Publication: Eurasia Daily Monitor Volume: 4 Issue: 175

Despite continuing political differences, Russia is rapidly becoming one of Turkey’s most important trading partners.

According to figures released by the Turkish Statistical Institute (TURKSTAT), during the first six months of 2007 Turkey’s exports to Russia rose by 60.3% over the same period of 2006 to reach $2.1 billion. In 2006 annual Turkish exports to Russia stood at $3.3 billion, an increase of 36.2% over 2005.

However, the mainstays of the rapid growth in bilateral trade are Russia’s exports to Turkey, particularly energy. In 2002 Russian exports to Turkey stood at $3.9 billion, rising to $5.5 billion in 2003, $9.0 billion in 2004, $12.9 billion in 2005 and $17.8 billion in 2006. During the first six months of 2007 Russian exports to Turkey stood at $10.5 billion, up 30.6% from $8.1 billion in the first half of 2006.

Turkish companies have also been very active in Russia, particularly in construction. A delegation of 80 Turkish businessmen recently traveled to attend the Sixth International Investment Forum in Sochi, in southern Russia (Referans, September 19). Turkish businesses are also eying the $12 billion that the Russian state is expected to invest in southern Russia in the run-up to the 2014 Winter Olympics in Sochi.

Nor has the movement all been one way. The Russian Alfa Group recently took a 13.2% stake in Turkcell, Turkey’s leading cell phone services provider. The group has announced that it is looking to make investments in four more sectors in Turkey (Radikal, September 21). Turkey is also a favorite Russian tourist destination, particularly the country’s Mediterranean coast. Over the last few years, the huge increase in visitors has meant that stores and restaurants in resorts such as Antalya are now sprinkled with signs in Russian. The area has also become a favorite money-laundering destination for the Russian underworld, many of whom have invested in local hotels.

In theory, Russia and Turkey would also appear to be natural political allies. Both are situated on the periphery of Europe and have a strong sense of their imperial past. Both also have an ambivalent attitude toward the EU and, particularly given the recent strains in Turkey’s relations with Washington, both feel increasingly alienated by the policies of the United States.

However, few in Turkey have forgotten that, in addition to an imperial past, the two countries shared a centuries-old historical rivalry, which in recent years has been rekindled by unrest in the Balkans and the Caucasus. The conflict is now seen in Turkey primarily in religious rather than nationalist terms. Even if the decline in ethnic conflict in the former Yugoslavia has removed one source of friction, there continues to be considerable unease in Ankara at Russia’s frequent support at international forums for the Greek Cypriot government of the Republic of Cyprus.

However, the main obstacle to closer political ties between Moscow and Ankara remains the ongoing conflict in Chechnya. Although their numbers are still too few to have a decisive impact on the course of the conflict, many hard-line Islamist Turks continue to travel to Chechnya to fight alongside the insurgents against the Russian security forces. There are also numerous Chechen support groups inside Turkey, many of them with close links to high-ranking members of the ruling Justice and Development Party (AKP). Whatever the strategic benefits, if the AKP attempted a closer political alignment between Turkey and Russia, it would inevitably face a storm of protest from its grassroots support.

Such reservations have also made many in the AKP uneasy about Turkey’s increasing dependence on Russia for energy and are among the main reasons for Ankara’s attempts to diversify supplies; particularly by increasing imports from its Muslim neighbor Iran. On August 13, Turkey signed a memorandum of understanding (MOU) to invest around $3.5 billion in a project to import natural gas from Iran’s South Pars gas field (see EDM, August 13). The agreement has been opposed by the United States. However, Turkish officials insist that, if they cannot diversity their energy supplies, Turkey will become too vulnerable to a downturn in its political relations with Russia. On September 19, the Iranians stepped up the pressure by publicly noting that the MOU was merely a preliminary agreement and giving Turkey four months to sign a permanent agreement (EkoTurk Agency, September 20).