Monday, 30 November 2015

Turkey: Russian Sanctions Set to Deal Heavy Blow to Turkish Economy

Political tensions are traditionally followed by a disruption of economic ties. Thus, the recently announced Russian economic measures against Turkey were expected.

"The decision to impose sanctions [against Turkey] was logical and predictable for countries having political tensions. This is the reality of international relations," economic expert Sergei Khestanov told Rossyiskaya Gazeta.

Russia is Turkey’s second-largest trade partner, after Germany. In turn, Turkey accounts only for four percent (4.9 percent in exports, and 2.3 percent in imports) in Russia’s total foreign trade.

Despite the fact that Russia’s exports to Turkey by value surpass imports ($15 billion against $3 billion), Turkey sells Russia a wide range of products, including fruits and vegetables as well as machines and their parts.

Last year Russia purchased Turkish-assembled cars (many foreign brands have assembling facilities in Turkey) worth $794 million. What is more, Turkey’s annual income from Russian tourists is estimated at $10 billion, according to the Russian Tourism Agency. Other incomes come from the so-called shuttle trade, money transfers and Turkish construction businesses in Russia.

Turkey has invested much in the production of auto parts in Russia. Traditionally, Turkish construction companies have been significant players in the Russian market.

Some Turkish companies are involved in major construction contracts on order by the Russian government, Khestanov underscored. The analyst said such contracts would not fall under the sanctions.

Partial withdrawal of Turkish companies from Russia would pave the way for Russian developers, he added.

"Restrictions on hiring Turkish citizens by Russian companies will give a chance for employment to residents from Belarus, Armenia, Kazakhstan and Kyrgyzstan," he said.
What is more, Turkish companies run a wide range of other businesses in Russia, including tourism, banking, beer manufacturing, and clothing retail. In 2014, Turkey exported to Russia textile products worth $762.8 million.

No more Turkey no more Egypt but welcome Goa!

Russia has banned sales of tour packages to Turkey, Russia’s First Deputy Prime Minister Igor Shuvalov said Monday. All charter flights to Turkey are prohibited, regular air travel will be regulated, he added.

"All sales of the package tours to Turkey are stopped effective immideately. The charter flights to Turkey banned, except those used to retrive Russian tourists from there," Igor Suvalov said.

Russian sanctions against Turkey will not affect contracts signed before December 31, 2015 and industrial products, the Deputy PM noted.

"Those [construction] contracts that are currently under operation and contracts that are signed before December 31 of this year, Turkish nationals may continue their labor activities on these construction objects. For new contracts [signed after January 1, 2016], there won’t be such freedom and a special permit will need to be applied for from the government," Shuvalov told Russian Prime Minister Dmitry Medvedev during a Cabinet meeting.

In the same breath Russia declares…

The Indian state of Goa is safe for Russian tourists and hopes to attract some of the country's vacation-goers now that Egypt and Turkey are no longer options, according to the head of the Russian Information Centre in Goa
The Indian state of Goa, a former Portuguese colony which has re-invented itself as a world-renown vacation destination, remains on the Russian list of safe travel destinations and will attract part of the tourist traffic from Egypt and Turkey, Yekaterina Belyakova, the head of the state's privately-run Russian Information Centre was quoted by RIA Novosti as saying.

"The security situation in Goa remains safe. The state is bound to increase its number of Russian tourists. Now Goa has a huge opportunity to attract part of the tourist flow from Turkey and Egypt," she said.

Belyakova added that in recent years, prices in Goa were partly on the rise, not least due to the fact that the number of Russian tourists visiting the state doubled between 2012 and 2013.

Her remarks came a day after media reports cited allegations that Goa has been excluded from the list of places Russia considers safe.
The measure followed the blacklisting of Egypt and Turkey, the most popular travel destinations for Russian tourists.

Russian President Vladimir Putin banned all flights to Egypt after a terrorist attack brought down a tourist-loaded Russian A321 passenger airliner in Sinai on October 31, killing all 224 people on board. The attack was the worst disaster in the history of Russian and Soviet aviation and one of the 30 worst passenger air disasters of all time.

On Saturday, Russia banned tourist operators from operating in Turkey in response to the downing of a Russian bomber Su-24 by a Turkish warplane in Syria.

"If Russia fully implements its plan of sanctions against Turkey Ankara may lose $2.5-3 billion or nearly one percent of its GDP," expert Alexander Shirov from the Russian Academy of Sciences said. How much damages the redirecting of the traditional money flow by Russian tourists "away from Egypt" will cost the Egyptians remains to be seen.