Russian investment fund eyeing more joint ventures with Turkey

Emine Kart ANKARA

RDIF CEO Kirill Dmitriev (L).

Defying rising pressure on Ankara from Western powers to join economic sanctions against Moscow, Turkey and Russia have taken yet another bold step toward deepening their joint investment cooperation. The move has prompted a top executive of the state-run $10 billion Russian Direct Investment Fund (RDIF) to express his admiration for Turkey’s "entrepreneurial spirit."

“Right now, what is interesting is some investors don’t invest in Russia and wait. Other investors see there is actually an opportunity to invest when other people are not investing. So we have quite a bit of interest from China and the Middle East to invest, from Turkey and frankly, those countries are taking away some of the positions that other countries had,” Kirill Dmitriev, CEO of the sovereign wealth fun RDIF, said on Dec. 1, soon after signing a deal with Turkey’s Renaissance Holding, a leading construction and development firm.

According to Dmitriev, Turkish companies are on the right track to make investments in their Black Sea neighbor, since it will strengthen their country’s position in Russia and solidify their position in the market.

Having signed the Dec. 1 agreement on the sidelines of Russian President Vladimir Putin’s official visit to the Turkish capital, Renaissance Holding and Russia’s state-backed private equity fund agreed to jointly invest $400 million in Russia, in sectors such as healthcare and commercial real estate.

Despite taking pains to stay out of the uncharted waters of Russia’s political showdown, Dmitriev was clear in his appreciative remarks on the boldness of the Turkish private sector.

“Turkey is strengthening its position in Russia by investing in difficult times and by really solidifying its position in the market, while some other partners and some other countries lose their position in Russia. Time will tell which strategy is right,” Dmitriev told the Hürriyet Daily News.

Later in the same day, speaking at a joint press conference with his Russian counterpart, Turkish President Recep Tayyip Erdoğan once more affirmed the joint will of the two countries, who are major trading partners, to increase their two-way trade volume from $33 billion to $100 billion by 2023. On the same day, in Brussels, NATO Secretary General Jens Stoltenberg said more countries should join the U.S., EU and their allies by imposing economic sanctions on Russia.

But NATO member-state Turkey had already made clear that it will only impose United Nation sanctions. The U.S. and the 28-nation EU have both imposed sanctions on Russia’s financial, defense and energy sectors over Moscow’s annexation of Crimea and its support for the separatists in eastern Ukraine. Many Western companies have been paring back their activities in Russia after the sanctions were imposed over Moscow’s role in the Ukraine crisis, with the sanctions having a wider negative impact on Russia’s economic outlook.

Dmitriev has maintained that it was European businesses that suffered from the sanctions on Russia, while underlining that there are no sanctions on the investment sector.

“I think Turkey is doing very wisely to just obviously abide by sanctions, but there are no sanctions on investing. Renaissance, for example, has really built its position now, which is very strategic and very wise,” he added, emphasizing that they targeted joint projects such as the construction of private healthcare centers, transportation, infrastructure and commercial real estate projects, including the development of new shopping centers.