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Çarşamba, 7 Aralık 2022
Çarşamba, Aralık 7, 2022
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‘Alliance of Authoritarian Leaders’ and the 2023 elections

There are many indications that Russian President Putin wants President Erdogan to win the election and that he is making efforts to that end

With the rapprochement process following the 15 July coup attempt, Turkey-Russia relations have evolved into a ‘strategic partnership’ based on the close personal relationship between Russian President Vladimir Putin and President Erdoğan. The acquisition of Russia's S-400 air defense systems, which led to Turkey's exclusion from the next-generation F-35 fighter jet project, has added a new dimension to Turkey-Russia relations. Turkey's place in both NATO and the Western alliance has also been questioned.

After Russia invaded Ukraine, almost all Western countries, especially the US and the UK, imposed sanctions on Russia as an alliance, while Turkey's strategy was to sell TB-2 unmanned aerial vehicles to Ukraine on the one hand and to deepen its economic and political relations with Russia on the other. This policy, which is defined as ‘politics of balance’ in the international relations literature, although seemingly pragmatic for Turkey, ushered in a new era in which relations with Russia directly intervened in Turkey's domestic politics. The fact that mutual relations were conducted at the level of leaders also paved the way for Putin and Erdoğan to instrumentalise their diplomatic relations for their interests to maintain their power.

Record trade volume and Russian capital flowing to Turkey

Following the invasion of Ukraine, many Western countries imposed sanctions on Russia in all areas, especially in trade, defense industry, technology, and finance, and Russia's relations with the Western world were completely severed, so to speak. As giant companies such as Mercedes, Apple, and McDonald's left Russia one by one, Turkey-based companies started to fill the gap in the market. For example, after Reebok decided to exit Russia in May, Turkey-based shoe manufacturer FLO bought more than 100 Reebok stores in the country. In addition, it was announced that companies such as Fiba, Anadolu Efes, İpekyol, and Mudo will increase their activities in Russia by benefitting from the emerging market gap in Russia.

The statements of Şeref Fayat, Chairman of the Apparel and Ready-to-Wear Industry Assembly of the Union of Chambers and Commodity Exchanges of Turkey (TOBB), summarise Turkey's strategy to fill the market gap that emerged with the exit of Western countries:

‘Although things did not improve in Ukraine, it became clear that there were some opportunities in Russia. Thanks to the sanctions, the American, French, and German companies there, in other words, the European companies exiting from that market, naturally increased the demand in the same regions a little more. They became less competitive. Therefore, there has been an important orientation towards Turkish brands both in opening new stores and making new investments.’

While Russia was the dominant party in Turkey-Russia relations before the invasion of Ukraine, the economic effects of the sanctions and the diplomatic isolation brought about by political isolation turned out to Turkey’s advantage in the relations between the two countries. Today, it is possible to define Turkey-Russia relations as ‘interdependent.’ While Turkey has gained vital importance as Russia's gateway to the world, the fact that Turkey-based companies filled the gap in the Russian market has played a major role in the business world's continued loyalty to the government despite the economic crisis. On the other hand, many Russian business people moved their capital to Turkey, established thousands of companies, and started to use Turkey as a logistics centre to reach the European market. Looking at the figures, Turkey-Russia trade reached $50 billion in 2022, up from $34.7 billion in 2021.

The Russian capital, seeking a safe harbour in the face of the threat of sanctions by Western countries and the risk of confiscation by the Russian government, started to flock to Turkey as a result of the AKP government's policies encouraging all kinds of capital inflows regardless of their origin. Between January and August, 729 companies with Russian capital were established in Turkey, and the total capital of these companies reached 360 million liras. 

Property purchases constitute another dimension of the story. Even before the invasion of Ukraine, Russian citizens had a great interest in buying real estate, especially in southern cities such as Antalya, but after the invasion, record levels were reached in real estate sales.Between January and September, the number of houses purchased by Russian and Ukrainian citizens in Turkey reached 11,086 and the number of houses purchased by Russian citizens increased by 200% compared to 2021. The number of Russian tourists to Turkey reached 3 million between January and August, providing short-term relief to the economy's growing need for foreign currency.

On 5 August, Erdogan and Putin met in Sochi and made a series of agreements that will benefit both leaders to stay in power. Following the meeting between the two leaders, the Russian energy company Rosatom, which is building the Akkuyu Nuclear Power Plant, injected more than $5 billion of foreign currency into the CBRT reserves under the name of the capital increase, and it was announced that the total amount to be transferred to Turkey would reach $15 billion.

President Erdoğan also announced that the Russian credit card system Mir, which was sanctioned by the EU, will be put into use in Turkey. Regarding the unregistered foreign currency inflow, former CBRT Chief Economist Prof. Dr. Hakan Kara said on his Twitter account, ‘The current account deficit is exploding, there is no registered capital inflow, yet why are foreign exchange reserves not depleted? Because the inflow of unregistered financing is at the peak of history’ and drew attention to the unregistered Russian capital entering Turkey.

While the sanctions imposed on the energy sector, which is Russia's biggest source of income, caused major energy and financial crises in EU countries, Russia's shift of its export market to the Asian market, especially China and India, enabled it to compensate for the loss of the market in Europe to a great extent. The fact that energy prices reached record highs across the world also provided Russia with a large income and allowed it to expand its diplomatic room for maneuver. President Erdoğan's policy of financing the current account deficit, which has increased due to the currency crisis and high inflation, with capital transfers from Russia is also based on this foundation. Putin's goal of keeping Erdoğan, whom he sees as a useful partner against NATO, in power is materialised through capital transfers to Turkey via Russian oligarchs.

Natural gas gesture to Turkey

Another significant dimension of Turkey-Russia relations is natural gas. Vladimir Putin, who stopped the flow of gas to Europe in response to the sanctions, is using energy resources as a weapon against Western countries by threatening Europe with freezing this winter if the sanctions are not lifted and the support to Ukraine is not stopped. On the other hand, by granting unprecedented concessions in natural gas to Turkey, which he sees as an ally, Putin aims to prolong President Erdoğan's stay in power.

Following the meeting in Sochi, it was agreed that Turkey would make most of its natural gas payments in roubles. However, the government, which has largely depleted its foreign currency resources to control the decline in the Turkish lira, agreed with Russia to make some of its natural gas payments in roubles. It even went a step further and offered to postpone natural gas payments until 2024. Although there is no official response from Russia yet, it is seen that this offer is likely to be accepted. Having cut off the gas flow to Europe via Nord Stream, Russia plans to increase Turkey's importance in terms of energy security by sending some of the natural gas to Europe via the Turkish Stream. The latest step in this regard was Putin's announcement of a plan to turn Turkey into ‘Europe's largest natural gas hub.’ President Erdoğan welcomed this plan and stated that Thrace is the most suitable place to become a gas hub and that concrete steps will be taken soon.

The impact of Erdogan-Putin friendship on the 2023 elections

Erdoğan has seized the historic opportunity created for him by Russia's invasion of Ukraine and expanded his room for maneuver in the international arena as the only NATO member to maintain relations with Russia. Aware that Turkey is Russia's only gateway to the West, Putin attaches great importance to Erdoğan's victory in the 2023 elections to prolong the life of his rule and avoid a defeat in the invasion of Ukraine. Putin, who has become heavily dependent on Turkey as Russia's gateway to the West, is forced to ignore even the TB-2 armed unmanned aerial vehicles sent by Bayraktar to Ukraine or the support provided by Turkey to Ukraine.

Recognising that a possible change of government in Turkey would require a more institutional framework between Turkey and Russia rather than personal interests, Putin is aware that Erdoğan's staying in power is also significant for his power. In this sense, knowing that the biggest threat to President Erdoğan's power before the 2023 elections is the economic crisis, he is making moves that could provide short-term relief to the government. 

Capital inflows of uncertain origin, which are shown as ‘net errors and omissions,’ the plan to postpone some of the energy payments, which are the biggest cause of the current account deficit, until 2024, or increasing Erdoğan's credibility in the international arena through his role in the grain deal can be shown as concrete examples of Putin's intervention in the 2023 elections, albeit indirectly. The temporary control of the exchange rate through the transfer of foreign resources and the government's creation of an electoral economy by opening the treasury's taps to the fullest with moves to balance the current account deficit have been steadily increasing both President Erdoğan's approval rating, the rate of those who think that Erdoğan will win the election, and the AKP's vote share for some time.

Against this backdrop, to win the 2023 elections, the opposition needs to win the voter's confidence in domestic politics and defeat the government, as well as end international support for the authoritarian regime in Turkey.

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Related Keywords

international relations

Turkey

Russia

Vladimir Putin

S-400 air defense systems

F-35 fighter jet

NATO

Western alliance

Ukraine

McDonald's

Reebok

Anadolu Efes

İpekyol

Mudo

Şeref Fayat

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Weekly insights: national and international relations in the run-up to the elections

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