The Russian-Turkish Bond to Harm the West

Turkey’s skies remain open to Russian airlines and its doors remain open to hundreds of thousands of Russians and their money. Turkey’s exports to Russia are surging.

Russian cash helped to plug the growing hole in Turkey’s foreign currency reserves — and at a time when Erdogan needs foreign money to shore up the country’s ailing economy before the presidential and parliamentary elections in June 2023.

Some analysts see this as a scheme to open up room for parking Russian funds in Turkey.

The Erdogan-Putin bond has two main pillars. One is pragmatism: They both strategically, politically and economically benefit. The other is ideological: They both hate Western civilization.

If they had met as presidents of other countries, Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin would probably have hated each other. Historically, Turkish Islamists have hated both Tsarist and Soviet Russia. Similarly, Russians have never been fond of the Turks. Today, however, Erdogan, with a foot in NATO, is exhibiting a pro-Russian tilt never seen before. What is the secret of this ostensible marriage?

Turkey has refused to join Western sanctions against Russia over Ukraine, thereby throwing Putin a lifeline. Turkey’s skies remain open to Russian airlines and its doors remain open to hundreds of thousands of Russians and their money. Turkey’s exports to Russia are surging. In July alone, exports to Russia shot up by a dizzying 75% year-on-year.

Russia’s state-owned Rosatom, which is building Turkey’s first nuclear power plant, had sent around $5 billion to its Turkish subsidiary, the first in a series of such transfers. Russian cash helped to plug the growing hole in Turkey’s foreign currency reserves — and at a time when Erdogan needs foreign money to shore up the country’s ailing economy before the presidential and parliamentary elections in June 2023.

Some analysts see this as a scheme to open up room for parking Russian funds in Turkey.

It might look to them as if the increase in the Turkish central bank’s foreign currency and gold reserves — to $108.1 billion on August 4 from $98.9 billion on July 26 — had to do with Russian money flowing to Turkey. Bloomberg reported:

"Mystery capital flows into Turkey have reached new highs, allowing policy makers to boost foreign reserves despite a growing trade deficit and weak demand for lira assets."

Bloomberg’s source remains unclear.

In March, Turkish Foreign Minister Mevlüt Çavuşoğlu said that Russian oligarchs were welcome in Turkey. In October, Financial Times reported that a record $28 billion from unclear origins had flowed into Turkey between January and August this year. Turkish investigative journalist Aytuğ Özçolak listed some of the Russian oligarchs who have business interests, investments and funds in Turkey: Leonid Mikhelson, Vagit Alekperov, Vladimir Lisin, Vladimir Potanin, Alexey Mordashov and Mikhail Fridman.

According to Marc Pierini, senior fellow at Carnegie Europe and former EU ambassador to Ankara, the number of Russian expatriates in Turkey, as well as their real estate investments and financial transfers to Turkish banks, have grown substantially. Furthermore, Pierini wrote, there is a suspicion that Russia is trying to circumvent some of the effects of Western sanctions via Turkey, in particular through the acquisition of stakes in Turkish oil businesses, as joint companies help to blur Russian trade in oil.

Pierini further wrote:

"The Kremlin's policy is highly pragmatic: knowing that Turkey's partners in NATO are keen to keep it in the North Atlantic Alliance and Ankara has every interest in staying within NATO, Putin's goal remains anchoring Erdoğan more and more to Russia through a vast mesh of mutually beneficial operations in the fields of defense, energy, trade, and finance.

"By doing this, Putin is comforting an embattled incumbent president and is openly bolstering Erdoğan's position in the upcoming elections. More than the Turkish president abandoning his traditional Western partners, the world is witnessing the Russian president using Turkey for his own benefits."

Jokes in Ankara’s political grapevine describe Putin as “head of Erdogan’s party’s Moscow provincial branch.” Whichever indicators one looks at, Putin wants Erdogan to stay in power. He would rather not gamble with someone else as Turkey’s new leader. This is understandable. Erdogan’s potential rivals have pledged to reinstate Turkey’s strong bonds with the West.

The Erdogan-Putin bond has two main pillars. One is pragmatism: They both strategically, politically and economically benefit. The other is ideological: They both hate Western civilization.