Under the din of jet fighter bombing civilian areas and a massive misdirection campaign staged by Russia, it is difficult how the war in Ukraine is proceeding, however most experts would agree that it will not be over soon. With Western sanctions pouring in daily, it is also difficult to measure how much the Russian economic activity will decline. Finally, Ukraine’s ability—if such a sovereign country still exists after war—to continue production and exports is a big question mark.
Turkey has long-standing economic ties with Russia, which ties had been extend to Ukraine recently. She is dependent on Russian energy and agricultural commodities, as well as tourists from both countries. Daily Hurriyet does an excellent job of listing the areas where Turkey is likely to suffer some economic loss:
No problems will occur in grain supplies until the new harvest season, the Agriculture and Forestry Ministry has said after the Ukraine-Russia crisis erupted, responding to news that the country has a shortage of sunflower oil and enough wheat to last through the new harvest.
“It is envisaged that no supply shortage will emerge in grains, particularly wheat, until the next harvest season,” the ministry said in a written statement on Feb. 24.
“Besides, the Turkish Grain Board continues its works for flour and forage regulation,” it added.
With good hopes for grain harvest this year, food supply disruptions are not expected, said the ministry. On the other hand, press reports indicate that Ankara may resort to export restrictions in agricultural commodities, if the war persists, disrupting supplies, or global prices soar to new highs.
Turkey has close ties with both countries in areas of construction contracts, tourism, wheat imports and fresh fruit and vegetable exports.
Russia and Ukraine together account for 29 percent of global wheat exports, 19 percent of world corn exports and 80 percent of world sunflower oil exports.
Turkey procures 70 percent of imported wheat, which is essential for pasta and flour exports, from Russia and 15 percent from Ukraine.
Turkey is one of the largest flour exporters in the world and the second-largest pasta exporter. The country exports around 1.3 million tons of pasta in a year.
In 2019, before the COVID-19 pandemic disrupted the global supply chains, Turkey’s flour exports rose to over $1 billion.
However, Turkey’s wheat cultivation areas dropped to 6.7 million hectares from 7.3 million in recent years.
Turkey’s agricultural imports from Russia hit $4.4 billion last year, while agricultural exports to this country reached $1.5 billion.
In total, Turkey’s exports to Russia increased from $4.5 billion in 2020 to $5.7 billion last year. Imports from Russia were $29 billion, up from $18 billion a year earlier.
Turkey’s Energy Shortage Reaches Critical Point
Russia has pledged to commit to its obligations as part of the long-term natural gas contracts, Energy and Natural Resources Minister Fatih Dönmez told daily Hürriyet on Feb. 23.
In December 2021, Russia supplied the most gas to Turkey at 2.06 bcm, while the U.S. and Iran followed with 1.05 million cubic meters (mcm) and 855 mcm, respectively.
Turkey’s exports to Ukraine were at $2.9 billion last year, whereas imports from that country rose from $2.6 billion in 2020 to $4.5 billion last year.
Construction sector could be affected
Turkish contractors have undertaken constructions works worth $95 billion in Russia in the last five decades, according to the Turkish Contractors Association (TMB).
Russia Ukraine Conflict: Turkey Is Collateral Damage
Last year, 30 contracts with a total volume of $11 billion were won by Turkish businesspeople.
“There are more than 100 construction sites at which works continue without disruption. The volume of those contracts is over $20 billion,” TMB head Erdal Eren told local media on Feb. 24.
However, a possible economic shrinkage in the Russian economy could affect future contracts, he added.
Turkish contractors have also completed construction works worth $9 billion since 1972.
The total volume of the ongoing projects of Turkish contractors in Ukraine is around $3 billion.
“As works were suspended due to winter conditions, most of the Turkish workers in Ukraine were on leave,” said Eren.
As for tourist source countries last year, Russia took first place with 19 percent – some 5 million visitors. It was followed by Germany, at 12.5 percent, or 3.1 million, and Ukraine, at 8.3 percent, or 2.1 million.
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