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by the US They have also exported equipment covered by US sanctions, including electric generators and semiconductors, which can have military applications. Additionally, Turkish warehouses have reportedly received large shipments from the EU and the Far East destined for Russia. These cargoes, often unregistered as imports, are transported by Turkish cargo companies to Russia via air, land and rail routes.
“According to WSJ in 2022 at least 13 Turkish companies sold a variety of items including plastics, rubber items and vehicles worth around $18.5mn to a number of Russian companies which were sanctioned by the US for their role in Russia’s aggression towards Ukraine,” says Konarzewska.
WSJ also revealed that Turkish companies have sent to Russia millions of dollars-worth of equipment such as US-manufactured electric generators, elevators, circuit boards, conveyors, steering wheels for trucks and others which also fall under US sanctions. Additionally, according to Voice of America sources in 2022, Turkey surprisingly started exporting a substantial number of semiconductors to Russia, while in 2021 these exports were minuscule.
In late February 2022 the US imposed a ban on the sale
to Russia of technologically advanced products such as semiconductors, which can be used both for private and military purposes, in order to prevent Moscow from getting access to the high-end technology. As bne IntelliNews has reported, the technology sanctions on Russia have largely failed thanks to loopholes and willing partners like Turkey.
In addition to the sanctions-busting trade, Turkey has also become a safe haven for wealthy Russians and their money. This includes oligarchs, politicians and dissidents who aim to evade Western sanctions or circumvent capital controls imposed by their own country.
There are also legitimate refugees fleeing Putin’s Russia. Many young Russians who fear military conscription or imprisonment have also sought refuge in Turkey. The country has welcomed these cash inflows and facilitated money transfers, enabling Russians to navigate the restrictions imposed by Western sanctions that limit access to popular bank cards and exclude certain Russian banks from the Swift system.
The influx of Russian funds has had a positive impact on Turkey, stabilising its currency, the lira, to a degree. The lira has experienced massive devaluation against the US dollar in recent years, while also addressing the foreign trade deficit.
Russians are also registering companies in Turkey and investing in various sectors, particularly real estate, which have helped reduce Turkey's historically high foreign trade deficit, particularly since the start of the war in Ukraine.
Turkey firmly maintains its position that it will only support sanctions against Russia if they are authorised by the United
Nations, as Ankara believes that joining Western sanctions would have a negative impact on the Turkish economy. This stance allows Turkey to position itself as a mediator in the Russo-Ukrainian conflict and reap benefits from facilitating trade between the West and sanctioned Russia, even involving the supply of prohibited goods.
“Turkey, however, is not the only country which has refused to impose sanctions against Russia and that has positioned itself to reap economic benefits from the tectonic shifts in trade caused by Western bans on Russia’s economy. This group of countries also includes China, India, Saudi Arabia as well as countries in the South Caucasus and in Central Asia,” says Konarzewska.
What has emerged is a tug-of-war between West and the Global South, where the West has been trying to enforce
its embargo on Russia through the use of carrot and stick, whereas countries of the Global South have been resisting this pressure and trying to navigate a middle path that focuses first and foremost on their national interests. Russia remains an important source of raw materials, arms and energy technology for many countries in the developing world.
Washington has expressed concerns to Turkish authorities and industry representatives, highlighting the suspicion that certain trade ties between Turkey and Russia may contribute to Moscow's military efforts in Ukraine, but many countries of the Global South consider this to be a European problem that is none of their concern. The US has explicitly warned that companies and individuals engaging in business with sanctioned Russian entities could face secondary sanctions. Western pressure has had some impact, leading several prominent Turkish banks to abandon their initial plans
to join the Russian Mir payment system. However, Turkey remains committed to trade co-operation with Russia, considering it crucial for its own economic interests, and is unlikely to change that approach in the near future.
Ankara finds itself placed in the middle between warring Russia and the West and has taken advantage of its good relations with both to profit from boosted trade by ignoring sanctions. / bne IntelliNews
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