Turkish, Russian commercial relations reach critical point
Posted by meb at August 30th, 2008
The Georgian incursion into South Ossetia and the ensuing Russian response has dealt a serious blow to trade in the Caucasus, which was already battered by tension in the region.
Turkey suffered serious losses in economic terms. The country’s trade not only with Georgia, but also with Azerbaijan and Central Asia was blocked. Thousands of trucks had to wait on the road and deliveries could not be performed.
There is talk now about restrictions imposed by Russia on Turkish commodities at its customs. Following the crisis in Georgia, Russia distributed a circular that imposed several restriction on goods imported from Turkey and instructed Russian officials to slow down the acceptance procedures for Turkish goods at customs, which meant a secret embargo was put in place by Russian authorities on Turkish commodities. According to a statement from the Russian side, Russian authorities are just trying to assert control over their customs and fight against bribery and corruption. However, Turkish exporters argue that this practice discriminates against trucks coming from Turkey.
Turkish exporters say they are suffering great losses as they are unable to deliver their goods in time due to delays of as much as three weeks. As they cannot forward their goods, importers do not pay for them. In particular, the textile season is about to finish. The situation for the fresh vegetable and fruit sector is riskier as these products cannot be sold after their due date passes. Perishable goods cannot endure long delays.
For whatever reason, Turkey’s trade with Russia has always been problematic. In the recent past and before, several agricultural and technical reasons were promoted by Russia to halt imports from Turkey.
Turkey is trying to sell a wide range of small consumer items while Russia is selling several items, such as natural gas and oil, in amounts many times more than Turkey’s entire trade volume. As energy contracts are long-term agreements with a purchase guarantee, Turkey cannot halt import of energy items in case of problems. Thus, while Russian customs officials count Turkish commodities one by one, Turkey cannot delay its purchase of natural gas or oil in retaliation. Even if Turkey could do this, it would not be in the country’s interests. Indeed, our electricity generation and heating systems completely rely on the natural gas imported from Russia.
There is a giant gap in trade between the two countries and, it seems, this gap will widen due to existing problems. Last year, Turkey’s exports to Russia amounted to $4.7 billion while its imports from Russia were $23.5 billion. For the first six years of this year, Turkey’s exports were worth $3.4 billion and its imports $16.4 billion. In other words, this is a one-to-five ratio.
With this development coming after the Georgian crisis, Russia gave the impression that in cases of crisis it is ready to use its trade relations as a trump card against third parties — even Turkey, which takes care to pursue a balanced policy between Russia and Georgia. This has led people to question whether Russia is a reliable partner in the business world.
We recently witnessed how Russia had used its natural gas as a tool for diplomatic pressure in the Caucasus, Europe and Ukraine. Summer is about to end and winter will arrive soon. In the cold days awaiting us, Europe and, naturally, Turkey may face new natural gas problems.
Moreover, this has once again shown that Turkey desperately needs to diversify its energy resources, end its dependence on Russia and find alternative markets.
Furthermore, it has also shown that the Baku-Tbilisi-Ceyhan (BTC) pipeline and its parallel natural gas pipeline are open to threats and that the West’s access to Eurasia via Georgia or the northern route might be risky. This can also be seen as a positive development that brings new opportunities for Turkey as it has emerged as the more secure alternative route that provides access to Eurasia via Mersin and Trabzon ports and Iran.
The ongoing power struggle between Russia and the West has the potential of spreading to economic and commercial areas. And there is not the slightest possibility that this will not affect Turkey.
source: Today’s Zaman - Analysis by Kadir Dikbas
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