Russia plans to retaliate against Turkey for the downing of a warplane by imposing sanctions, cutting economic ties and scrapping major investment projects.
On Thursday, Russian Prime Minister Dmitry Medvedev ordered his government to also draft sanctions against Turkey within two days in response to what he described as an “act of aggression against our country,” AP reported.
The sanctions will include “restrictions and bans on Turkish economic structures operating in Russian territory, restrictions and bans on deliveries of products, including foodstuffs,” as well as on labor and services.
The steps threaten billions of dollars of trade. Russia is the largest destination for Turkey’s exports, and the two countries are bound by plans for a new gas pipeline and strong trade in food and tourism.
As recently as in September, Turkish President Recep Tayyip Erdogan met his Russian counterpart Vladimir Putin and predicted a tripling of bilateral trade to $100 billion in the next eight years. Some regional authorities appeared to be taking matters into their own hands.
In the Crimean peninsula, Deputy Prime Minister Ruslan Balbek told the Tass news agency that 30 Turkish investment projects worth a total $500 million had been frozen. In the southern Krasnodar region, local TV reported that 39 Turkish delegates at an agricultural exhibition were to be deported for visa violations.
Red Tape
All imports from Turkey now face mandatory inspection by Russian customs and not everything is getting through. Even perishable goods have become the victim of red tape after the downing of a Russian warplane by Turkey near the Syrian border, RT reported.
Starting Wednesday, customs have inspected every container of Turkish goods in Novorossiysk, one of Russia’s major Black Sea ports, a dispatcher working there told Vedomosti daily. There was no official guidance from the Russian authorities, he said. It’s within the rights of Russian customs to carry out fastidious inspections of goods. But according to the dispatcher, such inspections in the past were rare and applied to only 5-10% of the goods coming from Turkey.
Prior to the dispute between Russia and Turkey over last Tuesday’s jet incident, the two countries were trading in a ‘green corridor mode’ that implies simpler customs clearance.
Trade between Russia and Turkey from January to September totaled $18.1 billion, a decrease of 20% compared to the same period last year. The volume of Russian imports was $3.1 billion, a drop of almost 40%.
A third of Russian imports from Turkey are food and agriculture. A quarter makes up imports of machinery and equipment, and 17.6% in clothing and footwear, according to the Russian Economic Development Ministry.
Russian Agriculture Minister Aleksandr Tkachev said it wouldn’t be difficult to substitute Turkish fruit and vegetables with products from Morocco, Egypt, Iran, South Africa and Georgia. According to Tkachev, 15% of Turkish products don’t meet Russian standards.
Turkish Stream
One of Russia’s flagship energy projects, the proposed Turkish Stream pipeline, would allow Russia to export gas to the European Union through Turkey and reduce its reliance on transit through Ukraine.
Turkish Stream, which has yet to begin construction, was proposed last year after Putin ended plans for another pipeline to Bulgaria, South Stream, which had run into opposition from EU countries.
Turkey obtains most of its energy from Russia, and while ending those supplies would cause economic pain for Russia, scrapping plans for Turkish Stream could be more expedient, says Ozgur Unluhisarcikli, director of the German Marshall Fund in Ankara.
Also, Russian state company Rosatom was contracted in 2010 to build and operate Turkey’s first nuclear power plant in a $20 billion project, though it is far from complete.
Tourism
The biggest immediate impact on Turkish business may be a plunge in the number of Russian tourists. Turkey’s beach resorts are a big draw for Russians, but the Russian Foreign Ministry has warned against all travel there and leading Russian travel agencies have stopped selling tours to Turkey.
Nearly 4.5 million Russians visited Turkey last year, making them second only to German tourists among visitors to the country. An end to tour sales or restrictions on flights to Turkey could cost Turkey a couple billion dollars or more per year.
Border Restrictions
Russian authorities have begun to turn away vehicles with Turkish license plates at a border crossing with the Caucasus nation of Georgia, the Georgian government said Thursday. Hundreds of Turkish trucks are reportedly stuck in the neutral zone between Russia and Georgia as a result.
The Verkhny Lars crossing is on a transit route for exports from eastern Turkey to Russia over land, with trucks carrying food and consumer goods.
