Putin and Erdogan agreed on the tomatoes

Putin and Erdogan agreed on the tomatoes

Russia and Turkey have agreed to lift restrictions in trade relations between the two countries. This was stated by President Vladimir Putin after talks with his Turkish counterpart Recep Tayyip Erdogan, reports .

“You asked when you can say that the limitations that arose some time ago, removed — this I can say today,” — said Putin, speaking at a press conference.

He emphasized that any limitation of “destroying the economy” and ultimately hurt by the Russian manufacturers, and therefore decided to cancel the restrictive measures in areas such as construction, textiles, services, the use in Russia of Turkish labour and so on.

At the same time, the ban on deliveries to Russia of Turkish tomatoes is to remain in power, Putin said, explaining the importance of maintaining the interests of farmers.

“Our farmers have taken significant amounts of loans and credit. It is quite a long production cycle associated in our climatic conditions with the construction of greenhouse structures, and so on. For this type of goods, restrictions do remain”, he concluded.

In addition, because of the threat of terrorist attacks has not yet decided to cancel the visa regime of entry to Russia of Turkish citizens. However, Putin admitted the possibility of easing the regime of entry for those Turkish experts, “who often happens in our country on business, business.”

Turkey before the embargo was the largest supplier of tomatoes to Russia. According to the FCS, at the end of 2015 the share of Turkey accounted for almost 53% of total imports of tomatoes in money terms and 54% in volume. In 2015 from Turkey was delivered 292,8 thousand tons of tomatoes for a total of $the 281.1 million in addition, Turkey was the largest supplier of grapes, and every fifth Mandarin that entered the country were also grown in Turkey.

The report, jointly prepared by experts of the Gaidar Institute and the Russian Academy of national economy and public administration (Ranepa), it is noted that the cost of grown in Russia of imported tomatoes is significantly higher, which leads to serious losses for consumers.

“The Russian consumer is in a very severe disadvantage. First, the price in the store exceeds up to three times the price at which tomatoes imported to Russia. Secondly, the selling price of Russian greenhouses is much higher than the average price of imported tomatoes calculated from all importers. Thirdly, if I now continue the import of tomatoes of protected soil from Turkey, their price would be lower than deliveries to Russia from other countries,” the report says.

Russia imposed a food embargo against Turkey after the November 2015 Turkish fighter jets shot down a Russian su-24 bomber, which carried out a combat mission in Syria. Subsequently, on the background of a gradual warming of relations — part of the embargo was lifted: onion, cauliflower, broccoli and a number of other products from Turkey import is allowed, but a ban on the import of tomatoes preserved.

In mid-March 2017 Turkey refused to allow Russia to import duty-free into its territory grain, corn and sunflower meal, which made the supply of agricultural products unprofitable. Minister of agriculture Alexander Tkachev later called the decision by Turkish authorities to “stab in the back”.

“The share of exports to Turkey is of the order of 10% and above is severe blow, but I don’t want to say that without Turkey, we do not live… the position of the government: we the tomato market is not going to open”, — said the Minister.

According to professionals, the Academy and experts of the Gaidar Institute, Russia’s losses due to the imposition of duties on grain supplies to Turkey amounted to $1.3 billion to $1.5 billion, However, the Vice-President of the Russian grain Union Alexander Korbut said at the time that says these figures are “too emotional”. In his opinion, the whole import of selhozprodukti in Turkey is estimated at $1.5 billion and to speak about its complete loss due to the introduction of Turkey’s customs duties on certain products is incorrect.

Recep Tayyip Erdogan and Vladimir Putin. Sochi. May 3, 2017

Photo: Alexei Nikolsky / TASS

Commenting on the results of the meeting of Putin and Erdogan, Deputy Prime Minister Arkady Dvorkovich explained that the agreements reached during the negotiations of the agreement also include the removal of restrictions on delivery to Turkey of Russian grain. “All the individual constraints of the parties are removed, there are nuances in terms of when, what to do, because something can be solved in one day, what a week, what a month, but in General all restrictions, except common visa regime and special arrangements for tomatoes, which are still to be removed. The agreements include grain,” — said Dvorkovich, answering the question, removed any restrictions on export of Russian grain to Turkey.

Deputy Prime Minister also said that restrictions on deliveries to Russia of Turkish tomatoes can be stored for three to five years, but will be flexible. The import of tomatoes may be allowed during certain periods of the year when Russian manufacturers are experiencing a decline in production, said Dvorkovich.

Vice-President of Russian grain Union (RGU) Alexander Korbut in conversation with noted that the removal of restrictions on the supply of Russian grain will have a positive impact on the market. However, he reminded that most of the supplies of this year’s harvest has already been done. At the time of imposition of duties Turkey has already bought from Russia for about 2.1 million tons of wheat, was Vice-President of the Russian grain Union, the company informed. “Now we will talk about the conditions and terms of deliveries of grain,” — said the expert.

Turkey is the second after Egypt, the largest buyer of Russian grain. In Egypt since the beginning of the agricultural year (started July 1, 2016) sold 5.3 million tonnes of grain, including 5.2 million tonnes of wheat. According to the Federal center for evaluation of safety and quality of grain, Turkey by 3 April, purchased 4.9 million MT of Russian grain, including 2.3 million tons of wheat.

The representative of the press service of the Ministry of construction said that the restrictive sanctions against Turkish construction companies continue to operate and still orders of repeal to the Ministry is not received.

Almost immediately after the imposition of sanctions in 2015, the head of the Ministry of construction Mikhail Men said that the introduction of sanctions against Turkish builders, as well as their abolition will have no impact on the projects on construction of mass housing in Russia. But despite sanctions, Turkish construction companies in Russia completely stopped. In December 2015, it became known about the preparation of the white list of the Turkish developers who will continue to work in Russia, wrote Kommersant. In their number were the largest Turkish developers, including Enka, IC Ictas, Renaissance Construction, Ant Yapi and others. As said the publication of one of the Federal officials, “simultaneously to refuse the services of Turkish developers is impossible.” According to his calculations, total annual turnover of construction companies from Turkey on the territory of Russia amounted to 30-50 billion rubles, of which 70% — revenues from contract work, the rest of the development.

As recalled by Denis Sokolov, partner at Cushman & Wakefield, about 80% of the business centers of class A in Moscow was built by Turkish builders. However, their activity declined in the first place is not because of sanctions but because of the crisis that began in 2014, and the ensuing drop in demand. “Sanctions against the Turkish builders were more formal than real. At the same time, we cannot say that they were not invisible. They are primarily expressed in the fact that in relation to Turkish developers acted a more thorough audits, and many employees of Turkish construction companies from among the engineering staff couldn’t get a Russian visa, — says Sokolov. — At the same time, cooperation with Turkish companies has declined primarily state-owned companies, while other businesses continued to work with them. So, for example, did the primary owner of the retailer “Magnit” Sergei Galitsky, whose stadium in Krasnodar was built by Esta Construction”.

According to the CEO of the investment company Key Capital Sergey Kamluk, after the imposition of sanctions, some Turkish companies rushed to curtail their business. “But, enter legal entity in the Russian jurisdiction, they gradually began to come back,” he added.