Five Turkish banks have adopted Russia’s Mir payments system, Turkey’s President Recep Tayyip Erdogan said on his return from talks with President Vladimir Putin in the Black Sea resort of Sochi, according to Bloomberg. Turkish economist Ugur Gurses claims MIR payment system will be used to off-set Turkey’s NG imports, though the scheme is unlikely to generate more than $500-700 mn per year, in comparison to Turkey’s trade deficit with Russia estimated at $33 bn for 2022. Erdogan’s announcement is certain to ring alarm bells in Western capitals, concerned about Turkey helping Russia breaking the broadening sanctions regime.
There are serious developments regarding the work that Turkish banks are doing on Russia’s Mir card, Turkey’s state-run Anadolu Agency cited Erdogan as saying on the plane. That’s a relief for both Russian tourists and Turkey, he told reporters.
Payment in rubles will be a source of financial support for both Russia and Turkey, he said, adding the central bank governors of the two countries also met during the visit. Putin and Erdogan agreed to start moving to partial payment in rubles for deliveries of natural gas at talks in Sochi.
While Turkey voiced its opposition to Russia’s invasion of Ukraine, it has refrained from joining US and European sanctions on Russia.
It has also continued to import energy from Russia, which provided a quarter of its crude oil imports and around 45 percent of its natural gas deliveries last year.
Russia has also provided much needed foreign-exchange liquidity to Turkey by transferring billions of dollars to a Turkey-based subsidiary of Rosatom for completion of a nuclear power plant’s construction on the Mediterranean coast.
Erdogan also said he will visit the Akkuyu nuclear plant, which has been at the center of controversy, after a top Turkish contractor was removed by Russia’s state-run Rosatom.
Neither Turkey nor Russia would accept a delay on the completion of the plant, Erdogan said.
Turkish ministries are also working to broker an agreement on Russian grain exports, Erdogan said.
Western governments are alarmed over Turkey’s deepening ties with Russia – FT
Western governments are increasingly alarmed about deepening economic ties between Turkey and Russia, warning of the mounting risk that Turkey could be hit by punitive retaliation if it helps Russia avoid sanctions, the Financial Times reported on Saturday.
The article goes on to claim that Western governments are unlikely to impose official sanctions on Turkey ,but “arm-twist” their companies and banks to exercise utmost caution with the country, which will have a chilling effect on the Turkish economy and financial system.
Veteran political reporter and columnist Erdal Saglam reports that Finance Minister Nurettin Nebati had heralded “foreign direct investment equaling the current account deficit”, e.g. $40 bn for 2022 in the coming months, which had already started two weeks ago.
While it is not certain that such flows will come from Russia, Saglam expresses strong suspicion of Erdogan regime contacting oligarchs to white-wash their wealth in Turkey.
Turley has a poor track record of abiding by US-EU sanctions regimes, as attested by the ongoing trial of state-lender Halkbank in US, which is accused of helping funnel billions dollars’ worth of funds to Iran.
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