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    June 29, 2016

    $9 Billion - The Toll on Turkish Economy for Shooting Down Russian Plane

    June 29, 2016

    Translated by Kristina Kharlova

    Turkish President Recep Tayyip Erdogan offered an apology to Russian President Vladimir Putin for the Russian Su-24 bomber downed in November of last year in the skies over Syria by Turkish air force. 

    This step opened an opportunity for Moscow to cancel economic sanctions against Turkey, reported Kremlin's press service.

    In November of last year, Russian fighter which took part in Moscow military campaign in Syria was shot down. Ankara announced that it had acted lawfully, as the plane crossed the Turkish airspace; Moscow denies these arguments.

    After the incident, Moscow quickly imposed sanctions, among which was a ban on imports of almost all food products – from tomatoes and apricots to chicken and salt products. However, it has not affected such important energy projects such as the international gas pipeline "Turkish stream".

    Sharp deterioration in the socio-economic situation in Turkey forced Erdogan to take the first step to rapprochement with Moscow. It is expected that this year economic growth will be reduced to 3.5%. Last week the World Bank said that it is much lower than was recorded in the beginning of Erdogan's reign. A sharp drop in tourism revenue after a series of explosions this year and unrest in the South-East of the country played a role.

    Russian sanctions, the growth of a terrorist threat, the escalation with Kurds in the South of the country, deterioration of Turkey's relations with the United States and the European Union because of refugees - all these factors have had a tremendous impact on the economy. 

    According to many experts, Turkish business elites have been dissatisfied with this situation and since the end of last year put pressure on Turkish leadership, especially Erdogan. 

    According to the Federal customs service (FCS), the trade turnover between Russia and Turkey amounted to more than $31 billion in 2014. By the end of 2015 it had dropped to $23.4 billion, and for the first four months of this year it amounted to only $4.8 billion. In fact, by the end of this year, the drop in trade can continue and the value of these losses could exceed $10 billion. Turkey estimates the damage from the deterioration of relations with Russia at 0.3–0.4% of GDP, or $9 billion. Such assessments were shared by Turkish Deputy Prime Minister Mehmet Shimshek in December 2015. 

    Turkey faced the biggest drop in the flow of foreign tourists in the last 17 years.

    According to the Ministry of culture and tourism of Turkey, the number of foreign tourists in April 2016 fell by 28% compared to the same period in 2015: in April of this year, Turkey was visited by 1.75 million people – almost 700 thousand less than in April last year.

    This is the most serious decline in tourist flow to Turkey since May 1999, when the PKK issued a warning to tourists, announcing the beginning of "retaliation" campaign of after the capture and imprisonment of their leader Abdullah Odjalan. 

    According to the published statistics the total number of foreign tourists from January to April 2016 fell by 16.5% compared to the same period in 2015. As of April this year, the number of tourists from Germany decreased by 35%. The number of tourists from Russia fell by 79%. 

    Russian citizens have traditionally been most numerous after German tourists, however, after a sharp deterioration in relations between the two countries, the imposition of sanctions and ban on organized travel to Turkey, after Turkish air force shot down the Russian Su-24 aircraft involved in the operation in Syria, the Russians dropped out of the top three countries to visit Turkey. Besides Germany, the largest number of tourists visiting Turkey in April arrived from Georgia and Bulgaria.


    KK: Turkey may look forward to a better official relationship with Russia, however the trust of the Russian public may take decades and generations to repair. Some business relationships will never be restored, as they have already been occupied by others... But Turkey has worse problems to deal with today, as it's global security image is nearing that of Iraq and Syria.

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