{"id":5630,"date":"2022-08-05T11:53:36","date_gmt":"2022-08-05T16:53:36","guid":{"rendered":"https:\/\/whia.us\/5630\/"},"modified":"2022-08-05T11:59:03","modified_gmt":"2022-08-05T16:59:03","slug":"%d8%a8%d9%88%d8%aa%d9%8a%d9%86-%d9%8a%d9%84%d8%ac%d8%a3-%d8%a5%d9%84%d9%89-%d8%a3%d8%b1%d8%af%d9%88%d8%ba%d8%a7%d9%86-%d9%84%d8%aa%d8%ae%d9%81%d9%8a%d9%81-%d8%b9%d8%a8%d8%a1-%d8%a7%d9%84%d8%b9%d9%82","status":"publish","type":"post","link":"https:\/\/whia.us\/en\/5630\/","title":{"rendered":"Russia turns to Turkey, other trading partners to blunt sanctions\u2019 impact"},"content":{"rendered":"

by Catherine Belton, Kareem Fahim<\/strong>
\nThe Washington Post<\/strong><\/p>\n

Russia is turning to Turkey and other potential new trading partners as it tries to circumvent Western sanctions that are starting to bite even deeper into its economy following its invasion of Ukraine.<\/p>\n

Russian President Vladimir Putin is set to meet his Turkish counterpart, Recep Tayyip Erdogan, in Sochi on Friday, and the meeting \u2014 the leaders\u2019 second in just over two weeks \u2014 is setting off alarms that the Kremlin could strengthen economic ties with a NATO nation that has not joined in imposing sanctions on Moscow.<\/p>\n

A Russian proposal intercepted ahead of the meeting indicates Russia hopes Turkey will agree to new channels to help it avoid those restrictions on its banking, energy and industrial sectors.<\/p>\n

The proposal, which this week was shared with The Washington Post by Ukrainian intelligence, calls for Erdogan\u2019s government to permit Russia to buy stakes in Turkish oil refineries, oil terminals and reservoirs \u2014 a move that economists say could help disguise the origin of its exports after the European Union\u2019s oil embargo kicks in fully next year. Russia also is requesting that several state-owned Turkish banks allow correspondent accounts for Russia\u2019s biggest banks, which economists and sanctions experts say would be a flagrant breach of Western sanctions, and that Russian industrial producers be allowed to operate out of free economic zones in Turkey.<\/p>\n

There is no indication that Turkey would support these arrangements since they would leave the country\u2019s own banks and companies at risk of secondary sanctions and cut off their access to Western markets. Kremlin spokesman Dmitry Peskov did not respond to requests for comment. The Kremlin previously described the Putin-Erdogan meeting as focused on military-technical cooperation.<\/p>\n

A senior Turkish official, in response to questions about the Russian proposal, did not address its details but said the country remains \u201ccommitted to Ukraine\u2019s independence and sovereignty.\u201d He added that Turkey “as a matter of principle…exclusively joins sanctions that are imposed by the United Nations.\u201d<\/p>\n

The official, who spoke on the condition of anonymity to discuss a sensitive diplomatic meeting, noted that Turkey is \u201cthe only NATO ally that both Ukraine and Russia speak with and trust. That is why no other country has been able to bring together the two foreign ministers or official delegations.”<\/p>\n

Western government officials, also speaking on the condition of anonymity because of the sensitivity of the situation, told The Post that they were not aware of the intercepted proposal but knew Russia is seeking ways to circumvent the war-related sanctions and their growing economic damage. Russian officials are traveling the world trying to find people who would be willing to do business with their financial institutions, they said, noting that Turkey is among a group of jurisdictions being approached because of their lax regard to enforcement.<\/p>\n

With Russia cut off from much of the global economy, such overtures are a sign of the regime\u2019s increasing worries, those Western officials and economists say. Putin has derided Western sanctions as a failure \u2014 a steady stream of revenue from energy sales have propped up the Russian ruble and the country\u2019s financial system \u2014 and the International Monetary Fund now forecasts Russia\u2019s economy to fall only 6 percent this year.<\/p>\n

But economists say headline numbers mask a collapse across a large swath of Russian manufacturing and call the banking sector a \u201czombie system,\u201d with withdrawal of hard-currency deposits banned. Though Russia has sought to divert trade flows through countries like India and China, the Western-imposed block on imports of high-tech components has brought some industries to a standstill.<\/p>\n

\u201cThe situation will be darker next year,\u201d said Sergei Guriev, professor at France\u2019s Sciences Po and former chief economist at the European Bank for Reconstruction and Development. \u201cNo one knows how things are going to function when the European oil embargo kicks in. We\u2019re in unchartered territory.\u201d<\/p>\n

New figures released last week by Russia\u2019s state statistics agency Rosstat show how hard some sectors have been hit. Car production, the industry most dependent on foreign components, was down 89 percent in June year on year, while production of computers and semiconductors was down 40 percent year on year and that of washing machines nearly 59 percent lower.<\/p>\n

\u201cIt\u2019s clear things are going to get tougher and tougher,\u201d said Maxim Mironov, professor of finance at the IE Business School in Madrid. The announcement this week that one of the main auto plants of state-owned AvtoVAZ would reduce its workforce signals a lack of other options for the company \u2014 and the government, he noted. \u201cCutbacks are beginning and it could lead to social tension.\u201d<\/p>\n

Other high-tech sectors such as pharmaceutical production are also floundering. A Central Bank of Russia survey last month found that 40 percent of pharmaceutical producers had failed to find replacements for imports of ingredients and equipment. \u201cRussia has been trying to onshore pharmaceutical production, but it clearly hasn\u2019t been successful,\u201d said Elina Ribakova, deputy chief economist at the Washington-based Institute of International Finance. \u201cSometimes the overall data doesn\u2019t cover all the nuance,\u201d she said, with aluminum producers facing choke points on vital chemical supplies.<\/p>\n

Sergei Aleksashenko, a former deputy Central Bank chairman now in exile in the United States, said it\u2019s imperative for Russia to find alternative financial channels for its banks. \u201cIt is a question of money,\u201d he said, pointing out that Iran, with help from Russia and Turkey, had previously managed to get around Western sanctions. \u201cIf you pay a lot, there will be some banks ready to take the risk.\u201d<\/p>\n

Historic sanctions on Russia had roots in emotional appeal from Zelensky
\nThe Putin regime had previously hoped to bypass the current sanctions by creating alternative payment systems through Chinese banks, according to a well-connected Russian state official, speaking on the condition of anonymity because of fear of retribution. Yet Chinese banks have balked at taking on that role because of the risk of secondary sanctions. And despite the country\u2019s increasing imports of Russian oil and gas, it cannot replace all of Russia\u2019s equipment needs.<\/p>\n

A study by the Green Finance & Development Center at Shanghai\u2019s Fudan University concluded that sanctions fears prompted China to abandon new investments in Russia this year as part of its Belt and Road initiative. The Western officials said it had become clear that China was not an adequate channel for Russia to mitigate the impact of sanctions, forcing the Kremlin to desperately look for other partners.<\/p>\n

In Erdogan\u2019s complicated relationship with Putin \u2014 marked by periods of conflict and cooperation \u2014 Russia had significant past leverage and showed its displeasure by cutting off the flow of tourists to Turkey or banning the import of Turkish agricultural products. Since the start of the Ukrainian war, Turkey has positioned itself as a mediator between Moscow and Kyiv \u2014 a role that appeared to pay dividends last month when Turkey and the United Nations brokered an agreement to resume grain shipments from blockaded Ukrainian ports.<\/p>\n

Erdogan wants Putin\u2019s acquiescence for a planned Turkish military operation against Kurdish forces in northern Syria. Russia maintains troops in the area as part of its support for Syrian President Bashar al-Assad.<\/p>\n

According to two Moscow businessmen, retail supply chains are already being rebuilt in Russia with Turkey\u2019s help. The owner of a major retail chain said his outlets had completely reorganized supplies through new hubs in Turkey, Israel, China and Azerbaijan. Recent trade data from Turkish Statistical Institute, Ankara\u2019s statistics office also known as Turkstat, shows monthly Turkish exports to Russia surged by about $400 million between February and June.<\/p>\n

But consumer goods aside, sanctions experts and Western officials doubt Turkey could become a hub for vitally needed equipment supplies without facing the risk of crippling secondary sanctions. Those officials said the country now has to make a choice, knowing that any business it does with Russia risks casting a pall over its economy and financial sector and will make it harder to do business with the rest of the world.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sergei Aleksashenko, a former deputy Central Bank chairman now in exile in the United States, said it\u2019s imperative for Russia to find alternative financial channels for its banks.<\/p>\n","protected":false},"author":5,"featured_media":5628,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","footnotes":""},"categories":[142,199,128],"tags":[156,719,154,718],"series":[1027],"coauthors":[238],"class_list":["post-5630","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-most-important-topics-en","category-top-stories","category-updates-en","tag-russian-federation-en","tag-sanctions","tag-turkey-en","tag--en","series-whia-synergy"],"episode_featured_image":"https:\/\/whia.us\/wp-content\/uploads\/kkk-3-e1659718407338.jpg","episode_player_image":"https:\/\/whia.us\/wp-content\/plugins\/seriously-simple-podcasting\/assets\/images\/no-album-art.png","download_link":"","player_link":"","audio_player":false,"episode_data":{"playerMode":"dark","subscribeUrls":{"apple_podcasts":{"key":"apple_podcasts","url":"","label":"Apple Podcasts","class":"apple_podcasts","icon":"apple-podcasts.png"},"stitcher":{"key":"stitcher","url":"","label":"Stitcher","class":"stitcher","icon":"stitcher.png"},"google_podcasts":{"key":"google_podcasts","url":"","label":"Google Podcasts","class":"google_podcasts","icon":"google-podcasts.png"},"spotify":{"key":"spotify","url":"","label":"Spotify","class":"spotify","icon":"spotify.png"}},"rssFeedUrl":"https:\/\/whia.us\/en\/feed\/podcast\/whia-synergy","embedCode":"

Russia turns to Turkey, other trading partners to blunt sanctions\u2019 impact<\/a><\/blockquote>