Russian economic sanctions on Turkey, according to a report just published by the European Bank for Reconstruction and Development, will affect the rate of Turkish economic growth but only to a limited degree. The eduction in Turkey’s GDP growth in 2016 would be between 0.3-0.7 percentage points, “if [the sanctions] remain in force over the [whole] next year and are fully applied, with most of the impact related to tourism occurring around the mid-year.” Russians represent 4.5 million of the 37 million tourists arriving annually in Turkey.

What are the Russian economic sanctions on Turkey?

At the same time, the Russian economic sanctions on Turkey appear to be crafted so as to avoid affecting Turkish construction companies, which have signed contracts in the last three years in Russia totalling approximately US$11 billion, equivalent to 1.3 per cent of Turkish GDP. All in all, Turkey’s is set to lose $9 billion from the imposition of Russian economic sanctions on Turkey.

However, that is far less than the $12-14 billion that it is estimated that Russia and Gazprom will lose. Russia’s economy will also suffer from moderately increased inflation, estimated at 0.1-0.2 percentage points overall, because of upward pressure on import prices, particularly fruits and vegetables. In addition to this, the travel ban to Turkey is expected to increase Russian inflation by a further 0.5 percentage points in 2016, as travel and services become more expensive.

One cannot avoid observing the interesting circumstance, that Putin seeks to apply Russian economic sanctions on Turkey at the same time when the international community is applying economic sanctions against Russia. There is an almost unavoidable impression that Putin is engaging in a psychological projection, in wishing to do to Erdogan what he fears that the West is trying to do to him: i.e., to drive him from power.

What are the goals of Russian economic sanctions on Turkey?

His goal would be to break Erdogan’s hold on power by breaking the AKP economically. It must be admitted that such strategy on Putin’s side would be extremely ambitious. Indeed, if Russian economic sanctions on Turkey hurt Turkey, then this will only be in the short term. And the Turks who will be hurt the most are those who are sympathetic to Russia and do business with it. Turkey can diversify away from Russia faster than the sanctions can do any lasting damage.

Of course the big economic issue between the two countries is energy. Turkey imports almost 99 per cent of the natural gas that it consumes, and Russia represents 56 per cent of these imports. This amounts to slightly over 25 billion cubic meters of gas per year (bcm/y).

The government has already announced its intent to seek other suppliers. But the problem is not just quantitative. Different regions of Turkey are differentially dependent. The industrial northwest of the county, which produces close to 40 per cent of GDP, relies entirely on Russian gas via the “western route” through Ukraine, Romania, and Bulgaria. This is the gas that Russia has promised to cut at the end of 2019.

After TANAP is completed, Turkey will receive 6 bcm/y additional gas from Azerbaijan, and the two countries are seeking to accelerate the pipeline’s construction, which is already ahead of schedule. Gas from the Kurdish region of Iraq is possible in the medium term, although the claimed expectations of 20 bcm/y within three years or even five years are surely exaggerated.

Reliable supply of gas from Iran remains problematic despite technical improvements in transmission, especially on the Iranian side. It is difficult to count on Iran, although in the longer term it has the possibility to become a transit country for gas from Turkmenistan.

Finally, liquefied natural gas (LNG) from Algeria and Qatar is possible, but Turkey’s de-gasification capacity is relatively small (about 14 bcm/y at two plants, including one in the industrialized Marmara region) and its storage capacity is smaller still.

Russia has semi-officially killed the Turkish Stream pipeline, which was on life-support on its deathbed anyway. There will be no meetings soon of the bilateral economic cooperation commission where such a project would have been discussed.

There are also conflicting reports over whether Russia will shoot itself in the foot with a cancellation of the Akkuyu nuclear power plant, on which Turkey has been counting. The project has had significant organizational problems for over the last year, and if it is cancelled, then this may be a blessing in disguise for Turkey. Official statements notwithstanding, the Akkuyu plant would be not only financed but also owned and operated by Russia on Turkish territory.

What is the significance of Russian economic sanctions on Turkey?

Putin announced in a speech in early December that he does not intend further to amplify Russian economic sanctions on Turkey. But this will not be the end of things. He stated specifically: “If anyone thinks Russia’s reaction will be limited to trade sanctions, they are deeply mistaken.” This implies that Russia may seek more profound revenge against Turkey not through Russian economic sanctions on Turkey but rather in Syria.

Both Turkey’s rebirth as a regional power, beginning in the late Cold War period, and the transformation of that bipolar international system into multipolarity enhanced Turkey’s international influence over the last three decades. Favorable economic circumstances until recently created a firm domestic basis for that external power and prestige projection.

But the last several years of Turkish-Russian friendship have been an anomaly in the history of the countries’ bilateral relations. They mark the only peacetime period over the last three centuries, when the Turkish state and the Russian state, whatever their incarnations, were strong states in the international system and at the same time had friendly relations with one another.

In that sense the current developments represent a reversion to long-standing historical patterns, although the present-day circumstances give them a qualitatively different character. Because of the special and distinct quality of the present-day international system, and especially for the economic reasons given above, Turkey will weather the present storm better than Russia.