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In mid-September, the United States imposed sanctions on five Turkish companies for their trade activities with Russia, alleging that they are selling sanctioned products to Russians, thereby aiding in circumventing Western measures imposed due to the conflict in Ukraine. The sanctioning of Turkish companies comes at a sensitive time, as Ankara has not yet said yes to Sweden’s NATO accession. Turkey’s role as a balancing act has gained significance for both the East and the West in light of the Russian-Ukrainian conflict that escalated in February last year. 

Putin’s favorite Western politician

Recep Tayyip Erdoğan, has managed to find a modus vivendi with Russia since 2016, despite tensions and conflicting interests. They have built a pragmatic partnership in various areas, including defense procurement (e.g., the S-400 air defense missile system), energy cooperation (natural gas deliveries and nuclear power), and regular geopolitical consultations, such as within the Astana process for Syria.

Turkey accomplishes all of this while being part of the Western alliance system, having been a NATO member since 1952 and an EU candidate since 1999. However, since 2016, Turkey has also developed good relations with Ukraine, particularly in the defense industry.

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Notably, among Western leaders—assuming we can consider Recep Tayyip Erdoğan as one—Vladimir Putin, the Russian President, often meets with his Turkish counterpart. Their most recent meeting took place in Sochi in early September, where they engaged in a three-hour discussion.

However, they did not reach an agreement on the main topic of the meeting. Erdoğan failed to persuade Russia to return to the Black Sea grain transit initiative introduced last summer, which Russia has refused to renew since July. This refusal has not only raised global food prices but also affected Turkey, as approximately ten percent of the grain shipped from Ukrainian ports in the past year ended up in the small Asian country.

Nevertheless, both leaders value their cooperation. Putin allowed the rescheduling of Turkish gas payments during the May elections, reportedly granting immediate relief of around $4 billion. In turn, Erdoğan was among the first to seek Putin’s support during the summer Prigozhin uprising.

Western sanctions due to growing cooperation

Apart from geopolitical ties, Turkey has become economically significant for Russia due to Western sanctions. With limited countries left from which Russia can acquire or access Western technology, the importance of Turkey has risen.

As it became clear that last year’s Ukrainian offensive led not to a quick victory but to a prolonged conflict, surrounded by Western sanctions, both countries turned to strengthen their economic ties. Turkey did not join retaliatory measures against Russia.

In May 2022, Russia increased the quota for Turkish trucks from 8,000 to 20,000 annually, and transit shipments from 6,000 to 35,000. The number of Russian freight vehicles also saw a significant surge.

In terms of statistics, Turkish exports increased significantly. It reached $9.34 billion last year, up from $5.8 billion in 2021. This growth appears to continue in 2023, with Turkey exporting $4.9 billion in the first six months of the year, compared to $2.6 billion during the same period the previous year.

Between 2022 and 2023 March, the export of electronic goods increased by 85 percent.

In 2022, more than 1,300 Russian-Turkish companies were established, compared to fewer than 200 the previous year. It’s also worth noting that after the war began, Russian oligarchs, including Roman Abramovich, sought refuge on Turkish shores, while in Europe, they took the floating castles from the other Russian billionaires one after the other.

Russian oligarchs compete with Arab sheikhs in the length (Source: X-platform)

As a result, thousands of properties ended up in Russian hands, mainly in Istanbul and the Antalya region, further inflating the local real estate market.

On the other hand, imports have significantly increased, reaching $58.85 billion, double the previous year’s figure. The import of hydrocarbons has notably increased, partly due to rising prices, and some suspect that Turkish companies may re-export Russian oil, among other things.

Western criticism

Turkey’s role has also garnered criticism from its Western allies. In June of last year, Wally Adeyemo, the U.S. Deputy Secretary of the Treasury, visited Turkey to express the U.S. government’s disapproval.

An American politician of African descent is unlikely to be popular in Turkey. In August last year, Adeyemo warned that some Turkish companies could also be subject to US sanctions if they do business with sanctioned Russian individuals. (Source: X-platform, Millî Gazete)

Under American pressure, Turkish banks eventually abandoned the acceptance of the Russian MIR system in September of last year. Under international pressure, Ankara also pledged not to allow the transit of sanctioned products to Russia, which somewhat complicated the situation for Russian companies but did not result in Turkey joining the sanctions.

Bypassing the regulations is not impossible; the process still involves Turkish imports of products before re-exporting them to Russia, incurring additional costs but also generating extra tax revenue for the Turkish budget. Exports, however, continue to grow, and in April, the United States added more Turkish companies to its sanctions list, with another five added on September 14.

Nevertheless, while the statistics reflect a thriving Turkish-Russian trade, and we can be sure that some benefit greatly from the evasion of sanctions on both sides, it is important to note that the costs are ultimately borne by entire societies.

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The war initially increased geopolitical risks for Turkey, making the Turkish lira even more vulnerable in a situation that was already unfavorable, resulting in a steep decline in 2022 (although problems had begun earlier).

The disruption of grain shipments in the early months of the war led to food inflation, and panic buying occurred in Turkey during the initial weeks. The halt of Ukrainian shipments this year adds to the ongoing inflation.

Finally, the record-breaking imports from Russia basically stem from the increase in the price of energy carriers: the Turks also had to pay the bill, similarly to other European countries that buy Russian gas.

In conclusion, Turkey is striving to adapt to the current situation and benefit from it, given its limited room for influence, despite numerous mediation attempts. However, the nation can afford to balance between the two blocs due to its strategic position.