Vladimir Putin and Recep Tayyip Erdogan vow to deepen economic ties

Recep Tayyip Erdogan and Vladimir Putin have pledged to deepen economic ties between the two countries as Moscow seeks to soften the blow of Western sanctions over its invasion of Ukraine.

Putin, who hosted the Turkish president at his residence in Sochi on Friday, said the government delegation had discussed cooperation in “all the most important areas”. Erdogan praised the productive meeting addressing political, economic and trade issues, which he said would open a “very different page” in relations between the two countries.

While both leaders have shared tensions between them, including the conflict in Syria, the economic fallout of the war in Ukraine makes a case for reconciliation. Western sanctions have largely shut the Russian economy out of the global financial system, making it difficult to substitute banned imports or find markets for its energy exports.

Turkey is suffering from a trade imbalance caused by soaring global energy prices – caused in large part by Russian incursions that have disrupted markets. Ankara is looking for foreign capital to fill the void.

The United States and other Western allies have been concerned about Erdogan’s contradictory stance on the war in Ukraine. The U.S. deputy Treasury secretary met with Turkish officials and Istanbul bankers in June, warning them not to be a conduit for Russia to evade sanctions.

The Sochi meeting came as Ukrainian intelligence recently shared with NATO countries a document they said had been intercepted from Moscow containing an offer from Turkey to cooperate with Russia, according to Ukrainian intelligence officials and Western diplomats. The latter said he believed the document was authentic.

The proposals include ways to help Russia evade sanctions with the help of Turkish banks, as well as cooperation in other areas such as energy and industry, the people said. The Washington Post was the first to report that Russia was seeking help from Turkey to circumvent Western sanctions. It is unclear whether NATO member Turkey will accept the proposals.

Putin and Erdogan have previously suggested that the two countries could use their own currencies in commercial transactions. The move would allow Russia to sidestep U.S.-denominated global oil markets, while enabling Turkey to limit the damage caused by its dwindling foreign exchange reserves by paying for energy in Turkish lira.

Erdogan is trying to play the role of mediator between Ukraine and Russia. Ankara provided Kyiv with armed drones and was instrumental in enabling the UN to lift Russia’s maritime blockade and allow Ukraine to resume food exports from its Black Sea ports.

But Turkey has also refused to join Western sanctions against Moscow, threatened to veto NATO membership for Sweden and Finland, and allowed ships carrying wheat and corn from parts of Russia-occupied Ukraine to deliver goods to Turkish ports.

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