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Putin and Erdoğan vow to deepen economic ties

Recep Tayyip Erdoğan and Vladimir Putin have pledged to deepen economic ties between their countries as Moscow seeks to soften the blow of western sanctions imposed over its invasion of Ukraine.

After a four-hour meeting at Putin’s residence in Sochi on Friday, the Russian and Turkish presidents released a joint statement pledging to raise their bilateral trade volumes and deepen their economic and energy ties.

Deputy prime minister Alexander Novak, Moscow’s top energy official, told reporters that Turkey had agreed to begin paying for Russia’s gas in roubles, according to Interfax.

Putin and Erdoğan had discussed further developing banking ties and settlements in roubles and lira, he added.

Novak said the deals would “take our trade and economic relations to a new level in basically every area”, including transport, industry, agriculture, tourism and IT.

Though both leaders nodded to tensions between them, including the conflict in Syria, the economic fallout of the war in Ukraine has provided reasons for rapprochement.

Western sanctions have largely cut the Russian economy out of the global financial system and left it struggling to replace banned imported goods or to find markets for its energy exports.

Turkey is suffering from a gaping trade imbalance caused by soaring global energy prices — themselves caused in large part by how Russia’s invasion has disrupted markets. Ankara is on the hunt for foreign capital to plug the gap.

The US and other western allies have been worried about Erdoğan’s ambivalent stance on the invasion of Ukraine. The US deputy Treasury secretary met Turkish officials and Istanbul bankers in June to warn them not to become a conduit for Russian sanctions evasion.

The Sochi meeting comes as Ukrainian intelligence services recently shared with Nato countries a document they say they intercepted from Moscow that contained proposals for Turkish-Russian co-operation, according to a Ukrainian intelligence official and a western diplomat. The latter said he believed the document was genuine.

The proposals include ways to help Russia evade sanctions with the help of Turkish banks and co-operation in other areas including energy and industry, the people said. The Washington Post was first to report that Moscow was seeking Ankara’s help to circumvent western sanctions. It is unclear whether Turkey, a Nato member, will accept those proposals.

Putin and Erdoğan have previously suggested the countries could use their own currencies in commercial exchanges. Such a move would allow Russia to avoid the US-denominated global oil market while enabling Turkey to limit the damage to its dwindling foreign currency reserves by paying for energy in Turkish lira.

Erdoğan has attempted to carve out a role as mediator between Ukraine and Russia. Ankara has supplied Kyiv with armed drones and was instrumental in securing a UN deal to lift a Russian naval blockade and allow Ukraine to resume grain exports from its Black Sea ports.

But Turkey has also refused to join the west’s sanctions against Moscow, has threatened to veto Sweden and Finland’s Nato membership and has allowed vessels carrying wheat and corn from Russian-occupied parts of Ukraine to deliver their cargos to Turkish ports.

Putin and Erdoğan said the grain deal “must be implemented in full accordance with its spirit and letter”, including allowing the resumption of Russian grain and fertiliser exports that Moscow said had been hampered by the sanctions.

The US and EU never sanctioned Russia’s agriculture directly, but issued clarifications that effectively rolled back restrictions against it last month in tandem with the deal on Ukraine’s Black Sea ports.

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