US Sanctions Threat Leads Turkey to Cut Exports to Russia by a Third

Written by Camilla Jessen

Mar.04 - 2024 10:43 AM CET

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Photo: Matveychuk Anatoliy / Shutterstock.com
Photo: Matveychuk Anatoliy / Shutterstock.com
In response to the fear of US sanctions, Turkey significantly reduced its trade with Russia, impacting both exports and imports

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Turkey has reduced its exports to Russia by a third because of concerns over American sanctions. In February, the export value dropped to $670 million from $1 billion in the same month last year, as reported by The Moscow Times with information from Turkey's Trade Ministry.

Over the first two months of the year, Turkey's sales to Russia were $1.29 billion, down from over $2 billion a year before. Now, Russia represents just 3.2% of Turkey's total export market. The top export destinations for Turkey in February were Germany ($1.72 billion) and the USA ($1.33 billion).

Impact on Trade Dynamics

Turkey's imports from Russia also saw a decrease, falling by more than a third (36.65%) from $2 billion to $1.3 billion compared to the same time last year.

This pattern was similar in January, with Turkish exports to Russia falling by 39% to $631 million from $1 billion in the previous year. Trade in some products, including machinery, has completely halted, as a source told Reuters.

The downturn in trade is attributed to the threat of secondary sanctions from the US. On December 22, 2023, President Joe Biden gave the Treasury Department the authority to impose restrictions on foreign financial institutions that assist in transactions involving sanctioned Russian entities or support the Russian military-industrial complex's equipment needs.

Following this, Turkish banks began reassessing their relationships with Russian clients to avoid jeopardizing their access to the dollar, which is vital for nearly half of the world's financial transactions. This scrutiny has also impacted Russian oil exporters who have faced issues receiving payments for oil sold to Ankara.

In January, India encountered similar problems, refusing 14 shipments of Sokol Sakhalin oil from Rosneft after the company couldn't open an account in the UAE to facilitate payments in dirhams.

By early February, Turkish banks started closing accounts of Russian companies, extending restrictions to nearly all Russian entities, not just those under sanctions.

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