Turkey Slaps Curbs on Russian Export Goods

Bloomberg

ANKARA, Turkey -- Turkey will impose curbs on Russian exports and may withdraw support for its membership in the World Trade Organization as a trade dispute between the two countries intensifies.

From Sept. 1, Turkey will inflict the same trade restrictions on Russian goods that Moscow has applied at its border posts, Foreign Trade Minister Kursad Tuzmen told reporters in Ankara on Friday.

Turkey, a U.S. ally that trades more goods with Russia than any other country, complained last week as Turkish trucks sat waiting at Russian customs. The government suspects that Moscow may be punishing it for allowing U.S. warships to pass through the Bosporus to deliver humanitarian aid to Georgia.

"I hope we can now resolve the problem without it getting worse," Tuzmen said. "We don't want to conclude that Russia is obstructing Turkish exports because of permission we gave for NATO ships to pass through the Bosporus."

U.S. warships are spearheading the aid mission to Georgia, a U.S. ally that wants to join NATO. The Bosporus provides sole access for ships to Georgia's ports in the Black Sea. Russia began an incursion into its Caucasus neighbor on Aug. 8, a day after Georgian troops attempted to regain Russian-backed South Ossetia.

The curbs on Turkish exports may cost the country as much as $3 billion in lost revenue, Tuzmen said. Russia was the largest market outside the European Union for Turkish goods last year, with $4.9 billion of exports. Turkey also relies on Russian natural gas imports for heating and electricity.

Officials at the Federal Customs Service in Moscow have said they are not aware of measures against Turkish exports.

The Turkish government is responsible for policing the 32-kilometer Bosporus, the only route for ships traveling to the Black Sea, under the 1936 Montreux agreement. Countries that do not border the Black Sea may only sail their warships there for a maximum 21 days and must give 15 days' notice before passing the straits.

Turkey is responsible for applying the accord's three-week rule on foreign ships, Anatoly Nogovitsyn, deputy chief of the General Staff, said in Moscow on Aug. 27.

Ankara has sought to boost trade with Moscow as it tackles a current account deficit that's widening as energy costs increase.

Textile and clothing exports, which make up the bulk of exports to Russia, were Turkey's biggest foreign currency earner last year, bringing in $22.6 billion.

Meanwhile, Turkish builders, including Enka, have invested billions in Russian construction projects. Enka on Friday slumped 2.8 percent to 10.60 liras ($9) on the Istanbul Stock Exchange, extending this week's losses to 12 percent on concern that the trade dispute will hurt its business in Russia.

The dispute means that Turkey may withdraw its support for Russia's membership of the WTO, Tuzmen said. Russia, with the largest economy outside the 153-member trade organization, applied to join more than 15 years ago.