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Russia considers economic sanctions on Turkey

November 26, 2015

The blowback from Turkey's downing of a Russian jet is hitting trade and investment. Until now, Turkey and Russia have traditionally been able to compartmentalize political differences and cooperate on economic affairs.

Image: picture alliance/dpa/Ria Nowosti

Two days after Turkey shot down a Russian jet on the Syrian border, Moscow is responding with a host of economic measures targeting Turkey.

Russian Prime Minister Dmitry Medvedev told his cabinet on Thursday to prepare retaliatory economic measures within days that could scuttle joint economic projects, trade and investment, and agriculture trade.

"I propose doing all this in a period of two days so that we can move to setting up the appropriate procedures as quickly as possible," Medvedev told ministers in televised proceedings.

Tensions between Moscow and Ankara heightened after Turkish F-16s shot down a Russian jet on Tuesday, triggering a deterioration in relations between the two countries over the conflict in Syria that has been largely unaffected economic ties until now.

The measures under consideration include halting "humanitarian contacts" and changing customs duties, while cooperation in the tourism and transport sectors could come under review.

Russia and Turkey have agreements on tourism cooperation, investment promotion, customs cooperation and international transportation rights, which could all be impacted by the sanctions.

Any Russian step to punish Turkey over the jet downing could impact billions of dollars in bilateral trade, investment, and the lucrative Turkish construction sector, which accounts for a major portion of the struggling Turkish economy.

Transportation restrictions, meanwhile, could affect the income of hundreds of Turkish truck drivers.

Russian President Vladimir Putin has already warned Russians against traveling to Turkey and several tour companies have announced that they have stopped organizing trips to Turkey.

Nearly 4.5 million Russians visit Turkey each year, second only to visiting German holidaymakers.

In 2014, about 4 percent of Turkish exports, mainly textiles and food, worth $6 billion (5.63 billion euros) went to Russia. In the first three quarters of 2015, however, overall exports to Russia slumped by 40 percent to $2.7 billion (2.53 euros) due to the impact of western sanctions and falling oil prices on the Russian economy.

Turkish trucks stranded

Lines of Turkish trucks trying to take goods to Russia have been reported at the Georgia border since Wednesday.

Georgian officials said some trucks were being turned back at the border and were returning to Azerbaijan and Turkey.

Dmitry Peskov, President Vladimir Putin's spokesman, said customs officials were examining Turkish goods for "various reasons," including terrorist threats.

"This is only natural in the light of Turkey's unpredictable actions," Peskov said.

Russia has accused Turkey of both backing terrorist groups in Syria as well as serving as a base where terrorists can plot.

Russia targets agriculture

Agriculture trade is already affected after the Russian government told the food safety watchdog Rosselkhoznadzor to implement controls on agriculture goods in response to agriculture ministry findings that 15 percent of Turkish agriculture imports failed to meet regulations.

The food safety watchdog normally only checks some goods and the decision to check all food coming from Turkey could cause significant delays. Items such as fruits and vegetables are perishable and could rot.

Only 4 percent of Russia's food imports come from Turkey, mostly nuts, fruits and vegetables that were worth some $1 billion in the first ten months of this year. However, Russia receives nearly 20 percent of its fruits and vegetables from Turkey.

Russia's Agriculture Minister Alexander Tkachev said in a statement that Turkish vegetable and fruit imports could be replaced by supplies from Iran, Morocco, Israel, Azerbaijan, China and South Africa.

Moscow has used restrictions on agriculture in other diplomatic spats, although it generally cites health concerns and denies any political motivation. Russia banned many food imports from the US and EU after sanctions were imposed over the crisis in Ukraine.

cw/msh (AFP, AP, Reuters)

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