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Russia Strikes Back At Turkey By Cutting Business Ties

puerRussia plans to retaliate against Turkey for the downing of a warplane by imposing sanctions, cutting economic ties and scrapping major investment projects.

Since the plane was shot down Tuesday in disputed circumstances on the Syria-Turkey border, Russia has already restricted tourism, left Turkish trucks stranded at the border and announced the confiscation of large quantities of Turkish food imports.

On Thursday, Russian Prime Minister Dmitry Medvedev ordered his government to also draft sanctions against Turkey within the next two days in response to the downing of the Russian Su-24, which he described as an “act of aggression against our country.”

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.

Overall, the nosedive in relations threatens billions of dollars of international trade, as well as further complicating the Syrian conflict.

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.

Any reaction could exacerbate both countries’ economic troubles. The IMF predicts Russia’s economy to shrink by 3.8 percent this year, while the Turkish currency has slumped in value in 2015.

Here’s a look at what’s at stake.



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.

However, Turkish Stream has also become bogged down with political and economic issues in Russia, Turkey and potential EU customer nations.

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.

“Russia would not be able to turn away from its commitments such as providing gas, but if there is no commitment, then it could stop everything,” he said.

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.

Both Turkish Stream and the nuclear plant could become part of a sanctions package, Russian Economic Development Minister Alexei Ulyukaev said Thursday, adding that Turkish Stream was “no different to any other project.”



The biggest immediate impact on Turkish business from the breakdown in relations with Russia 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.

Restrictions on flights between Russia and Turkey are being considered, Ulyukaev said Thursday. In recent months, Russia has also ended flights to Ukraine and Egypt.

Nearly 4.5 million Russians visited Turkey last year, making them second only to German tourists among visitors to the country. Given that many Germans who travel to Turkey are ethnic Turks visiting relatives, Moscow-based analyst Tom Adshead of Macro Advisory said that Russians may be the largest contributors to the Turkish tourist industry.

An end to tour sales or restrictions on flights to Turkey “will definitely play through into reduced tourism receipts for Turkey from Russian tourists, which I think could be anything in the range of a couple of billion dollars a year, possibly even more,” said Adshad.

Turkey stands to lose out heavily if Russia ends visa-free travel between the countries, at that could redirect some Russian tourists to domestic destinations like Crimea.



Since Tuesday, there has been a flurry of Russian restrictions on ostensibly unsafe Turkish food and calls to patriotic buyers to avoid Turkish produce.

The consumer safety agency said Thursday it had confiscated more than 800 kilograms of Turkish food this year for “non-compliance with quality and safety requirements.” Clothing, furniture and cleaning products are also unsatisfactory, the agency said.

Separately, six shipments of Turkish chicken meat totaling 162 tonnes (178 tons) have been held up at a border crossing near Kaliningrad due to problems with their documentation, local authorities said Wednesday. In the past, Russian food safety authorities have often been accused of selectively blocking imports from various countries for political reasons.

Buying Turkish food is unpatriotic, according to Gennady Onishchenko, a former food safety chief who now advises the prime minister. “Every Turkish tomato bought in (supermarket chain) Auchan or at the market is a contribution toward the next rocket to be fired at our guys,” Onishchenko was quoted saying by the RIA Novosti agency.

Turkish fruit and vegetables are commonplace in Russian stores, especially since Putin blocked all imports of EU produce last year in response to Western sanctions. Previous import restrictions have been followed by sharp rises in food prices on the Russian market.



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.

Putin’s spokesman, Dmitry Peskov, insisted Thursday there is no ban on Turkish goods but said customs officials were inspecting them carefully “due to various reasons” including a possible terrorist.

“This is only natural in the light of Turkey’s unpredictable actions,” Peskov said.


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