Putin and Erdoğan pledge to deepen economic relations

Recep Tayyip Erdoğan and Vladimir Putin have pledged to deepen economic ties between their countries as Moscow seeks to soften the blow from Western sanctions imposed following its invasion of Ukraine.

After a four-hour meeting at Putin’s residence in Sochi on Friday, the Russian and Turkish presidents issued a joint statement pledging to increase bilateral trade volumes and deepen economic and energy ties.

Deputy Prime Minister Alexander Novak, a senior energy official in Moscow, told reporters that Turkey had agreed to start paying for Russian gas in rubles, according to Interfax.

Putin and Erdoğan discussed the development of banking ties and settlements in rubles and liras, he added.

Novak said the agreements “would take our trade and economic relations to a new level in virtually all areas”, including transport, industry, agriculture, tourism and IT.

Although the two leaders have welcomed the tensions between them, including the conflict in Syria, the economic fallout from the war in Ukraine has provided reason for closer ties.

Western sanctions have largely cut off Russia’s economy from the global financial system and left it struggling to replace banned imported goods or find markets for its energy exports.

Turkey suffers from a gaping trade imbalance caused by soaring global energy prices, themselves largely caused by the way the Russian invasion disrupted markets. Ankara is looking for foreign capital to fill the void.

The United States and other Western allies have expressed concern over Erdoğan’s ambivalent stance on the war in Ukraine. The US undersecretary of the Treasury met with Turkish officials and bankers in Istanbul in June to warn them not to become a conduit for circumventing Russian sanctions.

The Sochi meeting comes as Ukrainian intelligence services recently shared with NATO countries a document they say they intercepted from Moscow containing proposals for Turkish-Russian cooperation, according to a Ukrainian intelligence official and a Western diplomat. The latter said he believed the document to be genuine.

The proposals include ways to help Russia evade sanctions with the help of Turkish banks and cooperation in other areas, including energy and industry, the sources said. The Washington Post was the first to report that Russia was seeking Turkey’s help to circumvent Western sanctions. It is not clear whether Turkey, a member of NATO, will accept these proposals.

Putin and Erdoğan have previously suggested that countries could use their own currencies in trade. Such a move would allow Russia to avoid the global US-denominated oil market while allowing Turkey to limit the damage to its dwindling foreign exchange reserves by paying for energy in Turkish lira.

Erdoğan tried to carve out a mediating role between Ukraine and Russia. Ankara has supplied Kyiv with armed drones and was instrumental in securing a UN deal to lift the Russian naval blockade and allow Ukraine to resume grain exports from its Black Sea ports. .

But Turkey has also refused to join Western sanctions against Moscow, threatened to veto Sweden and Finland’s NATO membership and allowed ships carrying wheat and corn from Russian-occupied regions of Ukraine to deliver their cargoes to Turkish ports.

Putin and Erdoğan said the grain deal “must be implemented in full accordance with its spirit and letter”, including allowing the resumption of Russian grain and fertilizer exports which Moscow said had been hampered by sanctions.

The US and EU have never directly sanctioned Russian agriculture, but issued clarifications that effectively rolled back restrictions on it last month, alongside the deal on Ukraine’s Black Sea ports. .

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