Russia is Becoming One of the Priority Countries for Turkey Today
In recent months, Turkey has been in the focus of public attention: Ankara is trying to mediate in the Ukrainian-Russian conflict, is actively engaged in the problem of exporting Ukrainian grain, is strengthening its presence in the Transcaucasian region …
How are trade and economic relations between Russia and Turkey developing today? Capital Ideas spoke about this with Svetlana Babenkova, Candidate of Economic Sciences, Senior Researcher at the Center for Arab and Islamic Studies of the Institute of Oriental Studies of the Russian Academy of Sciences.
What does Russia mean for Turkey today?
Russia is one of the priority countries for Turkey, one of the largest investors in the Turkish economy, and one of its main trade and economic partners. Suffice it to say that last year the mutual trade turnover amounted to $30 billion. This is an order of magnitude higher than with Egypt, the UAE, Israel, or Iran, for example.
Are the Turks now trying to fill niches that have become vacant after the departure of Western companies from the Russian Federation?
Of course – this is evidenced by the fact that exports from Turkey have increased by 46% compared to last year, and in July they even grew by 75%. The most obvious reason is the increase in exports of goods to Russia. Russia’s share in Turkey’s total exports in July was 3.9%, compared with 2.6% 12 months earlier. According to updated data from the Turkish Statistical Institute, from May to July, Turkish exports to Russia amounted to $2.04 billion, which is $642 million more than in the same months of 2021. The $313 million increase between July 2021 and July 2022 was the biggest for any country to which Turkey exports.
In addition, Turkey is now becoming increasingly important for Russia’s trade with other foreign countries. After Western shipping companies such as Maersk, Hapag Lloyd, CMA CGM, and MSC – as well as large freight forwarding companies – mostly stopped shipping to Russia and at best deliver food and humanitarian goods here, Turkish transport companies are filling this niche. This makes Turkey an important hub for freight traffic to and from Russia. According to the Turkish business newspaper “Dünya,” more and more Russian foreign trade companies and freight forwarders are opening offices in Turkey. This underscores the country’s new importance as a hub of trade with Russia.
Why does Turkey, unlike many other NATO countries, not follow the United States “on a short leash” – but shows obstinacy, seeking interaction with Russia?
Turkish President Recep Tayyip Erdogan is very independent; he does not want to see his country as a puppet state, which leads to Ankara’s disagreement with Washington on many issues. We should not discount the ambitions of Turkey – at one time the Ottoman Empire – which have survived to this day. Whether this is good or bad is a question for political scientists, but it is clear that Erdogan as an independent politician is not a cause of delight in the United States – including because he intends to build relations with Russia, which is a good market for him. It is not profitable for him to go against Russia, either economically or politically. It is significant that Turkish Finance and Treasury Minister Nureddin Nabati recently said that Turkish business circles should not be concerned about the US threat to impose secondary sanctions against Ankara. He stressed that Turkey “intends to develop trade relations with neighbors in various fields – especially tourism – within a framework that is not subject to sanctions.”
Which Russian goods are most in demand in Turkey?
Last year, the bestsellers were, surprisingly, millet and tobacco – these positions had the strongest markets. However, mineral products, agricultural products, ferrous and precious metals, chemical products, and machinery were also exported.
What does Turkey answer that it can supply to Russia as parallel imports?
Turkey can supply a lot of things: for example, textiles or auto parts. But it should be kept in mind that the Turks cannot supply us with some high-tech things. Thus, deliveries for parallel imports, even if the goods are marked “made in Turkey,” will be carried out until Russia implements an import substitution program. Ankara intends to compete with China, at least with regard to the supply of mass market goods to Russia, primarily textiles. In fact, we must admit that Turkey also has good machines and equipment, including for wood processing and metalworking.