By Aziz El Yaakoubi
RIYADH (Reuters) -Saudi Arabia agreed on Tuesday to buy Turkish drones in the biggest defence contract in Turkey's history as President Tayyip Erdogan reaped the benefits of his diplomatic push to repair ties with Gulf powers and help Ankara's struggling economy.
Erdogan and Saudi Crown Prince Mohammed bin Salman attended the signing ceremony between Turkish defence firm Baykar and the Saudi defence ministry, Saudi state news agency SPA reported.
Erdogan arrived in the Saudi Red Sea city of Jeddah on Monday for the first stop of a Gulf tour.
Saudi Arabia will acquire the drones "with the aim of enhancing the readiness of the kingdom's armed forces and bolstering its defense and manufacturing capabilities," Defence Minister Prince Khalid bin Salman said in a tweet on Tuesday.
SPA did not give details about the value of the deal but Baykar CEO Haluk Bayraktar said it was the biggest defence and aviation export contract in Turkey's history.
"We signed a contract with the Saudi Arabian defence ministry for the Bayraktar Akinci (unmanned combat aerial vehicle) export and cooperation," he said in a Twitter post.
Investments and funding from the Gulf have helped relieve pressure on Turkey's economy and its currency reserves since 2021, when Ankara launched a diplomatic effort to repair ties with Saudi Arabia and the United Arab Emirates.
Turkey had been at odds for years with the two Gulf states over Ankara's support of pro-democracy movements in the Middle East and North Africa and the murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul in 2018.
'JOINT PRODUCTION'
Erdogan will travel to Qatar on Tuesday, the second stop of his first Gulf tour since being reelected in May. On Wednesday, he is due in the United Arab Emirates.
SPA said Erdogan and Prince Mohammed attended the signing of a defense cooperation plan by Prince Khalid and Turkish Defence Minister Yasar Guler.
Developing a local military industry has been part of an ambitious plan by Prince Mohammed to diversify the kingdom's economy away from oil.
Baykar said in a separate statement the agreement with Riyadh entails cooperation on technology transfer and joint production "in order to advance the high technology development capability of the two countries".
The two countries also inked several memorandums of understanding in sectors including energy, real estate and direct investments, SPA said.
Last month, Turkish Vice President Cevdet Yilmaz and Finance Minister Mehmet Simsek travelled to the UAE to discuss "economic cooperation opportunities" with counterparts, and they met President Sheikh Mohammed bin Zayed al-Nahyan, Ankara said.
Turkey's budget deficit surged to seven times the year-ago levels in June, data showed on Monday, while last month's annual inflation was close to 40% with the lira nearly 29% weaker this year.