Turkey is facing a difficult balancing act in the Ukrainian-Russian crisis as it has good ties with both and aggravation of deadlock carries risks, car its Black Sea neighbors are also among its main economic partners.
Ankara quickly reacted and criticized Russian policy decision this week to recognize two separatist regions in eastern Ukraine as independent. But it stopped net of announcing possible punitive measures.
The menace of war between the two countries carries the potential to harm Turkey’s economy given the son deep energy, defense and trade relations, while the two markets are its main sources of tourism.
the current risk has the potential to negatively affect Turkey’s inflationary balances, said Enver Erkan, chief economist at Istanbul-based Tera Yatırım.
“The most compelling factor, of of course will be the rise in oil prices,” Erkan told Daily Sabah.
“Of course, the strategic balances are also important. the fact that Russia is an important economic partner for Turkey in terms of energy flow and tourism directly concerns the state of the country.”
Turkey is in a unique to bind: He has close relations with Ukraine and Russia, but also oppose the sanctions in principle. that of Moscow move provoked a quick reaction and sanctions from Western powers, even if they fell short of expectations.
President Recep Tayyip Erdogan on Wednesday said Turkey could not let go of its ties with Russia or Ukraine, given its close economic ties, among others.
Speaking to journalists on flight back of Africa, President Recep Tayyip Erdoğan reiterated son offer of mediation between Russia and Ukraine and said that NATO member Turkey would take steps which do not harm its bilateral relations.
“It’s not possible for us to abandon one or the other (country),” he said. “Our goal is to take such a step that, God willing, we sort this out out without giving up either one.”
The crisis leaves Ankara to balance these relations while also protect son economy.
Any protracted conflict could reduce tourist flows to Turkey this summer, assuming Russian and Ukrainian tourist arrivals remain the same as in 2021 or dive a little.
Some 4.7 millions of Russians and 2.1 millions Ukrainians arrived in Turkey last year, according to data from the Ministry of Culture and Tourism. They counted for 27.34% of the total 24.7 millions foreign tourists arriving through the year. the share jumped 24.55% in 2020 and 19% in 2019.
Turkey’s tourism receipts doubled to nearly $25 billion (TL 345 billion) last year and the impasse constitutes risk car the country expects the income match this of 2019, when it stood at $34.5 billion.
“The negative impact on tourism revenues could further weigh on Turkey’s foreign exchange needs,” Erkan said.
“With the rising geopolitics riskthe expected influx of tourism sector currencies could fall below expectations and negative pressure on the reading may increase in the court term,” he noted.
The Turkish Lira has been broadly stable since the start of the year following 44% decline in 2021.
The currency hovered around 13.5 against United States dollar since he hit a record moo of 6:36 p.m. in December.
It weakened up to 1.5% against the dollar on Tuesday, approaching son lowest level since mid-January, on concerns over economic fallout from the standoff between Ukraine and Russia, including for the country’s tourism sector.
It slipped as high as 13.9 before paring losses to 13.85 on the day. It was trading at 13.80 as of 1:40 p.m. local time on Wednesday.
The late slide last year triggered a push in annual inflation at almost 50% for Turkey’s import-dependent economy adds to concerns about energy import costs.
Oil prices have reached their highest since 2014 after Moscow sent troops to eastern Ukraine, adding to supply issues that are pushing prices towards $100 a barrel.
Russia provided some 46% of Turkish gas last year and Ankara seeks to conclude gas agreements of shorter duration with Moscow to alleviate import costs.
On the inflation front, Erkan said that although volatility in exchange rates eased as Ankara moved to stabilize the currency, ‘we think additional energy price effects could be a problem risk and harm the current composition of the account.”
the current the account’s deficit has shrunk by nearly 60% to $14.88 billion last year. Reining in the gap is a big priority and Erdoğan seeks to move to a current account surplus under son government is new economic policywhich focuses on lower interest rates and stronger exports, investment and credit.
The Annual Stranger trade the deficit fell by 7.5% year-over-year in 2021 at $46.13 billion. But the shortfall got worse in January, jumping 240.7% year-over-year to $10.44 billion, mainly due to energy imports which almost quadrupled compared to year since.
Turkey trade with Russia and Ukraine have reached a record high in 2021. Volume with Russia reached 34.7 billion dollars, while the turnover with Ukraine jumped to $7.4 billion.
The numbers went from $22.3 billion to $4.7 billion in 2020, respectively, according to data from the Turkish Statistical Institute (TurkStat).
Both Russia and Ukraine are global agricultural heavyweights and major wheat suppliers for Turkey. The escalation of tensions could drive up world food prices, which are already near multi-year highs.
Both countries Account for about 29% of global wheat exports, 19% of world maize supplies and 80% of world sunflower oil exports.
Finding the Balance Employed by Turkey for decades, Erdoğan often highlights son friendship with President Vladimir Putin warned Russia against a invasion and offered to mediate in the crisis. He has also criticized the management of the West of things as an obstacle to peace.
On Tuesday, Turkey called for recognition of Russia of Ukrainian separatists, an unacceptable violation of Territorial integrity of Ukraine.
Erdoğan, who visited Kyiv this month, rejected it and called on parties to respect international laws, probably his sharpest language to Moscow from a crisis over The fall of Turkey of a Russian plane near the Syrian border of Turkey in 2015.
Erdoğan and Putin have since warmed up and Turkey has bought the Russian S-400 air missile defense systems in 2019, which resulted in US sanctions. Since then, Ankara has opposed the sanctions against any country.
“Punishments against Russia is useless. You’re just postponing the problems”, Turkish presidential spokesman Ibrahim Kalin told Die Welt over the weekend, adding “new rules and principles” were necessary for both Russia and the West to “feel safe”.
“Russia feels threatened by NATO,” he said. added.
While cooperating with Russia in energy and tradeTurkey has also sold armed drones to Ukraine and signed a co-production agreement more, in a move this disturbed Moscow.
Turkey opposes Russian policy in Syria and Libya even as they forge cooperation on the ground there. This also opposes the annexation of Russia in 2014 of Crimea and its recognition of Abkhazia and South Ossetia regions in Georgia as independent.
Can Kasapoglu, director of safety and defense studies program at EDAM, said that Turkey had made clear he supports Ukraine. But a buildup of Russian troops in the black Sea should “really worry him”, especially the risk of a change of leadership in Ukraine, he told Reuters.
“In this case, defense technology Cooperation with Turkey could be suspended, car Russia is uncomfortable with a NATO country defense technological and industrial base developing links with the post-Soviet space,” he said.