From Cold War enemies on opposite sides, Turkey and Russia have developed flourishing trade ties since 1991, so much so that last year bilateral trade exceeded $20 billion. Now a dispute over Turkish agricultural exports to the Russian Federation threatens to disrupt the burgeoning trade.
In 1989 Soviet-Turkish bilateral trade was worth $200 million, but Turkey’s trade with the Russian Federation has subsequently grown 15 percent to 20 percent annually (Paper 1101, South Asia Analysis Group, August 27, 2004). In January 2005, when Russian President Vladimir Putin welcomed Turkish Prime Minister Recep Tayyip Erdogan to Moscow, he noted that in 2004 bilateral trade “reached the record figure of $10 billion and, according to some assessments, even $11 billion. I know that in the interview he gave just before leaving for Moscow, the Prime Minister said he thought that through joint efforts we could increase our trade turnover this year to $15 billion and reach a figure of $25 billion by 2007” (Ministerstvo Inostrannykh del Rossiiskoi Federatsii, January 12, 2005).
Putin proved mildly overoptimistic. According to Foreign Ministry Spokesman Mikhail Kamynin, Turkish-Russian bilateral trade exceeded $20 billion in 2007. Kamynin added that in 2007 Russia supplied more than 23 billion cubic meters of natural gas to Turkey, while over the past decade Turkish companies have concluded contracts worth more than $17 billion, with overall Turkish direct investment in Russia exceeding $5 billion, while “the last few years have seen a noticeable increase in the interest of Russian investors for investing in the growing Turkish economy” (RIA Novosti, January 12, 2005).
The current dispute began on May 30, when Russia’s Rosselkhoznadzor (Federal Veterinary and Phyto-sanitary Control Service), announced that it would halt Turkish agricultural imports beginning on June 7 after discovering elevated levels of chemical fertilizer and pesticides in certain products. Rosselkhoznadzor stated that since the beginning of the year approximately 4 million tons of Turkish agricultural imports had contained pesticides and nitrate traces in “amounts significantly exceeding the maximum permitted levels set by Russian law.” He added that “These plants are not safe for the health of our citizens, because they contain residual pesticides, nitrates and nitrites in amounts exceeding the maximum permissible levels provided for in Russian legislation” (Itar-Tass, June 7). Rosselkhoznadzor requested that Turkish Minister of Agriculture and Village Affairs Mehmet Eker take action to ensure compliance with Russian standards.
The announcement caught Ankara by surprise, because on May 28 Turkey’s Energy and Natural Resources Minister Hilmi Guler and Russian Minister of Industry and Trade Viktor Khristenko had signed an agreement in Moscow to improve relations in energy, agriculture and trade and to increase investments (Hurriyet, May 28). The incident adds a sense of déjà vu, as in May 2005 Moscow suddenly halted the import of Turkish produce. When the dust settled four months later and imports were resumed, Turkey had lost approximately $220 million in exports (Yeni Safak, June 6). A similar crisis threatened in 2006 but was averted at the last moment through high-level ministerial talks (Haber, June 6).
Rosselkhoznadzor, which operates under the jurisdiction of the Russian Federation’s Ministry of Agriculture, was formed in June 2004 by amalgamating a number of government departments and structures. Rosselkhoznadzor’s mandate is vast, as it is responsible for supervising and controlling issues relating to, among other things, veterinary science, agriculture (including quarantine of imports), use of pesticides and fertilizers, soil fertility, and wildlife and marine life; and at the same time it is responsible for protecting Russia’s human and animal populations from disease (www.mcx.ru/index.html?he_id=888).
The ban covers all Turkish fruit and vegetables, including tomatoes, new potatoes, eggplants, grapes and lemons; and it includes shipments of Turkish produce through third countries (Ekho Moskvy, June 7). According to some data, during the summer season Turkey supplies the Russian market with up to 30 percent of its citrus fruits, 20 percent of imported tomatoes and 10 percent to 15 percent of cherries, grapes and peach imports (Nash Dom, June 7).
Rosselkhoznadzor’s quarantine is likely to accelerate an increase in fruit and vegetable prices in Russia, which over the past four months have already soared 41 percent. Conversely, agricultural prices in Turkey have plummeted. The produce affected includes green peppers, green beans, zucchini, iceberg lettuce and eggplants. Tomatoes were the hardest hit, with prices plummeting 50 percent in a week (Zaman, June 8).
Few observers believe that the crisis is because the Russian government has suddenly become concerned about the health of its citizens. Instead, the calamity seems to be a subset of larger disagreements roiling Russian-Turkish relations, most notably energy issues, and particularly Turkey’s interest in establishing itself further as a transit corridor for Caspian oil and natural gas exports. In this context, it is of particular interest that last week Gazprom CEO Alexei Miller visited both Azerbaijan and Turkmenistan in an attempt to lock in future gas production but in both places received noncommittal answers. A further possible irritant might be the proposed Samsum-Ceyhan oil pipeline, which would necessarily be filled with Kazakh oil, which Moscow considers within its purview. The produce issue is a stark reminder to Ankara about the influence that Russia has over the Turkish economy above and beyond energy. In an interview Rosselkhoznadzor Press Secretary Alexei Alekseenko hinted at as much. After noting that in certain Russian produce sectors Turkish produce dominated as much as 30 percent of the domestic market, Alekseenko commented, “In due time Turkey will be able to return to the Russian market,” before adding, “For this it will have to give guarantees of the safety of the supplied products” (Maiak, June 7).
On June 4 Erdogan telephoned his Russian counterpart Putin. According to a statement by the Russian Embassy in Ankara, the two leaders spoke about commercial and economic relations (Cumhuriyet, June 6).
The dispute is certainly having political repercussions in Turkey. While the Turkish agro-industrial market is currently worth about $50 to $60 billion annually, the sector is already facing problems from persistent drought (Zaman, June 1). Nevertheless, for the first time, Turkey’s agricultural sector has grown steadily for three consecutive years. Angry farmers also vote, and Erdogan will be concerned about retaining the rural vote, as local elections are scheduled for March 2009 at the latest, while there are currently discussions in Ankara about holding local and general elections in the fall.
Putin has invited Erdogan to Moscow to resolve the crisis (Yeni Safak, June 5). If Erdogan goes, doubtless they will have, in diplomatic parlance, “frank and candid conversations.”