Update on Russia’s sanctions on Turkey

Russia’s Economic Development Minister Ulyukayev has said that Russia is not planning to expand its sanctions on Turkey (see previous blog, which summarises the sanctions). Mr Ulyukayev said “the visa regime that we are introducing will remain in place for a long time”, but added that the food imports did not involve the same risks as people visiting a dangerous territory and so could “be the first thing to be abolished”.  Turkey’s Foreign Minister Mevlut Cavusoglu has said that Russia should lift the sanctions without delay – “the economy and trade have always taken special positions in our bilateral relations”, and sanctions “will affect directly the economies of the countries and will cause negative consequences for the Russian people, no less than for the Turkish people”.

A report by the European Bank for Reconstruction and Development (link here) concludes that Turkey will be more affected by the sanctions than Russia.  It estimates that Turkey’s GDP growth could be 0.3-0.7% lower next year as a consequence of Russian sanctions targeting Turkey’s food and tourism industries, with Turkey’s major reliance on Russia for its energy supply a vulnerability should Russia choose to impose further sanctions. While the overall impact on Turkey’s economy will likely be “moderate”, the impact on individual firms in affected industries is likely to be larger.  Key to the extent of any decline in the rate of Turkey’s growth is whether currently operating contractors and workers continue to be exempt from sanctions, and if affected exporters and contractors are able to find alternative markets. As to the effect in Russia, the EBRD notes that there may be upward pressure on import prices and inflation, with a possible 25% increase in the price of embargoed products.  Prior to sanctions, Turkey was the second largest source of fruit and vegetable imports into Russia, and sanctions may contribute to an increase in Russia’s inflation of 0.1-0.2% in 2016.

This entry was posted in Russia, Turkey by Michael O'Kane. Bookmark the permalink.

About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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