Commentary: Pros and cons of sanctions on Russia for Turkish economy

Rumor has it, that the difference between “threat” and “opportunity” in Chinese is only a tiny brush stroke. The author doesn’t know if this is true, but in Turkey’s case it certainly is, but he shall focus on the negatives which at this point seem to tip the scale.      On the positive side Turkish press reports confirms the social media excitement about American and EU business looking for opportunities in Turkey to invest either to replace some Russian-Ukrainian suppliers which had suddenly become riskier. In terms of goods and services not sanctioned under the incomplete, confusing but rapidly evolving sanctions regimes, Turkey could potentially become the export center for some sanctions-free items.


On the   negative side, Turkish banks have suddenly become very paranoid about any Russian trying to do any financial transaction in Turkey. As importantly, day by day, tourist estimates from the war- stricken countries are revised downwards.


Frist, “Wary of Western sanctions, Turkey’s banks resist Russian customers” heralds Reuters.


Russians newly arrived in Turkey are struggling to make deposits and transfers at banks that are taking a careful and sceptical approach for fear of contravening Western sanctions imposed on Moscow over the war in Ukraine, according to several sources.


Private lenders especially are resisting some customer requests and running others through extra layers of compliance to ensure they are abiding by international and domestic law, four bankers and two Turkish officials told Reuters.


“The problem is not opening an account but rather how will the money come and what will happen if any sanctions come,” the person said. “Banks are very careful in terms of new accounts.”



Experienced Turkey hand Peter Kenyon reports for NPR that “Sanctions on Russia may limit the number of Russian tourists visiting Turkey”.  In an interview with host Rachel Martin, he comments:


In 2019, more than 13 million visitors came here. And Russians filling the beaches by day and the clubs by night were a big part of that. Standing in the doorway of his watch-selling business, 65-year-old Ersan (ph) agrees to talk with a reporter if his last name isn’t used. All those interviewed for this story were worried about possible retribution for speaking candidly about the slumping economy. Ersan says business isn’t just slow, it’s almost dead, down by some 80%. He blames the sanctions.



The author Atilla Yesilada consulted several source to broadcast a video titled  “Ukraine Crisis Could Cost Turkey $30 Billion”, which is linked here.


In the broadcast, he shares his finding as follows:


Turkey’s leading economist, Mr. Mahfi Eğilmez estimated the cost of the “Ukraine Crisis” at $30 bn. I had independently calculated $35 bn. $30 bn is roughly 4% of annual national income. Such a loss would kick Turkey into a deep recession, as well as precipitate a Balance of Payments crisis.



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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.