Will Russian Sanctions On Turkey Impact Global Markets?

Russian Prime Minister Dmitry Medvedev announced last week that he would introduce a set of economic sanctions on Turkey in response to its “act of aggression” in shooting down a Russian Su-24 bomber in Syria. The government followed through on Saturday as Russian President Vladimir Putin signed a decree on “… measures to ensure Russian national security and to protect Russian citizens from criminal and other unlawful actions and the application of special economic measures with respect to the Turkish Republic.”

The statement issued by the Kremlin press office, indicated that the Russian government will, on January 1st, 2016, implement a series of temporary bans and restrictions on imports of certain types of goods whose country of origin is Turkey. The decree also bans or restricts organizations which fall under the Turkish jurisdiction from providing certain types of services in Russia. In addition, employers and contractors of services which are not specified in the list determined by the Russian government are banned, starting from January 1, 2016, from employing Turkish citizens who were not employed or contracted by such employers and contractors as at December 31, 2015.

Turkish nationals travelling to Russia would require visas from January 1st, as Putin warned citizens not to travel to Turkey, a hugely popular destination for Russians, and asked Russian travel agencies to refrain from selling trips to Turkey.

Turkey-Russia Partnership

Turkey is one of Russia’s biggest trade partners and any economic sanction will affect both the Turkish and Russian economies and will impact international trade in the long run.

According to HSBC analysts, energy cooperation has been the most significant field of cooperation between Russia and Turkey. Russia’s gas-producing giant Gazprom exported 23.7 billion cubic meters of gas in 2014, 5.3 percent of its overall output. Moreover, Turkey buys Russian-produced crude oil and coal.