ISTANBUL — Turkish President Recep Tayyip Erdogan met last month in Istanbul with 40 global CEOs to discuss ways to boost Turkiye's competitiveness as part of a drive to transform the Istanbul Financial Center into a leading regional hub. Ankara has sought to promote Turkiye as a model of security and stability for businesses and investors as the fallout of the Iran-U.S. war reverberated across the Middle East.

"Just as in the pandemic period, we wholeheartedly believe that this global crisis, too, will open new doors before our country," Erdogan said. Turkish officials said they want to capitalize on the economic effects of the conflict on regional business hubs such as Dubai, Doha and Riyadh, where Iranian missiles and drones have inflicted damage on infrastructure in the United Arab Emirates, Saudi Arabia and Qatar. Turkiye, which is protected by NATO air defences, has emerged largely unscathed from aerial attacks blamed on Tehran. The conflict is officially on pause until Wednesday under a two-week ceasefire between the United States and Iran.

Turkish Treasury and Finance Minister Mehmet Simsek said the government was preparing "radical" incentives to lure foreign capital. Guney Yildiz, a Turkish-born adviser at Anthesis Group, said the likely measures would involve tax breaks for companies that sell goods through Turkish entities without importing them into the country.

"So you'd have a commodities trader or a logistics company booking transactions through Istanbul and getting a meaningful tax benefit for it," Yildiz said. "That's a direct play for the kind of intermediation business that Dubai has owned for two decades. The timing is obviously shaped by the war."

The Istanbul Financial Center opened in 2023 as part of initiatives aimed at luring foreign investment. The special economic zone offers tax incentives to financial institutions, including a 100 percent exemption from corporate tax on export earnings until 2031. Less than half of the center's office space has been filled, and officials expect occupancy to reach 75 percent by the end of this year.

Istanbul ranks 101st on the latest Global Financial Centres Index, compiled by Z/Yen Partners in collaboration with the China Development Institute. Dubai is ranked 7th, Abu Dhabi 21st, Doha 48th and Riyadh 61st.

The Iran war has complicated efforts to turn around Turkiye's economy, driving up fuel prices and forcing authorities to dip into foreign currency reserves to defend the lira. Since the onset of the 2018 crisis, Turkiye's economy has experienced double-digit inflation and a depreciating currency. Erdogan's administration has kept interest rates low despite concerns about inflation, with the government saying the policy is aimed at boosting the economy and ending foreign currency manipulation.

"The lira loses roughly a fifth of its value against the dollar every year. For a financial firm that earns in multiple currencies and pays staff in lira-denominated salaries, the math gets complicated fast. You're constantly managing FX exposure in a way you simply don't have to in a pegged-currency jurisdiction like the UAE or Singapore," he said.