'Crisis with Russia will not continue for a long time'

'Crisis with Russia will not continue for a long time'

Barçın Yinanç - barcinyinanc@hdn.com.tr
Crisis with Russia will not continue for a long time Russia’s decision to implement sanctions following the downing of its war plane by Turkey does bother businesspeople but there is so much interdependence between the two countries that the current situation is not sustainable, according to a representative of the business community. 

“We are already seeing the signs; this will not continue for long,” Ömer Cihad Vardan, president of the Foreign Economic Relations Board of Turkey (DEİK), told Hurriyet Daily News.

How do you think the crisis with Russia will unfold?

These two countries are important trade partners for each other. But the relations go beyond trade; there are serious reciprocal investments. There are 20,000 Turkish-Russian families. All these show how relations have deepened. You can’t ignore these relations. Russia’s decision to take certain measures against Turkey does obviously bother us. But we don’t think they will last long.

What makes you say that?

The deeply rooted nature of our relations and the fact that we are neighbors… The current situation is not sustainable for a long time. They sell us natural gas; we provide them a serious income. Russia is also dependent on us. When we diversify in the future and our dependency decreases, Russians will have to think seriously, too.

Obviously there is a problem currently. But Russia has published a list and some companies were exempted (from the sanctions). Why? Because they are also dependent. So in a while things will become calm. Our view is to refrain from reactionary steps and that things will improve in a while.

Can you predict when things will improve?

I cannot. But obviously we are in a difficult situation, when we look to Syria, Iraq… But our exports are not limited to these geographies. Our biggest partner is the European Union. It is also our most important ally. So in this sense we need to spend efforts to continue these relations.

But what are the measures to be taken to alleviate the losses stemming from Russia?

Our companies find ways to continue their work. Somehow the water finds its way. We are also working intensively on how to compensate our losses by activating our business councils.

What are the lessons to be taken from the Russian crisis?

If we want to be among the biggest ten economies in the world, we need to forge relations with all the countries in the world, not just with Russia. One dimension of that is politics. Politics should work to open the way for the business world. We need to establish the political framework to increase economic relations. When our governments forge good relations with other governments, that opens our way and facilitates our job.

At one point, the policies of the Justice and Development Party (AKP) governments opened all doors. Now do you think that its current policies have led to the closing of all doors one by one?

I don’t think so. Money is not everything. Some countries’ needs and requirements could be different. If we are not to trade with certain countries, we won’t trade with certain countries. I don’t think this has been caused by the AKP or anyone else. We have a stance, especially on the Syrian issue. We could not abandon Syrians to their deaths. There is a humanitarian dimension. If this brings us to a point that leads to political tension with certain countries, we should not run away from that. If we are doing business with a country, the government does not have to open the way for us. If it can, that facilitates our job. 

But in certain instances, you have unavoidable priorities. If you are talking about the violation of your borders as in the case of Russia, you need to prevent that and you bear the consequences; as the business world, we would bear the consequences.

Let’s then talk about the Middle East. How do you see the situation unfolding?

Trade with Egypt continues at its former level. Just like in the case of Russia, there has been turbulence for a while but now things are going very well. We continue to sell products to Syria. But obviously we don’t want any of the turmoil that is taking place in the region. Who would want the dissolution of Iraq? But our constructors, our businesspeople cannot get their money from Iraq. Because of the war and the drop on oil prices, Iraq faces a budget deficit and our companies have difficulty in getting their receivables.  

Actually Iraq and Syria are in a situation that can be defined as failed states. Are we the cause? We are not, but obviously we are effected. Iraq is a huge market for us. If our relations were to be good with the government, yes, that would have been better. We would like to be in good terms with all countries. But whatever happens, business goes on. It is in the nature of economy.

But what is your projection for the Middle East; it sees the turmoil is here to stay.

This has always been a geography that has been bleeding. We will continue to force our way and maintain the level of our relations or reach even better levels than before. But this also depends of the conditions. While we will continue to work there, we will try to spend our energy in other places. For instance, I told you that our business people cannot get their receivables from Iraq.

Iraqi government took a liquidation decision. What we say is, for instance, let’s use this decision, suspend our problems for now by releasing performance bonds of Turkish contractors there and provide construction services in other places. Let’s not waste energy there. Let’s not be preoccupied by the safety of our workers there or about whether we can get our receivables. Let’s spend our energy in Latin America or the Asian Pacific or other markets. We are working on this. For instance, the Lebanese diaspora is very strong in Africa; our construction sector is very strong. So we went to Lebanon, had all high level meetings and inquired on how we can work together in Africa with the Lebanese diaspora. We got a very positive reaction and so in the coming days, we will explore joint projects in Africa.

So in a way you are saying that the problems in the close-by geography forces Turkish business people to be creative and become a trigger to do business in distant geographies.

Of course. But that does not mean let’s forget and neglect our close geography. We are already here when this geography will recover. But let’s just pause for a moment; let’s not waste too much effort. Let’s go for other geographies because we need to go on with our business. We need to help this country meet its targets. Let’s go and seek our bread from wherever it comes. In years, Turkey has learned to import and export.

How about Iran? Prior to the crisis with Saudi Arabia, many thought the possible reintegration of Iran into the world economy could have provided a good opportunity for Turkish businesses.

I would have said the same thing, before and after the Saudi-Iranian crisis. Iran is an important market both for us and the world. But it has many risks as well. As DEİK, we are working on an analysis to see how different sectors will be affected. The automotive sector could be positively affected, for instance, while that might not be the case for the cement sector. In addition, Iranians are very nationalistic; we need to question how they will treat those coming from outside. It is an important market but not one you can easily penetrate.

Who is Ömer Cihad Vardan?

Crisis with Russia will not continue for a long time

Ömer Cihad Vardan was born in the northwestern province of Sakarya in 1962. He received his bachelor’s degree in industrial engineering at Istanbul Technical University (İTÜ) and completed his master’s degree in manufacturing engineering at Ohio State University.

Following his return to Turkey, he launched his career as a manufacturing engineer responsible for CAD/CAM processes of Stringer Missiles at the Kale Group. Since 1991, he has been the partner and the general manager of his family business, Çukurova Heating Systems.

He has chaired many non-profit private sector organizations such as the Economic Development Foundation (İKV), the Independent Industrialists’ and Businessmen’s Association (MÜSİAD) and the Natural Gas Equipment Industrialists’ and Businessmen’s Association (DOSİDER). He has also been a board member of the National Human Rights Institution of Turkey and is currently serving as a board member on the Turkey-U.S. Business Council (FSECC). 

In September 2014, Vardan was appointed as the president of the Foreign Economic Relations Board of Turkey (DEİK).