Development of Trade Relations between Russia and Turkey in Past 20 Years: Political Motives and Impact of Covid-19 on Trade between Two Countries

Economic relations between Russia and Turkey have been developing over the period from 2000 to 2020 at an accelerated speed. Among those relations, trade is one of the areas of cooperation between countries where both state authorities invest considerable efforts in creation of legal framework. In 2019, bilateral investments between Russian and Turkey reached 20 billion USD. In 2018, 6 million Russian tourists visited Turkey as their holiday destination. This master thesis aims to identify development of trade relations between states in the period from 2000 to 2020 and key characteristics of these relations. Furthermore, this thesis strives to investigate the impact of political motives and Covid-19 pandemic on trade relations between Russia and Turkey. The methodology of research is based on analysis of secondary data, mainly official statistics, articles from Russian and Turkish magazines and journals and international media. This research contributes to existing academic knowledge by explaining impact of political motives and recent Covid-19 pandemic on trade between Russia and Turkey. Analysis of trade structure between countries made it clear that Turkish companies in Russia are actively involved in construction sector, while in trade volumes significant proportion of products exported from Turkey are agricultural products and textiles. At the same time, Russia is the key energy supplier for Turkey and such dependence on Russian gas is an area of concern for Turkish government because country lacks internal sources of energy and balance in trade is distorted in Russia’s favor. Furthermore, in spite of economic measures to facilitate trade between states, Russia in recent years restricted trade with Turkey as a measure to punish Turkey for political conflict over dominance in the region and international affairs. An example of such political conflict is involvement of Turkey and Russia in Syrian conflict: Turkey supported regime change, while Russia expressed support to Assad regime. In response to political tensions between states, Russia imposed trade restrictions on certain agricultural products imported from Turkey and banned Russian tourists from entering Turkey. Another factor which could potentially harm trade between Russia and Turkey was Covid-19 pandemic which distorted global supply chains. However, analysis within this research showed that pandemic had little effect on trade between states, while Covid-19, in fact, created more opportunities for Turkey to export to global market. Therefore, this master thesis concluded that political tensions have significant effect on trade relations and volumes between Russia and Turkey since Russia often resorts to trade restrictions as measure to punish Turkey for conflict of interests. However, Russian government abstains from any restrictions on energy exports to Turkey even in times of political conflict because this area of cooperation constitutes an important part of Russian geopolitics and economy. Nevertheless, in recent years Turkey started to invest in diversification of energy supplies to avoid heavy dependence on Russian gas, largely with the help of Azerbaijani gas and exploitation of internal resources.