Russia Resorts to ‘Very Selective’ Sanctions on Turkey

Russia's president Vladimir Putin gives a press conference with Turkish Prime minister Recep Tayyip Erdogan (R) in Istanbul on December 3, 2012, as part of Putin's trip focused on resolving sharp differences over the near 21-month conflict raging in Syria. AFP PHOTO/BULENT KILIC (Photo credit should read BULENT KILIC/AFP/Getty Images)

On Tuesday, Russia’s Economy Minister, Alexei Ulyukayev, sought to downplay the impact of much-publicized sanctions against Turkey over the downing of a Russian fighter jet on November 24.

His comments may have been meant more for Russians nervous about the effect of sanctions on their own enterprises as Turks.

“Turkey remains our large trading partner. Our embargo is selective, very selective, concerning food and only certain (items),” Ulyukayev said in an interview with Russian state television, as reported by Reuters.

“They are designed in a way so that existing contracts won’t be violated,” Ulyukayev continued. “Here we are for the time being very cautious. We don’t want to create problems for Turkish business, and even less for our own business and citizens.”

The Russian government may feel a need to reassure its own citizens after President Vladimir Putin expanded the sanctions to include more companies, including those “controlled by Turkish citizens even if the companies did not fall under Turkish jurisdiction,” according to Reuters.

However, even as Putin widened the sanctions, he ordered a list of exceptions that would give Russian interests “leeway to do business with Turkish companies,” if the government decides Russia would benefit.

Hurriyet Daily News found an extensive list of top Turkish brands receiving sanctions relief from Russia, including clothiers Colin’s, Defacto, Koton, Adl, LC Waikki and Mexx, which do a great deal of business in Russia. Hurriyet notes that Turkish clothing stores hold about 7 percent of the Russian retail market.

Also exempted were the global Marks & Spencer, Banana Republic, and Gap brands, which are distributed in Russia by a Turkish holding company, along with Turkey’s leading brewery, Anadolu Efes. Representatives of these companies reported no difficulty doing business in Russia since the sanctions were imposed.

“The export business is something else, but there are many Turkish brands that invest heavily in Russia and have properties. How could they fill stores without our products? We have now seen a moderation in ties,” said LC Waikki chairman Vahap Kucuk.

Anadolu Holding chairman Tuncay Ozilhan thought the Russians were unlikely to deal strong blows against Turkish companies that invest heavily in Russia, or employ large numbers of Russians.

“We generally opt for Russian raw materials in manufacturing and pay our taxes in a regular manner. There is something about loyalty here,” said Ozilhan. “We started to invest in the Russian market during the 1998 crisis, even though many global markets had left the market. When the first problems started between Turkey and Russia in November, we saw protests in negligible numbers. We have not seen such incidents now.”

Another reason for Russia to apply its sanctions delicately is that Putin has been striving to create distance between the Turkish people and the government of Recep Tayyip Erdogan. Measures that cripple Turkish businesses and impose huge costs on everyday citizens would make that strategy more difficult for Putin.

However, Russian propaganda outlet sees the broadened sanctions hitting Turkish companies that aren’t granted special exemptions very hard:

According to the updated list, Turkish companies won’t be able to construct buildings, work in architecture and design in Russia. The ban also prohibits Turks working in the travel and hotel business. Turkish companies won’t get Russia state and municipal contracts and won’t be able to participate in forestry and timber processing.

“The sanctions do not apply to contracts in place before the date of them the coming into force, or for the duration of those contracts,” adds. Their report counts a total of 53 Turkish companies receiving exceptions from the ban.


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