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Sunday, March 18, 2018

Turkey will be extremely hard to regain position in Russian market

The restoration of economic relations between Russia and Turkey began. Work on key projects – the gas pipeline “Turkish stream” and the construction of nuclear power plants – will be resuscitated immediately. It is planned to restore Charter flights and to resume the supply of Turkish vegetables to the Russian market. And yet, to fully restore trade relations, at least in the near future, it does not, and for good reason.

The meeting of the President of Russia Vladimir Putin with President of Turkey Recep Tayyip Erdogan, as expected, opened a new phase of restoring economic relations between the two countries.

“Turkish producers can not fully regain the market share that was previously”

The decision was made one thread “Turkish stream”

Of course, the main expected outcome of the meeting of Erdogan and Putin was the resumption of the project “Turkish stream.” But while we are talking about only one thread pipes in Turkey. The parties agreed to October this year to sign all necessary documents, in particular, to agree on a draft intergovernmental agreement on gas pipeline, said the head of Ministry Alexander Novak. According to him, construction of the first line can be completed by December 2019.

And there remains the possibility of extending the pipeline to the second line. The first will be calculated solely on the Turkish market with the prospect of growth in the demand for it. The pipe will replace the current delivery 12-14 billion cubic meters of gas going through Ukraine, Bulgaria and Romania (the power of one leg about 16 billion cubic meters per year).

But for the second line to export Russian gas to EU – Erdogan will have to fight. Because it also expects Bulgaria. But, as once stated by Vladimir Putin, Gazprom will be allowed to transit the thread only if they are provided legally binding guarantees from the EU. Who was the first to achieve such guarantees from Europe – Bulgaria or Turkey – and he will be able to count on transit of the Russian gas pipeline thread.

So while we can’t say that in Bulgarian the pipe delivered. “I think that will go parallel processes (negotiations with Turkey and with Bulgaria – approx. OPINION)”, – said Deputy Director of the national energy security Fund Alexei Grivach. “Turkey cannot give guarantees from the EU, so there is a window of opportunity opens for Bulgaria,” – he said. Moreover, Bulgaria, the pipeline is needed, because the first leg in Turkey, which will feed the Turkish market with Russian gas to bypass Ukraine, Bulgaria and Romania, Sofia loses the transit and the income from it. She is more important to negotiate with the EU and Russia on the “South stream”, which will provide new transit to other European countries.

With regard to costs of Gazprom, due to the delay of a pipeline project under the Black sea investment will increase, but not much.

Gazprom has already invested 12-14 billion dollars in “Turkish stream” and “South stream”, from which refused, arguing strategist at Sberbank Investment Research Alex Bulgakov. The money mostly went to expanding capacity of the terrestrial network of gas pipelines in the South of Russia. “Another 6-8 billion dollars can be spent on the underwater part of the project. Thus, the resumption of the “Turkish stream” will increase the investment program of the company only in a moderate way,” says Bulgakov.


The Association of tour operators of Russia (ATOR) expect that first Charter in Turkey will be able to fly in a week after the official lifting of the ban, roughly after 15 August. The time required for organizing and preparing: to find the aircraft to align the flight with the aviation authorities, to pick up slots at airports. Regular flights to Turkey did not stop, however, the vast majority of Russians flew holiday charters. Thanks to them, the tour cost is considerably cheaper than an independent trip on the sea.

Once the Charter will resume its flights, tour operators are waiting for lower cost of travel in Turkey. In ATOR expect falling of the prices by 25-30%. The local hotels have already started to give Russian companies discounts of 25% to 35% compared to last year in the hope to spur demand from Russian tourists.

However, we can already say that the tourist season in Turkey failed. To help the tourism industry, Erdogan had to apologize much earlier.

Tourist arrivals to Turkey, it is impossible to recover, even if Charter flights from this country will be opened soon, as “Turkish crush” Russian tourists has already passed, said the press Secretary of the Russian Union of travel industry (PCT) Irina Tyurina.

In September and October you can still relax in Turkey, however, the problem is that “many have already decided where they will rest instead of Turkey, and even paid tours, including a September, since the depth of sales on the market now reaches a month.” “This means that in the current year, Turkey did not recover even in the sense of sales activity compared to the same period last year. The time has gone,” – said the representative of the Russian Union of travel industry, reports “Interfax”.

In fact, even noted in early July a ban on the sale of tours to Turkey, little has changed for the Antalya coast. Instead of half a million Russians rested on the Turkish coast in the first half of 2015, this year in six months the country was visited by no more than 184 thousand tourists from Russia. Moreover, the flow of tourists from Germany and other countries also decreased. In the end, for half a year, Turkey earned from tourism of about $ 9 billion is 12.6 billion last year. For the year this figure can grow twice. According to expert estimates, losses of the Turkish tourism industry by 2016 will be at least $ 5 billion that will cost the Turkish GDP of 0.5%.


Russia will have to cancel the embargo on the Turkish vegetables and fruits. But to return to the Turkish products to the Russian market, as it turned out, will not be easy. First, overnight to remove all barriers regulatory authorities of the Russian Federation is not going to, especially since they have accumulated a large list of claims to the security of Turkish agricultural products. It’s time to restore order and to force the Turkish authorities to play by the rules.


On Tuesday, August 9, President Recep Tayyip Erdogan arrived in Saint Petersburg, where he later began his talks with Russian leader Vladimir Putin. The heads of state discussed the abolition of the predamage Turkish products, the resumption of Charter flights, “Turkish stream,” the Syrian settlement, the fight against terrorism and the issue of compensation for the downed su-24.
The meeting, held in Strelna, was the first after the incident with the destroyed Russian aircraft that caused the crisis in the relations between strukturze not understand the Russian requirements on ensuring the security of supply of Russian products, so talk about the imminent lifting of the ban on the supply of Turkish plant products is not necessary, said TASS, the official representative of the Rosselkhoznadzor Julia Melano. Such a conclusion the Russian regulator had made after a visit of the Rosselkhoznadzor delegation of Turkey 1-6 August to assess the possibility of lifting the previously imposed restrictions on the import into Russia of plant products. The results of the evaluations were disappointing for the Turkish farmers.

“The visit showed the lack of preparedness of the competent authorities of Turkey in terms of knowledge and understanding of phytosanitary requirements of Russia. Professionals Turkey is not familiar or no knowledge about quarantine for Russia organisms,” said Melano.

She recalled that when the supply of Turkish fruit and vegetables, the Rosselkhoznadzor has regularly identified harmful organisms. “The greatest danger for the Russian Federation represent the tomato moth, which affects all the Solanaceae family (eggplants, peppers, etc.), Western flower thrips California and Mediterranean fruit fly,” – said the representative office, adding that these quarantine objects were detected more often in Turkish products.

“Therefore, the Rosselkhoznadzor expects that the Turkish side is a fundamentally different approach to ensure phytosanitary safety of products they wish to place on the territory of the Russian Federation. To talk about the possibility of imminent lifting of restrictions on today is not necessary”, – said in a few words.

The Minister of economic development Alexei Ulyukayev before suggested that restrictive measures can be revoked before the end of this year, but noted that first you need to make sure that the quality of the product. He believes that, overall, the recovery in the volume of trade with Turkey that were to cool relations between countries may require one to two years.

Turkish producers can partially restore its positions on the Russian market in case of cancellation of the embargo, however, 20-25% of the market they lost, probably forever, the Chairman of the Board of the Eurasian business Alliance (EADS) Victor Kambolov. “The market of our country has changed, and Turkish goods, as it turned out, easily replaced, or even fully replaced manufacturers of Russia, EEU, FSU, China, Iran, countries of South-East Asia,” says kambalov, RIA “Novosti”.

What are the plans for the replacement of imported goods, rosyjskiego on fruits and vegetables for the EU and Turkey has become a good incentive for Russian producers in terms of import substitution. The USDA notes, in particular, increase the gross harvest of greenhouse vegetables in Russia more than 20%. In mid-July were collected 414 thousand tons of vegetables. Moreover, the main increase was in tomatoes – traditional export item of Turkey in Russia. They gathered more than one and a half times more – 92 thsd tonnes as opposed to 55 thousand tons in the previous year (per semester). And Russian farmers do not stop. They intend to invest about $ 5 billion in the construction and reconstruction of winter greenhouses in 2016-2019. Therefore, the return of Turkish tomatoes and other vegetables not in the hands of Russian farmers.

However, the President of the National Union of food exporters Dmitry Bulatov retorted that the return on the Russian counters of Turkish products is not likely to be afraid of Russian producers and other import suppliers.

“When we banned the supply from Turkey, we had a breath-taking situation. Then the consumption of tomatoes by two-thirds dependent on imports. About 57% of the imports of tomatoes come from Turkey. What we have now? Now, still 57% of tomatoes by import we buy in one country but in Tunisia. That’s all import substitution”, – said Bulatov. “So when the Turks will return to the Russian market, we should not worry our producers, and more suppliers from Tunisia, they may press the” – he said.

In any case, rapid changes in the market of vegetables and fruits should not wait, because before the lifting of the embargo on the Turkish products for at least another six months.

To invest in each other and work together in third markets

Turkey and Russia intend to develop other areas of work, in particular, investment. The parties agreed to expedite the establishment of a joint investment Fund, from Moscow will be presented to the FUND. The volume of joint Russian-Turkish investment Fund is estimated at several billion dollars, said the head of the Russian direct investment Fund (RDIF) Kirill Dmitriev. “Accordingly, the first step will help in the creation of a sovereign Fund of Turkey, which is now created and we will create similar mechanisms, as we have established with UAE, China, mechanisms of joint investments in projects from infrastructure to agriculture, medicine”, – he added.

Finally, Ankara hopes to join Russia and the markets of third countries. The call was made by the Minister of economy of Turkey Nihat Zeybekci. “We need not only to consider those areas where we can mutually invest in the economy of each other, but also cooperate in third countries,” he said. Among the areas where the two countries need priority and the priority to develop cooperation, Zeybekci highlighted energy, including nuclear energy, metallurgy, machine-building and petrochemicals.

In late 2016 – early 2017 must take place another meeting of the Russian-Turkish cooperation Council at the highest level, said the Minister of foreign Affairs of Turkey Mevlut Cavusoglu. The last such meeting was in December 2014. It will be discussed in more detail the resumption of cooperation in the framework of the package of documents signed following the meeting of heads of two States.

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