Special measures, on a plan of Moscow, should minimally affect the economic interests of the Russian Federation, but it will be sensitive for Turkey.
MOSCOW, 1 Jan. Russia from January 1, introduces a ban on imports of a number of species of Turkish agricultural products and prohibits the employment of Turkish companies in some industries of the Russian Federation.
According to members of both governments, these measures will affect the economy of Russia and Turkey, but the other way, the Russian authorities do not see and dialogue with the current leadership of Turkey is no longer going.
Relations between Russia and Turkey until the end of November developed in a productive manner. The presidents of two countries Vladimir Putin and Recep Tayyip Erdogan met on several occasions during the year and expressed the intention in the future to increase the trade turnover between the countries to $ 100 billion with roughly 30 billion in 2014.
But on 24 November, the Turkish F-16 was shot down over the Syrian territory of the Russian bomber su-24. Putin called it a “stab in the back from supporters of terrorists”. Ankara claims that the su-24 entered its airspace. The General staff of the Russian Federation stated that the plane boundary is not crossed, which is confirmed by the data of the Syrian air defense.
Shortly thereafter, President Vladimir Putin issued a decree on measures to ensure national security and the special economic measures against Turkey. On 1 December Prime Minister Dmitry Medvedev signed a decree on specmark pursuant to this decree.
According to him, from 1 January 2016 the Russian Federation imposes ban on the supply of foodstuffs, particularly vegetables, fruits, raw meat and flowers, suspends the visa-free regime with Turkey, limits the employment activities of Turkish citizens in Russia.
According to Deputy Prime Minister Arkady Dvorkovich, one-month delay in the entry into force of specter caused by the need to ensure that retailers are able to switch to new suppliers.
In addition, since December 1, there was a ban on Charter flights between the two countries.
The Ministry of economic development was instructed to 10 December to develop and present to the government a list of organizations that will be able to hire Turkish employees since January 1 (it was later compiled a list of 53 such companies), as well as the list of prohibited for Turkish companies activities in Russia. The day before New year, December 30, Medvedev approved the list.
In the list of prohibited for Turkish citizens industries, in particular, included: construction of buildings and engineering structures, activities in the field of architecture and engineering, research and analysis, activities of travel agencies, hotel management, execution of works and rendering of services for state and municipal needs, the processing of wood.
The effects of inflation for Russia
Introduced special measures on the plan of the government of the Russian Federation, should minimally affect Russia’s economic interests, but it will be sensitive for Turkey.
The head of the Ministry of economic development Alexei Ulyukayev noted that for certain sectors of the Russian economy (the tourist industry, airlines, airport management) these measures are sensitive, however, with regard to food supply — the Russian Federation will be able to balance the situation by diversifying imports.
Limiting the supply on the food market contributes to inflation. The Bank of Russia reported that on a separate selhoztehnik the position dependence of the RF from the supply of Turkey significant: 67% of physical volume of import of apricots, 55% of tomatoes, 45% of the grapes.
In early December, Medvedev declared that, by estimations of analysts, the measures against Turkey will add to inflation in Russia from 0.2-0.5 percentage points. In turn, the Bank of Russia expects that the anti-Turkish limit will lead to faster growth of prices in Russia on food in 2016 by 0.5-1.1 percentage points (when the inflation forecast in 2016 at the level of 6%).
In late December the Ministry of economic development reported that the prices of cucumbers and tomatoes in the past two weeks rose significantly in connection with the upcoming restrictions. Meanwhile, at the same time Federal Antimonopoly service (FAS) Russia has warned manufacturers and suppliers of food about inadmissibility “unjustified” price increases in connection with the ban on export of products from Turkey.
The Russian authorities still have not developed a system of support for Russian enterprises, which suffer from specter in Turkey, the situation is under evaluation and monitoring, told the speaker.
According to experts, the measures taken by Russia will have a greater negative impact on the Turkish economy than on the Russian.
The European Bank for reconstruction and development (EBRD), for example, believes that they can slow the growth of Turkey’s GDP in 2016 by 0.3-0.7 percentage points, while their influence on the Russian economy will be limited. In the Republican people’s party of Turkey has estimated that the damage to the economy because of the crisis in relations with Russia could cost from 8.5 to 12.2 billion dollars a year.
According to first Deputy Minister of economic development of the Russian Federation Alexei Likhachev, the market for the services between the two countries is about 13 billion dollars from Turkey and 4 billion from Russia. In this case, because Russia by its actions is not fully closed the supply from Turkey, we will most likely fold reduction in indicator.
Prime Minister Ahmet Davutoglu has said that Russia’s actions so far have not had a significant negative impact on the Turkish economy but in the long term ensuring damage to both countries. In turn, the Minister for trade and customs of Turkey Bulent Tufekci expressed the view that ensuring will not have a significant negative impact on the Turkish economy and the damage will be minimal, as the trade turnover between the countries has decreased during 2015 at 38-40%.
However, despite this, the government has developed various scenarios of situation development — find new markets for products and has taken action to support producers. To them, in particular, the decision about the delay of payment of credits to companies who are harmed by spacerami from Russia. They will be taken if necessary.
Trade in figures
According to data of the Federal customs service (FCS) of the Russian Federation, the turnover between Russia and Turkey in 2014 decreased by 2.4%, amounting to USD 31.6 billion dollars, while imports decreased by 8,5%, to 6.7 billion dollars. Imports of agricultural products increased by 0.8%, amounting to $ 1.8 billion, with 81% of supplies accounted for vegetables and fruits.
Thus, in 2014 Turkey’s share in the supply of vegetables and fruits accounted for approximately 17% of the total import of these products to Russia.
In this vein, explanations Dvorkovich about the necessity of postponing the entry into force of specter seem quite logical. However, in 2014, Russia already had the experience of abandoning a large part of the food — from Western countries — and the retailers have managed to replace the fallen volumes. Experts and officials as alternative suppliers called China, Egypt, Iran and other countries.
In the Ministry of economic development expects that trade with Turkey will be reduced in 2016 by at least $ 800 million is attributable to sales of some foodstuffs.
These same FCS for the first half of 2015 suggest that the volume of trade between the two countries in this period fell by 19 percent to 12.7 billion dollars, while imports from Turkey to Russia by 38.5%, to $ 2.1 billion.
Hope for the future
“I already spoke in my address (to the Federal Assembly — ed.), and I want to repeat here again: we believe the Turkish people friendly people, and I don’t want to have curtailed relations with the Turkish people. Well, as for current leadership, nothing is eternal under the moon” — said the President of the Russian Federation.
Putin also noted that at the interstate level interactions between Moscow and Ankara is almost impossible, but will be continued on humanitarian. In this case, since the current Turkish authorities are almost impossible to negotiate. According to the leader of the country, Russia does not see any attempts by Turkey to establish relationships.
In turn, Turkish President Abdullah Gul in late December, noted that relations with Russia are ongoing in various areas, stressing that the two countries should break diplomatic relations. He also expressed the hope that Turkish exports to Russia, despite all the problems, will grow. Tufekci also noted that the crisis in relations between Russia and Turkey could be resolved by March 2016.
According to the survey “Levada-Center”, about 81% of Russians consider the Russian retaliatory measures against Turkey adequate, while only 9% hold the opposite point of view. According to the latter, these measures will have a negative impact on the economic situation of Russia and its citizens, will deepen the economic crisis in the country.