Economy · August 6, 2022

The alarm is raised in the Western capitals over the intensification of Turkey’s ties with Russia

Western capitals are increasingly alarmed by the intensification of economic cooperation between Turkish President Recep Tayyip Erdoğan and Vladimir Putin, warning of the growing risk that the NATO member state could be hit with punitive retaliation if it helps Russia avoid sanctions.

Six Western officials told the Financial Times they were concerned about the promise made on Friday by Turkish and Russian leaders to expand their cooperation on trade and energy after a four-hour meeting in Sochi.

An EU official said the 27-member bloc was monitoring Turkish-Russian cooperation “ever more closely”, expressing concern that Turkey was “increasingly” becoming a platform for trade with Russia.

Another described Turkey’s behavior towards Russia as “very opportunistic”, adding: “We are trying to get the Turks to pay attention to our concerns.”

Washington has repeatedly warned that it will strike countries that help Russia evade sanctions with “secondary sanctions” that target violations outside of US legal jurisdiction; however the EU has been more reticent in doing so.

US Deputy Treasury Secretary Wally Adeyemo met Turkish officials and Istanbul bankers in June to warn them not to become a conduit for illicit Russian money.

A senior Western official has suggested that countries could ask their companies and banks to withdraw from Turkey if President Erdoğan fulfills his commitments on Friday, a very unusual threat to another NATO member state that could cripple the $ 800 billion of the country. country economy if foreign companies have agreed to comply.

The official said nations that imposed sanctions on Russia could take action against Ankara “by calling on Western companies to withdraw from relations in Turkey or to restrict their relations with Turkey, in light of the risk that Turkey would create by expanding its relationship. with Russia “.

However, that suggestion was rejected by many other Western officials who questioned how it would work in practical and legal terms and whether it would be a good idea.

Turkey is deeply integrated into the Western financial system, and brands from Coca-Cola and Ford to Bosch and BP have long-standing and often highly profitable businesses in the country.

“There are very significant economic interests that would probably fight hard against such negative actions,” said a European official.

But the official added that “it would not rule out negative actions [if] Turkey gets too close to Russia ”.

While admitting that a formal EU decision on sanctions against Turkey would be a challenge given the divisions within the bloc, he suggested that some individual member states could take action. “For example, they could ask for restrictions on commercial financing or ask large financial companies to reduce funding to Turkish companies,” she said.

Three European officials said there have not yet been any official discussions in Brussels about possible repercussions for Turkey. Many others warned that the full details and repercussions of the discussions in Sochi were not yet clear.

The warnings come the day after Putin and Erdoğan – who have pursued what he calls a “balanced” approach to Kiev and Moscow since the Russian full-scale invasion of Ukraine in February – held a long tête-à-tête that culminated in a commitment to increase the volumes of bilateral trade and to deepen economic and energy ties.

Deputy Prime Minister Alexander Novak, Moscow’s top energy official, told reporters that Turkey had agreed to start paying for Russian gas in rubles, according to Interfax. Putin and Erdoğan discussed the further development of banking ties and deals in rubles and lira, he added.

Speaking on his flight back from Russia, Erdoğan told reporters that there were also “very serious developments” on the use of the Russian MIR payment card system, which allows Russians in Turkey to pay by card at a time. which Visa and Mastercard have suspended operations in their home country.

Erdoğan said the MIR cards would help Russian tourists pay for shopping and hotels. Western officials fear they could also be used to circumvent sanctions.

Diplomatic relations between Turkey and the West are already strained. Washington hit Ankara with sanctions in 2020 in retaliation for the purchase of an S-400 air defense system from Moscow, although the measures were aimed at the country’s defense industry rather than the economy in general.

Erdoğan, who has repeatedly threatened to veto the entry of Sweden and Finland into NATO, is seen in many Western capitals as an increasingly unreliable ally. Yet Turkey is a vital partner for Europe on counter-terrorism and refugees. The country is home to around 3.7 million Syrians under an agreement concluded with the EU in 2016 that helped stem the flow of migrants to Europe.

The conflict between Russia and Ukraine underscored Turkey’s strategically important position by controlling access to the strait connecting the Black Sea to the Mediterranean.

Erdoğan also played a key role in securing the wheat deal signed by Russia and Ukraine last month, which aimed to avert a global food crisis.