2015 was a turning point in the foreign economic relations of Russia and Turkey. The impetus for the development of the conflict was the violation of Turkish airspace by the Russian Su-24, which took part in an anti-terrorist company in Syria and was subsequently shot down by the military. The result of official Ankara’s actions was the introduction by Moscow of sanctions against certain types of goods and services exported from Turkey.
Regulatory sanctions against Ankara were introduced in November 2015 based on the Decree of the President of Russia. A more detailed plan to limit the supply of goods from Turkey to the Russian Federation was developed by the Government in an appropriate resolution.
What restrictions has Russia imposed on the export of goods from Turkey
Restrictions on exports from the Republic of Turkey to the Russian Federation mainly affected crop products. This includes tomatoes, grapes, tangerines, oranges, cucumbers, cabbage, onions, apricots, peaches, plums, strawberries, strawberries. In addition, the import of salt, carnations (flowers), carcasses of turkeys, chickens and offal from them, chewing gum is not allowed.
In 2015, a huge amount of food that was banned from import into Russia was disposed of. Such a move, according to many, is wrong. While certain categories of citizens are below the poverty line, chicken, citrus fruits, sweets brought from Turkey are simply destroyed.
Fish restrictions
The expected measures that could be used to put pressure on the Turkish economy at the end of 2015 were possible restrictions on fish exports from the Republic of Turkey. According to experts, sanctions could affect only the premium segment of fish products that do not affect the overall consumer basket.
The main types of seafood exported from Turkey are sea bass and dorado, the scope of which in Russia is limited to restaurants. This is a very insignificant segment of the market, and therefore the losses of the Russian Federation and the Republic of Turkey will be minimal.
At present, Turkey does not suspend fish exports to Russia, but develops trade relations in this area.
The response steps of the Republic of Turkey
Considering that the restrictions imposed by the Russian Federation on the export of products had a noticeable effect on the volume of Turkish exports to Russia, it is fair to expect Ankara's reciprocal steps towards domestic goods. Indeed, the foreign economic relations of these states were built on mutually beneficial export-import relations.
To date, Turkey has not imposed retaliatory sanctions against the Russian Federation. This position of Ankara suggests a possible normalization of relations between the two states.
Export of goods from Turkey to Russia
In what proportions were exported Turkish goods to the Russian market in 2015? Export from Turkey to Russia (list of goods) will be given below:
- The lion's share of Turkish exports is made up of food products and agricultural raw materials - more than 30% of the total Turkish exports to Russia (citrus fruits, nuts, tomatoes, sunflower seeds).
- A quarter of Turkish exports are automotive products (vehicles and from components).
- About 20% of exports are textile products (clothing, shoes).
- The share of chemical products in the export structure is 12% (plastic products, soap and detergents).
- Metal products are exported in an amount equal to six percent.
- Minerals and products from them occupy 2% of the total.
Export to Turkey from Russia
The most significant sphere of export to Turkey from Russia is energy. Over the years, Russia has been supplying significant volumes of gas to Turkish territories. In fact, Russia "closes" 60% of all energy needs. Ankara is not interested in changing the situation, since at the moment there are no other reliable and affordable sources of this type of fuel. Gas cooperation for the two states was very promising. The Russian Federation planned to build a separate gas pipeline. However, work has not begun.
The second export position is occupied by the supply of hot-rolled steel and makes up more than nineteen percent of the total import of Turkish metal. In January, Turkey conducted an anti-dumping investigation in this area, which resulted in statements that Russian metallurgical enterprises are dumping in the Turkish market. This situation leads to a decrease in the competitiveness of local metal producers. According to Russian metallurgists, such accusations are groundless and dictated by the unfavorable political situation.
Large volumes (export to Turkey from Russia) fall on the grain market. Since 2010, indicators have fluctuated within 15-17% of the total amount of exported grain. Despite the difficult relationship between the two countries, today grain is exported from Russia to Turkey. All concluded contracts for the export of Russian grain are being implemented, moreover, new ones are being concluded.
It should be noted that in addition to the above groups of goods, export to Turkey from Russia also implies military products that are not officially advertised, but occupy a significant share of the total. The total share of Russia in Turkish exports is about 10%.
Investment component of the Russian-Turkish conflict
Long-term partnerships between the Russian Federation and the Republic of Turkey have created a favorable climate for mutually beneficial investment projects on both sides. The volume of such investments in the economies of the opposing countries today can be estimated at $ 500 million from the Turkish side and $ 1.75 million from the Russian side. The energy sector remains particularly problematic for Russian investments. The Lukoil, Inter RAO and Rosatom companies have significantly invested in Turkish energy.
In connection with the conflict between Russia and Turkey, the acquisition of the Turkish DenizBank in 2012 by the Russian Sberbank becomes a problematic issue. At the end of 2015, the Russian subsidiary of Sberbank was in the leading positions of the banking sector in Turkey and served more than 5 million customers.
The military conflict significantly affected the economic situation of both countries. The areas affected by the implementation of anti-Turkish sanctions will be described below.
Tourism
By a decree of the President of the Russian Federation, a de facto ban on tourism to Turkey was unilaterally introduced. Given the climatic conditions of the Republic of Turkey, the flow of tourists from Russia to this country has not declined throughout the calendar year. Such losses for the tourism industry in Turkey are difficult to recover. In financial terms, the country lost about $ 10 billion annually.
Construction industry
A special place in the structure of exports of goods from Turkey to Russia is occupied by building materials, which thoroughly won the Russian consumer. But the most painful was the ban on the use of services provided by companies controlled by Turkish citizens. He became painful due to the fact that foreign construction companies have proven themselves for decades from the best side.
The ban on any type of construction services for Turkish companies is a tangible obstacle to the further development of this sphere of activity of Russia as a whole. A mitigating factor remains that the contracts signed with Turkish companies until December 31, 2015 will be fully implemented.
Consequences of Sanctions
Trade relations between Russia and Turkey for many decades had the prospect of development. This fact is confirmed by the indicators of total trade between the two countries according to the results of 2014. The general plans for expanding trade relations envisaged increasing trade turnover until 2023 to a volume of $ 100 billion. And that was real. The realities of today are such that the increase in trade did not happen, but in the face of its significant decline.
The aggravation of political relations also affected the unrealized project on the construction of the Turkish Stream gas pipeline along the bottom of the Black Sea. The results of the introduction of sanctions by the Russian side against Turkey will be tangible at the end of 2016. However, it is already clear today that such actions will allow both parties to diversify the markets for goods and services.
What are the results
The structure of Russia's exports to Turkey has changed, which has affected the price increase. For ordinary Russians, such sanctions initially "spill over" in the rise in price of fruits and vegetables. In addition, such violent actions to eliminate Turkish producers from the food market will contribute to increased smuggling.
A positive point in the imposition of sanctions is the fact that artificially lowering the threshold of competition will allow domestic producers to occupy empty niches of food products. But still there is a precipitate. After all, market conditions should imply lively competition, which creates a healthy and high-quality product.
