This Is How Russia Could Hurt Turkey’s Economy

Russia and Turkey have a raft of strategic and commercial trade deals in place which could be at risk as the diplomatic row over Turkey’s downing of a Russian warplane continues.

Geopolitical tensions between Russia and NATO member Turkey have risen this week after a Russian SU-24 warplane was shot down by a Turkish F-16 fighter jet on Tuesday. Turkey said the jet was in Turkish airspace and ignored warnings to leave, Russia denies this.

Since the incident a war of words has broken out between the two countries over who was at fault and Russia has threatened to retaliate on an economic level.

On Wednesday, Russian Prime Minister Dmitry Medvedev said Turkey’s actions could result in the scrapping of joint projects and that Turkish companies could lose Russian market share.

On Thursday, Medvedev appeared to harden his stance against Turkey, ordering the government to draw up measures which could include freezing some joint investment projects with Turkey, Reuters reported. These could also include restrictions on food imports, he said.

Erdogan responded by saying such talk was “emotional” and “unfitting for politicians,” Reuters reported. He added that he was saddened by such statements from Russia.

This could be significant for both countries, Turkey is Russia’s second most important trading partner after Germany and, if Russia goes ahead and cuts economic ties, both countries will feel the effects, analysts warn.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.