Russia in no hurry to revive business with Turkey

Russia's Federal Air Transport Agency banned charter flights to Turkey in Nov. 2015. Charter flights will resume in September, 2016.

Russia's Federal Air Transport Agency banned charter flights to Turkey in Nov. 2015. Charter flights will resume in September, 2016.

Alexander Demianchuk / TASS
The thaw in relations with Turkey has seen Russia only lifting a ban on charter flights to that country, at the very end of the vacation season. Russia is yet to lift an embargo on some Turkish food imports. Is a delay in restoring normal relations really in Moscow’s interests?

Operators in the tourism sector are convinced that Russia has deliberately taken a protectionist step by holding back on lifting sanctions and re-starting air links with Turkey.

"The opening of charter flights to Turkey at the very end of the season is a very smart move to protect the interests of our resorts in Crimea and the Krasnodar Territory in the south of the country," said Janis Dzenis, PR director of ticket aggregator Aviasales.

"There are only a couple of weeks left of the classic season, so Turkey can hardly somehow dramatically soar in 2016," he said.

According to the Russian Union of Travel Industry, charter flights are 30 percent cheaper than commercial flights. Prior to the ban on charter flights in December 2015, Turkey was the most popular destination among Russian tourists, the Association of Tour Operators of Russia (ATOR) stated.

The situation is similar in the food market. Before introducing the product embargo in 2015, 29 per cent of imported cucumbers and 44 percent of imported tomatoes came to Russian shops from Turkey, according to Russia's Greenhouse Growth Technologies agricultural holding company.

"Lifting the product embargo on Turkish food is not on the table," said Yakob Lyubovedsky, executive director of the Organic Farming Union. "It will benefit Russian producers if this decision is not made at all.”

If the embargo is lifted, he said Turkish vegetables would easily regain their former share in the Russian market.

Ivan Rubanov, head of the analytical group of the Russian Government's Agricultural Committee, agrees."Turkish goods fall exactly into the niche of the Russian market with its rather poor consumers," said Rubanov.

Another delay for Turkish Stream

During their August 9 meeting in St. Petersburg, Russian President Vladimir Putin and Turkish President Recep Erdogan provisionally agreed to resume the construction of the Turkish Stream gas pipeline under the Black Sea, which Russia is hoping to subsequently extend into the Balkans.

However, the process has again stalled at the stage of signing government agreements and making decisions on the number of threads of the pipeline. Russia is insisting on doubling the capacity of the pipeline, while the Turkish company Botas wants to get a 10.25 percent discount on the price of gas from Russia's Gazprom, on which they had agreed before relations between them plummeted.

The issue of the discount is not such an obstacle today as it was before the drop in oil prices and gas, said Valery Nesterov, analyst on oil and gas at Sberbank CIB.

"Two years ago, Turkey was paying $400 per 1,000 cubic metres for Russian gas, and up to $600 for Iranian," Nesterov said. "Gazprom is now selling gas to Europe at a price of around $160. Therefore, Gazprom is able to offer gas on the most competitive terms."

According to Nesterov, the real intentions of the parties will be judged by their actions in the coming months.

"If government agreements are signed on all issues this year, then the project will start to be implemented next year," he said.

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