Saudi Arabia puts $5 billion into Turkish central bank

Saudi Arabia said Monday it deposited $5 billion into the Turkish central bank, likely helping Ankara firm up its long-weakening currency, the lira, after last month’s massive earthquake that struck southeast Turkey and northern Syria.

The deposit provides a capstone for just how far relations have improved between the kingdom and Turkey after years of tensions between the nations, particularly after the 2018 killing and dismemberment of Washington Post columnist Jamal Khashoggi at the Saudi Consulate in Istanbul. Turkey also backed Qatar in a yearslong boycott by the kingdom, Bahrain, Egypt and the United Arab Emirates.

The deposit will also likely help boost Turkish President Recep Tayyip Erdogan ahead of upcoming elections this year.

The kingdom made the announcement via a statement on the state-run Saudi Press Agency, describing it as “a testament to the close cooperation and historical ties that exist between the kingdom of Saudi Arabia and the Republic of Turkey and its brotherly people.” It said the money came from the Saudi Fund for Development.

The statement offered no details on how the cash would be used or if the kingdom could call for the sum to be returned. However, such deposits can help firm up exchange rates for a nation’s currency against other currencies internationally.

Turkey’s state-run Anadolu news agency praised the deposit, saying it reflected the kingdom’s “strong support for the Turkish people and its confidence in the future of the Turkish economy.”

“This agreement supports Turkey’s economic and social growth and sustainable development,” the agency said. “Thanks to this deposit, it is aimed to contribute to the solution of economic problems in various sectors.”

Turkey has been struggling with high inflation and a weakening lira even before the Feb. 6 earthquake and many of its strong aftershocks. A year ago, $1 sold for 14.26 lira while today a dollar is worth 18.90 lira – weakening by nearly 30% in the last year.

The quake killed around 50,000 people – the vast majority in Turkey. Close to 204,000 buildings either collapsed or were severely damaged in Turkey, leaving hundreds of thousands of people homeless.

Turkey’s support for Islamist groups such as the Muslim Brotherhood following the 2011 Arab Spring had strained relations with Persian Gulf monarchies and sheikhdoms, who viewed the Brotherhood as a threat to their rule.

Those tensions eased as the Gulf Arab states broadened their relations over concerns about what they perceived as waning American support and rising tensions with Iran. The UAE in particular has grown closer to Turkey, pledging nearly $5 billion last year in a deposit and $10 billion more in investments.

Erdogan visited and embraced Saudi Crown Prince Mohammed bin Salman in 2022, even after hinting for years that the crown prince likely ordered Khashoggi’s killing. US intelligence agencies have made the same assessment, though the kingdom denies the prince had any part in the slaying.