic Challenges, Strategic Partnerships, and Regional Power Projection
Sources: Moshe Dayan Center for Middle Eastern and African Studies, Bosphorus News review and reporting.