Russia’s Economic Development Minister Ulyukayev has said that Russia is not planning to expand its sanctions on Turkey (see previous blog, which summarises the sanctions). Mr Ulyukayev said “the visa regime that we are introducing will remain in place for a long time”, but added that the food imports did not involve the same risks as people visiting a dangerous territory and so could “be the first thing to be abolished”. Turkey’s Foreign Minister Mevlut Cavusoglu has said that Russia should lift the sanctions without delay – “the economy and trade have always taken special positions in our bilateral relations”, and sanctions “will affect directly the economies of the countries and will cause negative consequences for the Russian people, no less than for the Turkish people”.
A report by the European Bank for Reconstruction and Development (link here) concludes that Turkey will be more affected by the sanctions than Russia. It estimates that Turkey’s GDP growth could be 0.3-0.7% lower next year as a consequence of Russian sanctions targeting Turkey’s food and tourism industries, with Turkey’s major reliance on Russia for its energy supply a vulnerability should Russia choose to impose further sanctions. While the overall impact on Turkey’s economy will likely be “moderate”, the impact on individual firms in affected industries is likely to be larger. Key to the extent of any decline in the rate of Turkey’s growth is whether currently operating contractors and workers continue to be exempt from sanctions, and if affected exporters and contractors are able to find alternative markets. As to the effect in Russia, the EBRD notes that there may be upward pressure on import prices and inflation, with a possible 25% increase in the price of embargoed products. Prior to sanctions, Turkey was the second largest source of fruit and vegetable imports into Russia, and sanctions may contribute to an increase in Russia’s inflation of 0.1-0.2% in 2016.
Michael was called to the Bar in 1992 and prior to joining Peters & Peters was a senior specialist prosecutor at the Crown Prosecution Service Headquarters (CPS). He was a key member of a small specialist unit responsible for the prosecution of serious and high-profile fraud, terrorist,...See profile for Michael O'Kane >