AGP Executive Report

Hejaz Railway Revival: Türkiye plans to modernise the historic Hejaz Railway and extend it toward Oman, aiming to build an alternative trade corridor to the Strait of Hormuz. The first step targets a link from Türkiye to Aleppo via existing Aleppo–Damascus–Jordan routes, with talks underway with Saudi authorities. Energy Security & Logistics: Turkish President Erdoğan warned the Iran–US crisis is raising energy import costs and inflation risks, stressing that Hormuz closure showed supply security is a sovereignty issue. Regional Oil Corridor Push: Iraq approved a plan to more than triple oil exports via the Kurdistan–Turkey pipeline network to 770,000 bpd, routing flows to Ceyhan to offset Hormuz disruptions. Aviation Demand Signal: European airport passenger traffic fell 0.7% in April 2026 year-on-year, the first decline since the post-COVID recovery began, with Middle East exposure hitting Turkey and nearby markets. Industrial Trade Pressure: The EU is building tools beyond product-by-product tariffs to tackle China’s industrial overcapacity, as steel and car exports surge. Local Labor Watch: Turkey was ranked among the world’s 10 worst countries for workers’ rights in the 2026 Global Rights Index, citing union-busting and strike restrictions.

Defense & Tech Diplomacy: FM Hakan Fidan heads to South Korea (June 4) to push defense ties on drones and nuclear/renewables, while also discussing AI, semiconductors and batteries. Trade & Industry: Türkiye targets $30bn trade with France by 2030 after a 71% jump to $24.2bn over five years, with French firms flagging $5bn new investments. Energy & Regional Power: Iraq brings ~1,200MW more power online via Turkish and Kurdistan interconnections to stabilize summer supply. Manufacturing Exports: Turkish tire exports hit a record $1.9bn in 2025, reaching 155 countries; passenger car tires lead. Digital Infrastructure: Damac Digital says its IT capacity landbank reached 6,000MW across 13+ countries, aiming for 2GW operational by Q1 2028. Economy Watch: Türkiye’s Q1 2026 GDP grew 2.5% y/y, led by services and household consumption, while industry contracted 0.8%. Market Pressure: Pistachios face tight, cautious supply as Iran conflict disrupts exports amid demand spikes tied to Dubai chocolate.

Crypto & Payments: Ripple says its USD-backed stablecoin RLUSD is now available to Turkish institutions via new partnerships with BiLira, Bitexen and Bitlo, after reaching $1.7bn market cap since late-2024. Energy Prices: Türkiye cut gasoline and diesel prices after a dip in global oil benchmarks tied to expectations around US-Iran talks. Rail & Logistics: The upgraded Baku-Tbilisi-Kars railway entered full operation, with the Georgian segment modernization lifting annual freight capacity from 1m to 5m tonnes. Defense & Industry: NATO Parliamentary Assembly backed stronger funding and faster delivery of defence capabilities ahead of the Ankara summit, pushing lawmakers to help turn pledges into combat-ready output. Regional Diplomacy: Foreign Minister Hakan Fidan said Trump plans to attend the NATO summit in Ankara, while warning Israeli actions in Lebanon could complicate the US-Iran ceasefire. Aviation/Trade: Malaysia urged Norway to expedite refunds for a canceled missile deal, blaming Oslo’s export-license refusal. Health Tourism: Turkey is drawing more international patients for eyebrow transplants, adding another niche to its medical tourism push.

Energy & Mining Diplomacy: Egypt and Türkiye are looking to deepen cooperation in petroleum, natural gas and mining, with talks in Baku Energy Week also tied to Turkish OZ Mining’s gold feasibility work in Egypt’s Eastern Desert. Manufacturing Pulse: S&P Global data points to near-stabilisation in Turkish manufacturing in May, with the PMI rising to 49.8 and export orders helping output recover after April’s slowdown. Construction Outlook: Türkiye’s construction sector may shift to more moderate growth, as tight financing and high borrowing costs cool private-sector activity even while reconstruction and public infrastructure keep support going. Textile Tech at ITM 2026: Shima Seiki will showcase WHOLEGARMENT knitting and automated cutting solutions in Istanbul, highlighting productivity gains and lower material waste for apparel and beyond. Pipeline & Energy Corridors: BP says it will hand over operations of the BTC pipeline to SOCAR from July 1, while Türkiye and Azerbaijan push an “electricity TANAP” concept to connect power toward southeast Europe. Aviation Emissions Policy: The EU is reviewing CORSIA and whether to expand ETS coverage for non-CO₂ effects like contrails, with implications for airlines operating to/from Europe. Regional Trade Watch: India warns it may reconsider Scotch whisky tariff cuts under the India-UK FTA if UK steel measures restrict Indian access. Aviation/Defense Procurement: Malaysia is seeking missile options already in production after Norway cancelled export licences, including evaluating systems from Italy, Japan, France, Türkiye and South Korea. Cement Prices Probe: Venezuela’s assembly plans to review cement pricing and summon Türkiye-linked industry figures amid concerns over high bag prices.

Energy Deal: SOCAR, BOTAS, TotalEnergies and ADNOC signed a natural gas sales agreement tied to Azerbaijan’s Absheron field, with production expected to start in 2029 and about half of volumes earmarked for Turkey. Power Corridor: Turkey’s energy minister said Ankara is building an “electricity version of TANAP,” linking Azerbaijan, Georgia and Bulgaria, and is preparing a $30bn grid upgrade to boost cross-border capacity. Defense Industry: President Erdoğan said Türkiye is countering attempts to reshape the region through conflict while pushing ahead with defense-industry progress; separate reporting also pointed to a clearer look at Turkey’s new electronic warfare jet in recent imagery. Economy Watch: TurkStat reported 1Q26 GDP growth of 2.5% y/y, with markets set to watch more data in June. Manufacturing/Trade: Turkey’s factory activity neared stabilisation with PMI improving, while Turkish carpet exports target $3.5bn this year. Legal/Industry Risk: A Fed. Circuit panel upheld dismissal of Turkish steel duty challenges. Agriculture & Food: South Africa approved Turkey-linked vaccine imports for foot-and-mouth disease, while beef prices and supply pressures remain a key global concern. Archaeology: Snowmelt on Lifos Mountain in Kayseri revealed a large ancient complex with major stone walls and cisterns.

Manufacturing Pulse: Turkey’s manufacturing PMI rose to 49.8 in May (from 45.7 in April), nearing stabilisation as output edged up and export orders returned to growth after 21 months, though firms still cite uncertainty, higher input costs and longer supplier delivery times. Aviation & Regulation: Ankara is drafting new UAV rules, including a centralized drone tracking/traffic management system and risk-based categories, with advance authorization for foreign-registered drones. Energy Security: President Erdoğan said Turkish-Azerbaijani gas supplies to Syria support development and regional security, pointing to major pipeline projects and ongoing cooperation. Mining Deal: Turkish OZ Mining signed an agreement with Egypt to explore gold and other minerals in the eastern desert, as Cairo seeks new investors for its “gold triangle.” Exports & Industry: The carpet sector is targeting $3.5bn exports in 2026 after $871.7m in Jan-April, with Middle East wars still disrupting supply and logistics. Sustainability in Textiles: Danish GANNI is partnering with Turkish and other innovators to use industrial byproducts and textile waste, including an Oleatex olive-waste-based coating made in Turkey. Water Stress: TÜİK data puts Turkey’s renewable water availability at 1,301 cubic meters per person—below the 1,700 threshold—pushing calls for efficiency and storage upgrades. Defense Tech Link: Reports say Turkish HİSAR-A air-defense equipment has appeared in Sudan, highlighting Turkey’s defense exports reaching new conflict zones.

NATO Summit Prep: Turkey is stepping up preparations for the July 7-8 NATO summit, with Foreign Minister Hakan Fidan saying Erdoğan has spoken with U.S. President Trump “many times” and Trump has not indicated he will skip the meeting; Ankara is also coordinating the program with NATO chief Mark Rutte and expects Indo-Pacific partners’ defense leaders, including Japan, South Korea, Australia and New Zealand. Defense Industry: Katmerciler delivered the first batch of upgraded HIZIR 4x4 MRAP vehicles to the Turkish Armed Forces, integrating domestically developed subsystems on a NATO-standard platform, with remaining deliveries due by year-end. Turkey-Japan Cooperation: Fidan signaled deeper defense ties with Japan, highlighting joint drone development and Turkey’s counter-drone know-how, while also pointing to potential collaboration in energy, minerals, digital transformation, aviation/space, robotics and resilient supply chains. Energy Markets & Sanctions: The EU is weighing a temporary freeze on Russia’s oil price cap to avoid a higher reset amid Middle East-driven volatility, while also discussing additional sanctions targeting more “shadow fleet” tankers and related financial actors. Regional Water & Agriculture: Euphrates flooding in eastern Syria is receding as Syrian authorities report reduced releases and lower river levels, after earlier damage to homes and farms during the wheat harvest. Aegean Tensions: Greece is reportedly preparing legal and policy responses to Ankara’s “Blue Homeland” push, including possible new marine parks and expanded territorial waters south of Crete. Seismic Safety Tech: A new study highlights using Istanbul’s fiber-optic telecom cables as a sensor network to improve shallow seismic modeling and urban risk understanding. Tourism & Sports: The Champions League final in Budapest is credited with a major tourism and aviation boost, underscoring how big events can quickly reshape regional demand.

Trade & Industry Pulse: Turkey’s imports from Iraq jumped to about $829M in April (from $659M in March), while manufactured goods, agriculture, fisheries and mining/quarrying made up 94% of exports, according to TURKSTAT. Energy & Infrastructure: Ankara says it is planning a 97-km gas pipeline to Turkish Northern Cyprus from Alanya, targeting engineering studies this year and aiming for implementation by 2028, alongside a subsea electricity link. Defense Tech Cooperation: Turkey’s FM Hakan Fidan tells Nikkei Asia Ankara wants deeper drone and anti-drone collaboration with Japan, including joint development and co-production. Maritime Security: Turkey urged restraint after a drone attack hit a Turkish-owned cargo vessel in the Black Sea, injuring two crew members. Disaster Impact on Agriculture: Euphrates flooding in Syria’s Deir Ezzor has affected 2,400 families, with authorities linking the surge to dam floodgates opened in Turkish territory. Aviation Services: Turkey is rolling out free drinking water dispensers across all 58 airports, extending a prior in-flight water mandate. Manufacturing & Equipment: ANDRITZ will supply a diaper production line to ATCO Hygienics in Tashkent, with commissioning slated for end-2026.

Russian Tech Theft: European intelligence officials say Russia is ramping up efforts to steal Western machine tools, software and dual-use defense research via front firms, intermediaries and cyber operations as sanctions bite. Ankara Stadium Push: Turkey’s new 51,000-seat Ankara stadium is over 90% complete, with seating installation underway and UEFA inspections already done, targeting the 2026-2027 season. Black Sea Shipping Risk: Drone strikes hit three commercial vessels in Ukraine’s Black Sea export corridor; one Turkish-owned ship was reported among the targets, underscoring volatility for regional logistics. Water-Energy Pressure: Syria warns of reduced Euphrates flows after Turkey cuts water supplies, raising concerns for irrigation and power generation. Cultural Craft Loss: İzmir’s UNESCO-listed “living human treasure” karatabak leather and parchment master İsmail Araç has died at 93, marking a blow to Turkey’s traditional manufacturing heritage. Global Tech & Defense: Cyprus-based Swarmly Aero highlights drone production and export ambitions as small states seek deterrence through unmanned systems. Turkey-Linked Procurement Sanctions: The US Treasury sanctions an Iran-linked procurement network accused of diverting US-origin components to support Iran’s drone program, including targets tied to Turkey.

Trademark & Tourism Legal Battle: The EUIPO rejected Türkiye’s appeal over the cancellation of the “Turkaegean” trademark, upholding Greece’s win and removing the term from the EU register. Black Sea Shipping Safety: Turkey said two Turkish citizens were lightly injured after a drone attack on a Turkish-owned cargo ship transiting the Black Sea from Odesa, urging all sides to avoid uncontrolled escalation. Water & Flood Management: Syria’s energy ministry began reducing Euphrates releases from Turkey after flooding risk in Raqqa and Deir Ezzor, including operational steps at the Euphrates Dam to lower flows. Defense Tech Spotlight: A Turkish startup claims it developed a spray-on radar-absorbing coating using volcanic materials to cut drone detectability, aiming to make low-cost drones harder to track. Energy/Industry Diplomacy: Iraq appointed oil veteran Bassim Mohammed Khudair as Minister of Oil as exports face disruption amid the Hormuz crisis. Power Generation Update: Türkiye reported installed power hitting 125.4 GW, with solar set to overtake hydro.

Black Sea Security: Ukraine says a Russian drone hit a Turkish-flagged dry cargo vessel from Odesa to Turkey, injuring two crew members and sparking a fire that was quickly contained. Maritime Risk: Separate reports also point to drone attacks on three oil tankers off Türkiye’s Black Sea coast, with crews reported safe. Regional Water & Industry Impact: Syria’s energy ministry warns of flooding across northern and eastern provinces after sharp Euphrates rises linked to increased flows and dam floodgates in Turkey, disrupting bridges, farmland and infrastructure. Defense Tech: A Turkish startup claims a spray-on radar-absorbing coating for drones could cut radar returns by up to 43 dB, aiming to make “stealth” cheaper—though independent verification is still pending. Agriculture: Türkiye registered its first domestic salep varieties (“Bal Yumru” and “Bol Yumru”), enabling field cultivation in coastal regions and easing pressure on wild habitats. Trade & Mining: Peru signals closer cooperation with Türkiye on critical minerals and sustainable mining, including a possible memorandum of understanding. Textiles & Exports: Turkey’s ready-to-wear sector is pushing into Eastern Europe as EU demand softens, with Q1 exports reported at $4.28bn.

Black Sea Shipping Security: Reports say three Russia-linked “shadow fleet” tankers were hit by drones near Türkiye’s northern coast; the Palau-flagged James II was struck in its engine room while two other vessels (Altura, Velora) were damaged or saw failed detonations, with crews reported safe and Turkish coast guard patrols dispatched. Water & Infrastructure Risk: Syria’s energy and emergency authorities warn of rising Euphrates levels after Türkiye opened Atatürk Dam spillway gates for the first time in seven years; flooding reportedly disrupted dozens of water stations and submerged bridges, pushing local states of emergency. NATO Amphibious Capability: EFES-2026 showcased Türkiye’s FNSS ZAHA amphibious assault vehicles in sea-to-shore live-fire drills, highlighting NATO-focused protected landings and rapid reinforcement from ship to inland operations. Eastern Mediterranean Geopolitics: Turkish media frames an Israel–Cyprus–Greece undersea power interconnection as a direct challenge, with “Blue Homeland” doctrine cited as a potential legal/strategic response. EU Enlargement Watch: Cyprus’ EU officials say they’re cautiously optimistic about opening accession talks for Moldova and Ukraine next month, pending unanimity at the June 16 general affairs council.

Black Sea Shipping Security: Drone attacks reportedly hit three tankers near Türkiye’s northern coast; all crews were said to be safe, but the incidents underline how quickly maritime risk can flare around the region. Energy Diplomacy & Grid Tensions: Turkey obstructs an Israel-Cyprus-Greece power grid connection, adding friction to already sensitive Eastern Mediterranean energy plans. AI for Industry: TOBB’s Business World Artificial Intelligence Summit will be held in Ankara on June 17, aiming to push AI from theory into measurable business processes via B2B meetings and decision-maker participation. Engineering Talent Pipeline: The Global Engineer Girls (GEG) programme brings young women in engineering to Türkiye; a Huddersfield cohort attended the Istanbul conference and is set to expand STEM participation. Clean Energy Supply Glut: BloombergNEF reports clean-energy manufacturing capacity is now outpacing demand, driving down renewable prices—while Turkey and other producers ramp up solar output. LNG Contract Talks: SEFE and Ksi Lisims LNG agree on long-term LNG supply, signaling continued focus on securing gas inputs for Turkey’s energy market. Regional Infrastructure: Work begins on major transport upgrades in the region, including a “missing link” mass transit project and road reconstruction tenders tied to European financing.

Energy Security & LNG: Germany’s state gas importer SEFE agreed to buy 1 million tonnes/year of LNG from Canada’s Ksi Lisims project for up to 20 years, with deliveries starting in the early 2030s, as Europe seeks supply diversification after Russia and Iran-related market shocks. Strait of Hormuz Shipping: US President Trump said no single country will control the Strait of Hormuz and warned Oman against managing a toll system with Iran, while reports of a draft framework keep deal talks in flux. Defense Industry & Exercises: At EFES 2026, Türkiye showcased the YENER 100-G mine detection system on Otokar’s ARMA 8x8 and demonstrated AH-1W Super Cobra attack helicopters’ precision firepower in amphibious operations, underlining NATO route-clearance and expeditionary capabilities. Hydrogen-Ready Infrastructure: Edison and BOTAŞ signed an MoU to study a hydrogen-compatible Mediterranean pipeline linking Türkiye and Italy, via a joint working group assessing technical and regulatory feasibility. Turkey-Linked Trade & Logistics: Bloomberg reported Erdoğan is trying to meet Trump around the Turkey–USA World Cup match in Los Angeles, aiming to discuss bilateral ties and NATO roles ahead of the Ankara summit. Local Environment & Water Quality: In Farragut, Tennessee, daily E. coli testing after a sewer line break in Turkey Creek shows spikes tied to runoff but also a recent decline, as repairs continue in phases.

US-Iran Shockwave: The US carried out “self-defense” strikes on southern Iran as ceasefire talks drag on, while Iran warns the deal is being undermined—keeping Strait of Hormuz risk front and center for energy prices. Energy & Shipping: Kenya is in talks to contract Turkish floating power-plant provider Karpowership to ease electricity shortages, and Saga flags cruise fuel supply risk as oil squeezes intensify. Turkish Industry at ITM: Karl Mayer is running a Turkey-focused customer week and Mayer & Cie. Global is gearing up for ITM 2026 with premium circular knitting tech and a renewed push on deliveries. Logistics Upgrade: Turkey’s Mersin ports are set to link to both the Middle Corridor and the Development Road via a high-speed rail project, aiming to cut routes and boost freight. Trade & Manufacturing Pulse: TurkStat shows Türkiye’s economic confidence index rebounded in May, led by manufacturing and retail. Africa Minerals Push: Somalia expects positive results from Türkiye-led offshore drilling by year-end and is expanding cooperation into uranium and critical minerals.

Energy Deal: Canada is set to sign a major LNG purchase agreement with Germany’s SEFE for gas from the Ksi Lisims planned export facility on British Columbia’s coast, with Shell and TotalEnergies already tied in via long-term contracts. Aviation & Tourism: Airlines and airports are pushing harder on shoulder-season demand, with SunExpress citing a focus on improving traffic in February, March, April and November before tackling the darkest winter months. Middle East Diplomacy: U.S.-Iran ceasefire talks remain fragile after fresh U.S. strikes and Tehran’s retaliation threats, while negotiators keep working in Qatar and the enriched-uranium issue stays central. Turkish Politics: A Turkish court ruling invalidated CHP’s 2023 congress and removed CHP leader Özgür Özel, reinstating Kemal Kılıçdaroğlu—sparking resistance at party headquarters. Security/Shipping: Magnetic mines were reportedly found on a tanker at Russia’s Baltic port of Ust-Luga, raising new sabotage fears around energy routes. Industry/Mining: Nigeria and Türkiye renewed solid-minerals cooperation via MoUs, signaling continued investment focus beyond oil.