What's behind Turkey-Russia de-escalation?
- By Olga Sorokina
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E-mail CRI, August 16, 2016
The meeting in St. Petersburg of Russian president Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan has been interpreted by Russian political experts as a sign that Ankara can't afford the "trade war" and seeking a new political alliance with Moscow amid frustration with Washington's "lack of cooperation".
"The reason for Erdogan to go for it now could be, firstly, the impact of Russian sanctions, and secondly, the deterioration of relations between Turkey and the United States, the EU due to the refugee problem," explains the chief researcher of Russia's World Economy and International Relations Institute Viktor Nadein-Rajewski. According to the expert, the same reasons may explain the recent reconciliation between Turkey and Israel in June after six years of diplomatic confrontation.
"Erdogan's decision was made under the pressure from Turkish business circles and the potential economic losses, namely in the hospitality business and in agriculture," explained professor of The National Research University Higher School of Economics Alexei Portansky.
The two countries' leaders met for first time in Russian city of St. Petersburg on Aug. 9 since the diplomatic relations deteriorated last November over the Turks' shooting down of a Russian military aircraft near the Syrian border.
At that time V. Putin's reaction was fierce - he called the downing of the Russian jet a "stab in the back by the terrorists' accomplices." His Turkish counterpart R.T. Erdogan described Putin's comments as a "huge mistake" in an interview with CNN.
In fact, Turkey was one of the few business partners Russia could rely on the international scene.
Turkey did not join Europe and the United States in imposing economic sanctions on Russia over the crisis in Ukraine. On the contrary, Turkey was planning to boost the volume of trade with Russia threefold to $100 bln by 2020.
Following the incident with the Russian plane, the Moscow has imposed sanctions on food imports from Turkey. Moscow also banned the country's tour operators from sending Russian citizens to Turkey, diminishing one of the largest markets for Turkish tourism (Russia has historically been the second largest tourist market for Turkey, following Germany).
According to Russia's business information agency RBC, the political confrontation took a serious toll on the Turkish economy. December 2015, Turkish Deputy Prime Minister Mehmet Simsek was quoted as saying that Russian sanctions could cost the Turkish economy 0.3-0.4% of GDP, or $9 bln. Russian Ambassador to Turkey Andrei Karlov in an interview with TASS news agency claimed that the damage could exceed $11 bln with the greatest loss in tourism and agricultural sectors.
As a result of the political confrontation, the trade turnover between Russia and Turkey in 2015 amounted to $ 23.4 bln, and for the first four months of 2016 the trade volume fell to $4.8 bln. According to the Russian Federal Customs Service (FCS), Russian exports to Turkey decreased by 43%, imports from Turkey decreased more than 50%.
Simultaneously, the political instability in Turkey weighed on country's economy, with Turkish lira kept falling against the US dollar, making it challenging for Turkey to pay the external debt. According to IMF, Turkey foreign debt amounts to 52% of GDP while gross financing needs around 25% of GDP every year. In 2015 Turkey's GDP growth rate was 3.8%, way below the 9.1% it experienced in 2010.
However, as a matter of fact, both Russia's and Turkey's economies didn't do too well in 2015 and can't afford another "trade war".
Russian economy has been hit hard by the slide in oil prices. Western sanctions on Russia over its involvement in the Ukraine crisis also took their toll. According to an IMF survey, Russia's gross domestic product (GDP) fell -3.7% in 2015, the GDP decline in 2016 is projected at -1.5%.
The meeting, which Russian Komsomolskaya Pravda morning daily described as "historic", now projected to grow into mutual fellowship. Russia's Kommersant newspaper wrote that the meeting between Erdogan and Putin had ended the crisis and removed tensions on bilateral relations.
Besides from the obvious economic benefits in restoration of the trade partnership, the reconciliation between two countries has been interpreted in several Western media outlets as a sign that Ankara was seeking a new political alliance with Moscow, amid a certain disappointment with the West.
Erdogan has sharply criticized Western countries for taking a hesitant approach against the coup attempt. Putin was among the first world leaders to express support for the Turkish government.
Ankara has repeatedly said the coup attempt had been organized by followers of U.S.-based Fetullah Gulen and the Gülenist terror cult. But Turkey, as Western media puts it, "perceives a lack of enthusiasm on the part of the United States" to extradite for trial Fethullah Gulen. The issue is greatly damaging the U.S.-Turkish relations.
In the case of Russia, the country sees the banning of some Russian athletes from participation in the Summer Olympics and the entire Russian team ban from competing in the Paralympic Games in Brazil, as part of a general western cold-shouldering approach. On social media many Russians call it "another Cold War".
These events have since worsened relations between the West and Russia and between the United States and Turkey, thus the meeting between Russian and Turkish leader represents a setback for U.S. interests in general.
Commenting on the recent meeting of two leaders, Russian news agency TASS said that the talks had much more strategic importance than assumed.
Olga Sorokina is a former video producer at Russia's First National TV Channel and columnist for the BRICS magazine. The author holds a master's degree in Global Business Journalism from Tsinghua University.
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