Trade Relations Between Turkey and Russia Term Paper

Introduction

The Russia-Turkish connection is mainly driven by trade and economic relations. Despite the ongoing sanctions from Western countries, Russia has emerged as one of Turkey’s most important trade partners. The country exports refined petroleum, coal briquettes, and wheat, essential commodities to many industries and countries. After the illegal Russian invasion of Ukraine, the Western states imposed heavy sanctions to punish unlawful acts. Turkish President Recep Tayyip Erdogan has been in constant negotiations with Vladimir Putin of Russia to expand cooperation in the energy and economic sectors. A close financial relationship with Russia has led to further rifts with Western countries. The immediate trade relations have benefited the two countries and facilitated the growth of major industries that rely on specific raw materials, such as wheat and refined crude oil, from Russia. After invading Ukraine, most Western and Eastern nations distanced themselves from Russia and imposed heavy sanctions; Turkey remained neutral and continues to have close economic ties with the country.

Economic Ties Between Turkey and Russia

Turkey and Russia continue to have positive economic ties amid the ongoing Russia-Ukraine war. The excellent association is a puzzle to many Western nations. Some experts believe that Erdogan lacks any alternative hence the need to maintain a good correlation. The Turkish economy has been failing hence the need to be boosted; on the other hand, Putin seeks new options to work around the imposed sanctions. Despite being a NATO member, Turkey has not joined Western penalization¹. It is the only remaining connection between the West and Russia hence an important figure in the success of both economies. Russian companies have opened offices in Turkey and are facilitating the initial import of goods on behalf of Moscow². The Sochi meeting lead to a special agreement that further promoted the excellent trade ties the two countries are experiencing.

Russia-Ukraine War

The Russo-Ukrainian war has been ongoing since 2014 and recently escalated when Russian troops invaded Ukraine. The two countries at war are among the largest exporters of crude oil, wheat, and corn³. Both countries provide other additional commodities that are now not accessible, including palladium and titanium. The conflict has triggered distress in the financial markets, thus increasing the uncertainty of the global economic recovery. Ukraine is a top producer of wheat, sunflowers, and corn, vital raw materials in consumer goods⁴. Russia, on its side, is a leading gas and oil producer and the world’s largest wheat exporter, accounting for about 20 percent of the global trade⁵. As a result of the war, sanctions have been imposed limiting the export or import from Russia; the conflict has also disrupted trade operations. Turkey has been at the forefront of trying to broker a deal between the West and Russia to facilitate the smooth trade of vital products.

Turkey as the Mediator Between Russia and the West

Ankara is currently in an awkward position; it has deep military and economic ties with Russia and is a member of NATO. Turkish President, Erdogan, has been casting himself as the sole mediator between Ukraine, the West, and Russia; Ankara hosted the first two Russo-Ukrainian councils⁶. Turkey and Russia have significant economic ties, further facilitating the excellent relationship the two enjoy. During the Sochi Summit, Vladimir Putin emphasized the critical role Erdogan plays in ensuring the supply of gas was uninterrupted. Europe is a region with much dependence on Russian natural gas and oil; hence the move to replace all the collection is impossible⁷. Currently, the energy relations between the European Union (UN) and Russia are in crisis. Turkey has a unique bilateral relationship with the EU and Russia, which has resulted in the growth of its geopolitical importance within the region. The country stands out as one of the candidates with a severe interest in initiating mediation and preventing the conflict from escalating.

Sochi Agreement

On August fifth, a meeting was held in Sochi between Erdogan and Putin, where the two agreed on boosting economic ties. The assembly emphasized construction industries, agriculture, and transport network; the move was successful despite the ongoing regional and global tension. The two counterparts agreed to boost economic and energy corporations and build up trade. They also asserted the need to ensure the execution of the Istanbul agreement on the export of grain from Ukraine together with direct exports of Russian grain. Vladimir Putin praised the role of Ankara in the transit of Russian gas to Europe, citing that the Westerners should be thankful. Erdogan had negotiated and implemented the grain agreement in Istanbul under the supervision of officials from the UN, Turkey, Ukraine, and Russia. Putin appreciated the efforts and further stated the deliveries had begun. The agreement was also advantageous to Russia as it could export its fertilizers and grain despite being sanctioned, thanks to Turkey’s intervention. With trade relations commencing, the West also benefitted as it acquired the required merchandise.

Beneficiaries of the Closer Economic Ties

The close economic ties between Turkey and Russia have benefited the Western Nations and the growth and development of the local economies of the two nations. After the August fifth meeting between Putin and Erdogan in Sochi, Russian foreign policy tactics shifted drastically. Moscow views Ankara as a key transactional partner that can help boost Russia’s prospects toward the West⁸. Turkey, in turn, is eager to provide Moscow with the much-needed assistance with an expectation of substantial privilege in return. With the resumption of wheat, corn, and crude oil export, the affected industries, such as the baking and petrochemical companies, will finally attain the raw materials required⁹. Higher production and cheap access to the materials will result in low pricing for the commodities; in turn, the economy begins to stabilize. Turkey needs to improve its geo-economics and geopolitical position in the region, and this can only be possible if it maintains a good partnership with Russia.

Turkey as a Beneficiary

Turkey is emerging as a significant swing player in the ongoing Russo-Ukrainian conflict. There is close involvement between Moscow and Ankara in the growth of economies between the two nations. Cooperation has been deepened between the two countries despite western sanctions imposed on Russia. Turkey has increased the purchase of crude oil from Moscow while other European Nations have slowed their trade. The conflict has underlined its strategic position; it controls the straits linking the Mediterranean with the Black sea. Ankara has managed to preserve good accord with Kyiv and Moscow; this has been possible without the need to impose crippling sanctions on Russia¹⁰. President Erdogan has managed to take up the role of a mediator allowing the country to position itself in the middle of the conflict between the West, Ukraine, and Russia¹¹. A path that does not threaten the link with the EU or Russia has been carved. It presents Ankara with many opportunities to stabilize its economy.

Russia as a Beneficiary

The good economic relations between Russia and Turkey have helped circumvent the inflicted sanctions by the West. Turkish Banks started using the Russian Mir payment system after the Sochi meeting. As a close and critical trading partner, Turkey gets most of its supply from Russia. Even after the sanctions got implemented, Turkey drastically increased its crude oil shipments from Russia. As witnessed in the recent encounter between Erdogan and Putin, the good relations facilitated the attainment of a deal that allowed the exporting of wheat and corn. Russia was also allowed to export its grain to prevent a global food crisis. Russian companies have been seeking to resume business with Europe, with Turkey as the third party¹². Major firms have developed offices in Turkey and conduct trade on behalf of Moscow.

Agricultural Industry

The agricultural industry is one of Turkey and Russia’s most beneficial commerce. Good economic ties between the two countries have facilitated the trade of essential commodities such as wheat and other agricultural products. An agreement was signed between Turkey, the EU, and Ukraine to allow the export of essential products such as grains and corn. The move was adopted to limit any potential threat resulting in a global food crisis. With Ankara and Moscow having a good association, Turkey gets to export farm produce, such as edible vegetables and fruits, to Russia. Wheat and sunflower are the most exported agro-products from Russia and Ukraine¹³. With good economic ties, the trade of this actual merchandise is facilitated. After invading Ukraine, Moscow was highly sanctioned, which resulted in import restrictions. In return, Russia had to seek additional sources for the highly needed products; Turkey was ready to supply. In April, the ban, which limited the import of various farm products from Ankara, was lifted¹⁴. High sales result in significant profit margins, enabling the industry’s growth.

Natural Oil and Gas Industry

Oil and natural gas are essential commodities that facilitate the growth of all the other industries. The restrictions imposed on Russia limited the export of commodities to European countries. Turkey remained loyal and continued purchasing merchandise from the sanctioned Russia. It increased its annual purchase to two hundred thousand barrels from ninety-eight thousand during the same period in the previous year. Turkey relies heavily on Russia’s energy supply and could not allow the ongoing war to affect good economic ties¹⁵. With most Russian companies banned from conducting international trade, they tend to sell to Turkish firms who resale them to the outside world. Turkey has played a significant role in helping Russia overcome the sanctions. Despite limiting the purchase, Europe is still highly dependent on natural oil and gas¹⁶. It became clear when Putin stated in his speech at Sochi that they needed to be thankful that Turkey made the trade possible. Russia benefits from merchandise sales; it is among the top natural oil and gas producers, supplying various countries worldwide.

Impact of Turkey’s Actions

Turkey’s actions to continue doing trade with Russia are purely economic. The actions taken by Turkey are not, in any case prolonging the war between Russia and Ukraine. Turkey looks forward to protecting its security interests and its economy. The country is highly dependent on goods from Russia and can not risk being unable to access them. Most of its crude oil is purchased from Russia, which averages about 2.5 billion dollars¹⁷. Ukraine and Russia are important trade partners to Turkey; apart from the high crude oil import from Moscow, wheat imports from Kyiv and Moscow account for 80 percent of total imports by Turkey¹⁸. Ankara continues to support Ukraine militarily but also prevents antagonizing Russia. Russia is one of the largest gas suppliers and export partners to Ankara; additionally, it is Ukraine’s largest foreign investor hence the good economic ties. Turkey justifies its non-participation in the sanctions against Moscow with these security and economic considerations.

Conclusion

Turkey continues to have close economic ties with Russia during the ongoing conflict with Ukraine. President Erdogan believes limiting trade will severely affect the country’s economy. Ankara remains to be part of NATO but does not take part in imposing restrictions against Moscow. The Russo-Ukrainian war destroyed the world economy as the two countries were big suppliers of essential commodities such as wheat and crude oil. Due to its strategic position and good economic ties with both countries, Turkey acts as a mediator to prevent further repercussions. In the recent Sochi meeting, an agreement was signed allowing the transportation of grain and corn from the port of Odesa and Russia. Russia and Turkey are two primary beneficiaries of their sound economic ties. In turn, the agricultural and oil and gas industries are also gaining as trade continues. Turkey’s actions to continue business with Russia are for its economy and do not lengthen the war.

Bibliography

Dalay, Galip. “Deciphering Turkey’s Geopolitical Balancing and Anti-Westernism in its Relations with Russia.”International and Security Affairs 35, no. 1 (2022): 1–8.

Hellegers, Petra. “Food Security Vulnerability Due to Trade Dependencies on Russia and Ukraine.”Food Security 1, no. 1 (2022): 1–7.

Lesage, Dries, Emin Daskin, and Hasan Yar. “The War in Ukraine and Turkey’s Hedging Strategy Between the West and Russia.” Gies Occasional Paper 1, no. 1 (2022): 1–6. Web.

Liadze, Iana, Corrado Macchiarelli, Paul Mortimer-Lee, and Patricia Sanchez Juanino. “The Economic Costs of the Russia-Ukraine Conflict.” National Institute of Economic and Social Research 32, no. 1 (2022): 1–9. Web.

Mazzucco, Leonardo. “Turkey’s Delicate Balancing Act: Mediating between the West, Russia, and Ukraine.” Trends Research. Web.

Novianto, Bartolomeus. “European Union Sanctions Against Russia as Impact of Russia-Ukraine Conflict.” International Journal of Multicultural and Multireligious Understanding 9, no. 6 (2022): 501–510. Web.

Ozdemir, Sinem. “Turkey, Russia Partnership Essential to Both.”Deutsche Welle.

Schislyaeva, Elena, Irina Evgrafova, Nadezhda Butakova, and Yuri Mishalchenko. “The EU – Russia – Turkey Energy Triangle: Legal and Economic Conditions of Gas Transportation via the Turkstream Pipeline.”Transportation Research Procedia 63, no. 1 (2022): 1984–90.

Footnotes

1. Galip Dalay, “Deciphering Turkey’s Geopolitical Balancing and Anti-Westernism in its Relations with Russia,” International and Security Affairs 35, no. 1 (2022): 2, doi:10.18449/2022C35.
2. Petra Hellegers, “Food Security Vulnerability Due to Trade Dependencies on Russia and Ukraine,” Food Security 1, no. 1 (2022): 3. doi:10.1007/s12571-022-01306-8.
3. Hellegers, “Food Security,” 5.
4. Dries Lesage, Emin Daskin, and Hasan Yar, “The War in Ukraine and Turkey’s Hedging Strategy Between the West and Russia,” Gies Occasional Paper 1, no. 1 (2022): 2. Web.
5. Lesage, Daskin, and Yar, “Turkey’s Hedging Strategy,” 4.
6. Iana Liadze et al., “The Economic Costs of the Russia-Ukraine Conflict,” National Institute of Economic and Social Research 32, no. 1 (2022): 8. Web.
7. Leonardo Mazzucco, “Turkey’s Delicate Balancing Act: Mediating between the West, Russia, and Ukraine.” Trends Research. Web.
8. Mazzucco, “Turkeys Delicate Balancing Act.”
9. Mazzucco, “Turkeys Delicate Balancing Act.”
10. Mazzucco, “Turkeys Delicate Balancing Act.”
11. Dalay, “Relations with Russia,” 6.
12. Bartolomeus Novianto, “European Union Sanctions Against Russia as Impact of Russia-Ukraine Conflict,” International Journal of Multicultural and Multireligious Understanding 9, no. 6 (2022): 502, doi:10.18415/ijmmu.v9i6.3920.
13. Sinem Ozdemir, “Turkey, Russia Partnership Essential to Both.” Deutsche Welle. Web.
14. Elena Schislyaeva et al., “The EU – Russia – Turkey Energy Triangle: Legal and Economic Conditions of Gas Transportation via the Turkstream Pipeline,” Transportation Research Procedia 63, no. 1 (2022): 1986, doi:10.1016/j.trpro.2022.06.220.
15. Schislyaeva et al., “Legal and Economic Conditions,”1988.
16. Ozdemir, “Turkey, Russia Partnership.”
17. Novianto, “European Union Sanctions Against Russia,” 508.
18. Hellegers, 2.