Türkiye: the stowaway in the economic sanctions against Russia
In a conflict, the first actions taken by belligerents are first and foremost economic in nature. The aim is to weaken the opponent before a potential military engagement or better, to avoid it. The efficiency of these complex actions depends on the coherence of the countries involved, each of which must respect the decisions taken. The conflict in Ukraine is an example of a series of economic sanctions being applied by many countries to weaken Vladimir Putin’s Russia. In this case, external military intervention by NATO in Ukraine is not considered given the risk of triggering a major conflict.
Economic sanctions against Russia as part of the war in Ukraine
Following Russia’s first intervention in Ukraine, which led to the annexation of Crimea in 2014, Moscow was targeted by a first wave of economic sanctions. These sanctions led to a fall of the rouble and a cost of $40 billion to Russia. Combined with the fall in crude oil prices, the earnings foregone by Russia rose to $100 billion. In 2016, Russia lost $170 billion and $400 billion on its oil revenues. The sanctions implemented to weaken Russia not only affect national companies such as Gazprom and Rosneft, but also personalities close to the government. Russia has obviously answered with sanctions against its adversaries.
After the second Russian intervention on February 24, 2022, the sanctions took on a new dimension. Taiwan, South Korea and Singapore joined the sanctions against Russia. Apart from the traditional sanctions, they now include an embargo on components or equipment used to build modern high-tech weapons that require semi-conductors. Russia’s foreign exchange reserves held abroad have been blocked. In addition, Russian banks have been excluded from the SWIFT system, which enables financial transactions to be carried out.
Despite the bloc formed by many countries, nations non-aligned with Russia, such as Mexico, Brazil and Türkiye, have distanced themselves. The unique case of Türkiye, an important member of NATO, raises questions: Türkiye has decided not to apply economic sanctions against Russia.
Russia – Türkiye: growing economic relations
Türkiye’s economic situation is very strained. Inflation peaked in October 2022 when it reached a record of 85%. As for the Turkish lira, it was at its lowest in June 2023. Türkiye’s position is indeed understandable in terms of its contribution to the economic war effort. Benefiting from its commercial relations with Russia, it is not in its interest to really sanction the latter. However, it is disturbing to observe that trade relations between Türkiye and Russia have developed in 2022, since the beginning of the Russian operations in Ukraine. Indeed, Turkish imports doubled from $30 billion to $60 billion, making Russia the leading exporter (18%) ahead of China (13%).
Energy accounts for a large proportion of imports: oil imports have doubled and those of coal have quadrupled. Imports of raw materials such as copper, zinc and nickel have also soared, even though they do not represent a significant budget. As for cereal and fertiliser imports, they have risen by 20% and 60% respectively. While Türkiye has massively increased its imports from Russia, its exports have also risen by $3 billion (+30%).
The two countries are enjoying a honeymoon phase, following the inauguration of the Russian nuclear power station of AKKUYU. This plant was built but also financed up to 93% by the Russian company Rosatom. Türkiye will purchase to Russia the electricity produced for a 15-year period. In other words, Türkiye owns nothing, but depends on Russia. Trade between the two countries is doing rather well, despite the war in Ukraine and the determination of the allied countries to force Russia to turn back.
Economic warfare cannot be waged alone. It is even more complicated to conduct if a NATO ally such as Türkiye pursues its own agenda, whatever happens. Türkiye’s double game substantially jeopardises the efficiency of the actions taken against Vladimir Putin’s Russia.
As for Russia, it greatly benefits from Türkiye to export its goods to other countries. Beyond being a potential energy hub, Türkiye is gradually becoming Russia’s logistics platform.