As Russia’s invasion of Ukraine grinds on, its impacts are
already being felt far beyond Ukraine’s borders. In Turkey, the war has cast a
shadow over President Recep Tayyip Erdogan’s economic ambitions, which include
reining in soaring interest rates, boosting exports, spurring growth, and
creating jobs.
اضافة اعلان
Turkey’s ties with Russia and Ukraine have long benefited
the Turkish economy, but now they have become liabilities.
Once viewed as having the potential to be a major food
producer, Turkey today imports most of what it eats. As inflation rates climb,
this dependence on buying from abroad is bankrupting consumers.
The Turkish Statistical Institute (TUIK) recorded a 16.4
percent increase in the consumer price index during the first two months of
2022, while Turkey’s Inflation Research Group (ENAGrup), which tracks price
trends, estimates that consumer goods and services spiked nearly 124 percent
between February 2021 and February 2022.
The rising cost of wheat is particularly problematic. In
2019, Turkey became the third-largest wheat importer in the world, and today it
imports almost 20 tonnes annually. According to the Turkish Grain Board, the
price of wheat per tonnes has surged to $517, up from $262 last March, the most it
has in 14 years. As a result, the price of bread is 120 percent higher than
three years ago. And because Turkey imports 65 percent of its wheat from Russia
and 13 percent from Ukraine, these prices are only going to worsen.
The war in Ukraine has also led Turks to panic buy sunflower
oil, which Turkey imports in abundance (it is the world’s largest importer of
this commodity). Again, Russia and Ukraine are the key sources, accounting for
70 percent of Turkey’s imports. In the last week alone, the price has jumped to
$2,000/tonnes from $1,400/tonne, and fears are rising that the country will soon run
out of the essential cooking oil. Ankara is trying to solve the problem by subsidizing
the planting of sunflowers this growing season, but it remains unclear how much
of Turkey’s needs can be met domestically.
Finally, fuel prices are skyrocketing, as they are in many
countries. Six months ago, the average price for a liter of gasoline was 7.76
lira (about $0.53). Today it is nearly triple that. Some 4,000 service stations
are on the verge of shutting down as customers stay away from the pump. If
things continue like this for much longer, more than 50,000 people connected
with the oil and gas industry could be out of work.
As Turks line up for bread across the country, inflation
fears are dominating Turkish society.
“Everything is getting expensive, from your food to your
bread, from your shirt down to the socks you wear,” one participant in
Istanbul’s subsidized bread program recently told Al Jazeera.
The sentiment is nearly universal. A February 2022 report
from the Gezici Research Institute found that 71 percent of Turks say that the
country’s teetering economy is their biggest concern and that an economic
crisis is looming.
Unfortunately, the government’s mitigation strategy is
obfuscation. Despite the lira losing 44 percent of its value against the dollar
in 2021, the government insists Turkey’s economy grew 11 percent last year. But
as economist Fatih Ozatay has suggested, official numbers are almost certainly
tampered with; the actual percentage is likely closer to four percent. Yet even
if Turkey’s economy did grow anywhere close to double digits last year, 2022
will be another story. As Simone Kaslowski, president of the Turkish Industry
and Business Association, notes, “the war between Russia and Ukraine has
increased the [economic] risks for Turkey”.
One reason is Turkey’s exposure to the Russian and Ukrainian
markets. Currently, there are more than 700 Turkish companies in Ukraine with
more than $4.5 billion worth of investment. One of them is Anadolu Efes,
Europe’s fifth-larger brewer, which has 11 facilities in Russia and three in
Ukraine. All of them have temporarily shut down.
According to TUIK, in December 2021, Russians were among the top foreign buyers of homes in Turkey.
The ready-to-wear clothing manufacturers based in Istanbul’s
Laleli district have also been hurt. Orders by companies in Russia and Ukraine
make up 40 percent of the district’s $3 billion in annual trade volume. Sales
have come to a standstill since the war started.
Unlike its Western counterparts, Turkey has fewer options to
bring Russia to the table. While Europe shuts its doors to Russian airlines in
retaliation for the Kremlin’s actions, Turkey remains reliant on Russian
holiday makers. Russians do not need a visa to enter Turkey and can stay in the
country for 90 days every six months. There are already roughly 30,000 Russians
living in Antalya, and the Russian-Turkish Business Association estimates there
have been as many as 100,000 marriages between Russians and Turks in recent
years.
These family ties translate into new cash flowing into the
housing market, especially in Istanbul. According to TUIK, in December 2021,
Russians were among the top foreign buyers of homes in Turkey. Already a popular
Russian tourist destination, Turkey could become an important safe-haven for
those escaping Russian authoritarianism.
As the smoke of Russia’s war machine continues to engulf
Ukraine, Europe is on edge for what comes next. But in Turkey, the war has already
arrived. The sooner that Ankara concedes to this reality, the more ammunition
Turks will have to weather the economic storm.
The writer is a journalist based in Istanbul. She reported
on the Arab Spring from Beirut as a Middle East correspondent for Milliyet
newspaper. Her work ranges from current affairs to culture, and has been
featured in Monocle, Courier Magazine, Maison Francaise and Istanbul Art News.
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