If tension rises further and Russia cuts gas exports to Turkey
The tension that started after Turkey shot down the Russian jet on Nov. 24 is not de-escalating. On the contrary, it is continuing to rise. The side increasing the tension is Russia, which has imposed a series of economic measures that have started to affect Turkey. There is now anxiety that Russia will continue to escalate tension and perhaps expand measures to the energy sector.
Economy executives met after Russia’s most recent decisions and started reviewing their options. They concluded that in the event that Russia cuts natural gas exports to Turkey, Turkey will have little room for maneuver.
Most recently, it was hoped that President Recep Tayyip Erdoğan would meet with Russian President Vladimir Putin at the climate summit in Paris on Monday and take joint steps to moderate the tension, but Russia has shattered those hopes.
Let alone de-escalate the tension, Putin has opted to further escalate it. He claimed that Turkey hit the Russian plane so that its oil purchases from ISIL would not be affected. Erdoğan, who had been trying to use a moderate discourse to help relieve the tension, started to toughen his language after Putin’s words. Just like he acts in domestic political polemics, Erdoğan vowed to resign if Putin can prove his claims. If he cannot, then Putin should resign.
While Moscow continues to demand an apology and compensation from Turkey, Prime Minister Ahmet Davutoğlu has firmly ruled out an apology, again killing off hopes of rapprochement.
Sectors to be affected
While Russia has taken concrete measures in tourism and investments, in stopping food and agriculture imports from Turkey, it says these sanctions will only go into effect in one month - in order to prevent prices from rising too high.
The most concerned actors amid all these developments are Turkish contractors in Russia and the tourism sector. Sector representatives whose businesses in Russia are in danger have started saying loudly that the tension should be put to an end as soon as possible.
Panic is also huge in the tourism sector. Charter flights to Turkey have been suspended and only scheduled flights will continue. Although it is not peak season, connections are made in advance so if tension continues for a couple more months then the tourism sector will be badly hit in 2016.
It is Turkey’s economy that has been harmed the most since the tension erupted. The Turkish Lira has lost more value than the Russian ruble, while Turkey has also lost more in bond yields as well as stocks.
The peak of the economic effect of the bilateral tension would be if Russia opts to restrict natural gas exports to Turkey - at the coldest period of winter. We must hope that tension is de-escalated before it comes to this point, otherwise the effect on Turkish industry and in homes of having no gas may be very heavy indeed.