Turkish industries eye complete removal of Russian sanctions

Turkish industries eye complete removal of Russian sanctions

A number of key sectors with strong ties to Russia – including the agricultural, construction and tourism sectors - are eyeing the complete removal of Russian economic sanctions on Turkey.

The completion of these talks will certainly make some crucial sectors happier than others. Despite significant progress in normalizing bilateral economic and trade ties between both sides, negotiations still seem to be underway.

Turkey and Russia signed a declaration in Istanbul on May 22 to remove bilateral trade restrictions imposed after the jet crisis in 2015. On the same day, Turkish Prime Minister Binali Yıldırım said “significant progress” had been achieved regarding almost every issue in lifting sanctions imposed by Moscow. 

According to Yıldırım, the ban on many agricultural products - except the now-famous “tomatoes” - will be lifted within one week, while others would be addressed in the subsequent period. He said the restrictions imposed on Turkish firms involved in construction, technical consultancy, tourism, public tender and wood processing would be removed within this month.

On the issue of lifting visa requirements, Yıldırım said priority was expected to be given to flight personnel and holders of service passports. The Akkuyu Nuclear Power Plant in southern Turkey is also planned to be taken under the strategic investment scope, according to sources close to the matter. 

In bilateral relations, apart from Russian tourists returning to Turkey, there have so far been few concrete outcomes in favor of Turkey. Many restrictions are still continuing like a “sword of Damocles” hanging over Turkey’s head. The upcoming days will be of key significance to see whether there are any robust results to months-long negotiations. 

Still, at least three Turkish sectors are happy with the latest progress in talks with a cautious stance.

Charter flights between Russia and Turkey had been halted for around 10 months after November 2015 after the crisis erupted. This resulted in a 76.2 percent decline in tourists from Russia to Turkey in 2016.

Fortunately, a visible increase has been seen in arrivals since normalization started in bilateral ties. The number of tourists visiting the Mediterranean resort of Antalya saw a sharp rise of 40 percent in April compared with the same month in 2016. Arrivals from Russia soared 15.5 times during the period, official data shows. 

However, in early April the Russian civil aviation regulator dispatched a warning about a possible suspension of chartered flights to Turkey due to political considerations, although no further steps were taken in this area.
On the road to normalizing ties on the agricultural side, good news has also started to come. Moscow was reported on May 25 to be likely to allow six Turkish companies to supply vegetables to Russia. Sector representatives see the declaration between the two countries as quite a positive step, though they say it is just a beginning and many further steps must be taken. 

Another key sector which is waiting for a full normalization in bilateral ties is Turkey’s construction sector. The sector declared 2016 a “dark year,” closing with $10.1 billion revenue in foreign projects, amid serious problems in the key markets of Russia, Iraq and Libya. This figure was its lowest since 2004, data from a leading sector association shows.

According to the Turkish Contractors’ Association (TMB), which produces detailed reports regarding the sector’s progress, the lifting of Russian decrees preventing Turkish companies from bidding in construction tenders in Russia would be of great importance. 

“In the normalization process, the abolition of two decrees, dated Nov. 28 and Dec., 29, 2015, which ban Turkish businesses from bidding in Russian tenders, will be of key importance,” said TMB President Mithat Yenigün in an e-mailed comment to the Hürriyet Daily News. 

Saying that Turkish companies undertook an average of $5 billion projects in Russia on an annual basis between 2010 and 2015, Yenigün noted that they could start to accept projects of this volume in Russia in the medium-term. 

The upcoming days will be important if we are to see robust results in Turkey-Russia economic and trade ties. However, it must be said that the pendulum is in favor of the Russian side.