Turkish businesses reflect on possible sanctions from the US

Turkish businesses reflect on possible sanctions from the US
Update: 26 August 2022 01:10
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Companies in Turkey that conduct business with Russia seek to make sense of a letter sent by the US Treasury warning them not to relate to sanctioned Russian entities.

A letter sent from the US Treasury to Turkish business associations warning against doing business with sanctioned Russian companies and individuals threw into question the economic relations between the two countries. 

Turkish companies in general make sure they stay in the legal framework, but the warning may have psychological effects, Deutsche Welle Turkish reported

US Deputy Secretary of the Treasury Wally Adeyemo sent a letter the American Chamber of Commerce in Turkey and TUSIAD (Turkish Industry and Business Association) in which he said that Turkish companies were at risk of coming under U.S. sanctions if they did business with sanctioned Russian companies or individuals.

“Please be advised that relationships with sanctioned Russian actors may expose Turkish financial institutions and businesses to sanctions risk,” Adeyemo wrote.

It is very interesting that the US officials are sending a warning letter to an association like TUSIAD which represents the Turkish business world, said Naki Karaaslan, President of the Russian-Turkish Businessmen's Association adding that “state officials should answer their counterparts.”

Likewise, TUSIAD said that it conveyed the letter to Turkish ministries of trade, foreign affairs and treasury and finance, without making any comment. 

35 billion dollars of trade 

Turkish companies have investments in industries ranging from white goods to personal care products, from construction to banking and glass industry in Russia. Currently construction companies are conducting 150 projects worthy of 21 billion dollars, according to DW Turkish.

Data from the Turkish Exporters Assembly (TIM) shows that Turkish companies exported goods worthy of 3 billion 190 million dollars in the first seven months of 2022. The trade volume between Russia and Turkey is roughly 35 billion dollars.

Russia is the second country of origin for the tourism industry in Turkey. In the first seven months of the year, Russia sent 2.2 million tourists to Turkey. 

Tour Operators Platform spokesman Cem Polatoglu said that if the US imposes sanctions on Turkish companies, the tourism industry will be affected negatively.

The US warning also concerns financial institutions and banks that have correspondent bank relations with Russia. 

Economist Murat Sagman said that the warning will not have a negative impact on the banking and finance sector in the short term, but if actual sanctions come that will be another matter. 

According to Prof. Mehmet Sisman, it is necessary to clearly know the money traffic and the amount of money Russian oligarchs have in Turkey to understand whether the US is likely to impose sanctions on financial institutions in Turkey.

"It may take time for the US to detect these monetary movements, which take place outside the SWIFT system, monitored and directed by the US. However, the meeting between the US Treasury and its Turkish counterpart shows that the issue is taken seriously and is being followed in some way," Sisman said.