The Economics of Turkey – Russia Relations

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 The Economics of Turkey – Russia Relations

Soli Özel – EDAM,Academic Director , 

Gökçe Uçar – EDAM, Secretary General

The Turkish-Russian relationship has improved considerably since a period of tensions and near proxy-war in Syria after Turkey downed a Russian SU-24 bomber in November 2015. Turkey’s deal to purchase the Russian S-400, a long-range air and missile defense system can be regarded as the latest big strategic/military cum economic activity since the attack. This rapprochement was followed by the completion of talks on two infrastructure projects in the energy sector – the Turk Stream pipeline and a Russian-built, owned and operated nuclear reactor in southern Turkey. The post-jet crisis period during which Russia stood by the Turkish President during a botched coup attempt in July of 2016; the Russian ambassador in Ankara was murdered in plain sight of exhibition visitors and Iran-Russia-Turkey initiated the Astana Process to bring stability in Syria   the total volume of trade in commodities between the two countries has significantly increased. Russian tourist arrivals in Turkey has returned to their pre-crisis levels. The two countries’ reaffirmed desire to expand their bilateral economic engagements particularly in the defense sector have raised concerns in the West.

To assess whether Russia can be an alternative major trade partner for Turkey amid Turkey’s strained relations with the West, this paper seeks to identify the drivers of Turkey and Russia’s economic relations in the context of their historical trajectory. We will look to the developments and diversification of trade, energy, tourism and foreign direct investment flows and the evolution of the economic strategies of both partners.

Most analyses about Russia-Turkey relations focus on the historical strategic dimension. Both countries are legatees of now defunct empires that were once each other’s nemeses. Their mutual perceptions have been shaped by the wars they fought against one another for centuries. In the last two hundred years of their rivalry the Russian Empire expanded at the expense of the Ottoman one. The period following the Revolution and the Bolshevik takeover in Russia and the launching of the Independence War by the Ankara National Assembly Government in Turkey changed the nature of their interactions. The two new and fragile regimes recognized their counterpart’s usefulness for their own prospects and throughout the inter-war period, remained in solidarity with one another and enjoyed close relations despite their antithetical regimes, on the basis of a shared concern, fear and disdain of imperialism. In fact, when the young Turkish Republic undertook its industrialization policy, the Soviets helped it with loans, know-how and expertise in industrial planning.

The dominant position of the Soviet Union in Eastern and Central Europe at the end of the war and its claims on Turkish sovereignty and territory played a determining role in Turkey’s strategic choice as the Cold War order began to take shape. Assessing a vital threat to its security, Turkey launched its close strategic relation with the United States and joined the Atlantic Alliance by doggedly pursuing it and even sending troops to Korea in order to attain that goal. During the Cold War Turkey’s anti-communism both domestically and in its foreign policy considerations was relentless. Turkey was and remained a staunch NATO ally and when the military intervened and overthrew the elected government the putschists  started their work by reiterating their commitment to NATO and while it was still alive, CENTO.

Despite this political and ideological hardline, Ankara had in a way its own “Nordpolitik” in the 1960’s. While anti-communism continued to determine the policies of successive governments and military juntas the two countries had a growing economic relation that mainly benefited Turkey. Ankara sought to further its industrialization and launch its heavy industry in the 1960’s and needed both know-how and capital that its Western allies were not enthusiastic to advance. Following the unprecedented visit of the then Soviet Prime Minister Alexei Kosygin, the two Cold War rivals signed a number of economic agreements that began to bear fruit in the 1970’s. Naturally, both German policy of “Ostpolitik” and the period of détente between the USA and the Soviet Union facilitated this peculiar thaw in relations. Ankara’s estrangement from Washington due to the arms embargo imposed upon the former by the American Congress in the wake of the Turkish intervention in Cyprus also played a role in a tilt towards “third-worldism” by the social-democratic government in the second half of the 1970’s.

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