Burak Pehlivan, head of the Turkish-Ukrainian Business Association (TUID), said on Tuesday that Turkey opened more new business ventures in Ukraine last year than any other country, including the U.S. and China.
“Despite the ongoing war, Turkish-Ukrainian economic and trade relations remain viable, dynamic, and progressive,” Pehlivan told Ukraine’s state-run Ukrinform news agency.
“In 2024, 1,109 companies with foreign capital were established in Ukraine. Approximately 20% of them were companies with Turkish capital. Last year, Turkish companies accounted for the largest number of foreign companies opened in Ukraine,” he said.
“In total, more than 1,100 Turkish companies operate in Ukraine today. Turkish investments in Ukraine are approaching $5 billion,” he said.
Turkish President Recep Tayyip Erdogan and Ukrainian President Volodymyr Zelensky signed a free trade agreement (FTA) in Kyiv on February 3, 2022 – just a few weeks before Russia invaded. The signing ceremony was the culmination of an idea first proposed in 1998 and seriously negotiated since 2007.
Turkey was, at the time, Ukraine’s fourth-biggest trading partner after China, Poland, and Russia. China remains Ukraine’s top trading partner.
Pehlivan, who was chair of TUID when the free trade agreement was signed, predicted Ukrainian trade with Turkey would surge to over $10 billion per year thanks to reduced customs duties.
“We want to make the cake bigger so our Ukrainian counterparts eat more of the cake,” he gushed.
As things turned out, the cake had to stay in the oven for quite a while longer. Ukraine’s huge metal and grain exports to Turkey were major sticking points in free trade negotiations, causing negotiations to drag on for 15 years. Those sticking points remained and Ukraine proved very reluctant to actually ratify the deal Zelensky and Erdogan had signed.
Turkey ratified the agreement on August 2, 2024, more than two years after it was signed. The Ukrainian parliament still has not ratified the agreement to this day. If the deal ever goes fully into effect, import duties for over half of the industrial products traded between the two countries will be eliminated.
Pehlivan was upbeat on Tuesday that the FTA would soon be ratified by Ukraine, calling it a “step in the right direction for the economic relations between the two countries.” He said it was nevertheless understandable that the Ukrainian side has been slow to finalize the deal due to the distractions of the Russian invasion.
Pehlivan noted that in addition to the huge number of Turkish companies opening in Ukraine, trade volume has increased even without the FTA, and Turkey achieved its first trade surplus with Ukraine in 34 years in 2024.
The trade volume between Turkey and Ukraine reached $6.2 billion in 2024, well below Pehlivan’s hopes of $10 billion with the FTA, although Ukrainian Economy Minister Yulia Sviridenko said in February that $10 billion in trade remains the “overall goal” of both countries.
The Turkish Defense Ministry hinted last week that Turkey, which has the second largest standing army in the North Atlantic Treaty Organization (NATO), would be willing to contribute troops to a possible multinational peacekeeping force in Ukraine.
Turkish sources said a durable ceasefire between Russia and Ukraine would have to be obtained before any peacekeeping deployment would be possible.
Russia has generally rejected the notion of NATO forces anywhere on the ground in Ukraine, but Turkey has fairly good relations with Moscow, having refused to participate in punitive sanctions against Russia.
Turkey also helped to broker the Black Sea Grain Initiative, a deal struck in 2022 that allowed Ukraine to export grain through the Black Sea to alleviate world hunger. Russia terminated the agreement in July 2023 because it felt Western nations did not reciprocate enough by lifting sanctions on Russian goods.