Turkey’s economic direction shifting from US to Russia

Ankara has the assets and needs sites for effective investments, and is therefore turning to Moscow


From the USA to Russia: Turkey has shifted its economic vector

Maksim Bout, in Экономиа сегодня, 21 April 20, Moscow.

National funds of Russia and Turkey for $ 500 million invested into joint projects in infrastructure, healthcare and information technology present serious prospects. This view was voiced by Alexei Obraztsov, the leading researcher of the Center for Asian and African Studies of the Higher School of Economics ….

“As you know, Turkey decided to withdraw its assets from US banks and securities, and now they need to be invested somewhere.” One of the promising directions, according to the leadership of Turkey, is joint funds, including with Russia. Moreover, large projects with the Russian Federation are successfully advancing – both the Akkuyu nuclear power plant and the Turkish Stream. The role of the United States as a world financial center is increasingly questionable.


“Economists confirm: if not for international assets, then the crisis of 2014 would have put the American economy on the brink of disaster. Many states habitually keep money in the US, since they are an international emission center. But there are many examples of freezing of foreign assets by Americans, and and it is still unclear where money from the arrested accounts disappears – the recent Libyan example is indicative. That is, investments in Anglo-Saxon institutions are becoming less reliable and less profitable. With this background, Turkey’s casting about in search of new sites for investment is quite understandable,” notes the orientalist.

The head of the Russian Direct Investment Fund (RFPI), Kirill Dmitriev, said that jointly with the National Welfare Fund of Turkey, the RFPI are going to invest $500 million in joint projects. The main attention will be paid to infrastructure projects, healthcare and information technologies. “The Russian-Turkish investment fund, created in 2017, is aimed at strengthening economic relations between the two countries and increasing the flow of investments,” the official said.

“Turkey is obsessed with the idea of restoring its significant role in world markets. While Turkey’s economy is among the twenty largest in the world, by 2043 Ankara wants to take it to the top ten; altogether, it’s not so simple. At present, Turkey is withdrawing 30 tons of gold from the US, all told they have about 200 tons – not so hot as reserves, but not “cat tears,” either. At the same time, Turkey has a lot of internal problems, the solution of which requires money.


“It’s because Ankara is in search of sites for effective investment. They have the assets, and need profitable projects. This is why Ankara is going to Moscow,” the expert points out.


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Points of development

The report notes that at the end of 2016, the gold stock of the Central Bank of Turkey, stored in the US Federal Reserve, was 28.6 tons, while at the end of 2017 there is a dash in the corresponding column. Milliyet newspaper reports that the largest Turkish private banks also withdrew their gold reserves from abroad, responding to the call of Turkish President Tayyip Erdogan “to get rid of the pressure on the exchange rate and to use gold against the dollar.” Thus, Halk Bankas also transferred gold stored abroad to Turkey gold, in the amount of 29 tons. According to the Turkish press, altopgether 220 tons of gold were returned from abroad to the country ….

Back in March 2017, RFPI signed a memorandum with Ankara on establishing a Russian-Turkish investment fund to work on joint projects that will strengthen the economic ties between the two countries. “We are pleased that business is a creative force in the development of Russian-Turkish relations … RFPI has established close cooperation with the sovereign fund of Turkey since its inception … We have already begun joint consideration of a number of potential investment projects with our Turkish partners,” said Kirill Dmitriev.


“First of all, Ankara will be interested in energy, as well as projects related to transit. The economy of Turkey is growing in these components. With energy in the country, there is just not enough – there are few own hydrocarbons and they are of low quality.This is why, after many decades, Ankara has engaged in nuclear energy and successfully raises it with Russia.


Again, a very advantageous geographical location makes it possible for the transit of very many goods. How far it will be possible to realize this potential is a big question, as the political factor hinders. The current great problem of Turkey is the amendment of the Constitution, as long as only amendments are made to it, but, judging by everything, a cardinal reform is coming. And much in the country is done with an eye to this task.


It is worth paying attention to the item “health care” in joint investments with the Russian Federation. In Russia, medicine is exemplary, while countries like Israel put emphasis on this field and got interesting developments – they developed original international medical centers. Turkey, due to climate and geography, claims to be a major health resort with resorts and modern hospitals. In this sense, joint investments are very beneficial both for Ankara and for Moscow. These are not junk investments, but serious long-term projects, “Alexey Obraztsov concludes.

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