While the United States and European Union are enforcing powerful financial and trade sanctions on Moscow and closing their airspace to Russian airplanes, Turkey strongly opposes such measures, arguing they are counterproductive.
As a result, concerns are growing that Turkey is helping Russians to circumvent the sanctions, said Timothy Ash, an emerging-markets analyst with London-based Bluebay Asset Management.
“There [has] been some focus on reflagging of Russian aircraft as Turkish aircraft. There are strong trading, banking relationships between Russia and Turkey. [There has been] some media attention on a lot of Russians trying to set up new bank accounts in Turkey, presumably to try to get around some of the problems they are probably encountering. There has also been concern that Russian companies, entities trying to export or trade with Russia, are repackaging themselves as Turkish entities.”
VOA reached out to Turkish government officials for comment but did not receive a response at the time of reporting.
Ankara insists it abides by its international legal responsibilities. But analyst Atilla Yesilada of Global Source Partners said it's not the first time Turkey has been suspected of international sanctions-busting.
“A lot of people [hoped] that Turkey would become a proxy financial center or intermediary for Russia," Yesilada said. "I wouldn't put it past the current regime to try to repeat the Reza Zarrab incident - 40 billion dollars of money whitewashed to Iran.”
Reza Zarrab is a Turkish-Iranian businessman who pleaded guilty in 2017 in a New York court to massive charges of violating sanctions against Iran. A senior executive of the Turkish state-owned Halkbank was also convicted. Halkbank itself is facing trial as part of the same investigation.
Turkish private and state banks are also likely to face scrutiny and severe penalties for violating Russian sanctions, said analyst Yesilada. He warned that sanctions-busting is highly risky, especially as any penalties could affect Turkey's ability to borrow from international markets.
“The next 12 months, including the estimated current account deficit, Turkey will have to roll over $200 billion of debt, and any reason for these to seize up is going to cause massive pain not only to the banks but to the exchange rate market and inevitably to the Turkish economy,” Yesilada said.
However, Ankara's strong military backing for Kyiv has generated international goodwill and recognition of the high economic price Turkey is paying, said Ash.
“It’s carrot and stick, right?" said Ash. The stick is the penalty for ignoring Western governments' request on sanctions against Russia, "but at the same time, I think there will be an effort to help the Turks and encourage them — perhaps financially with more assistance, perhaps to make sure they comply with the regime as is.”
With many of Turkey's economic woes blamed on President Recep Tayyip Erdogan's unorthodox financial policies, some analysts warn any international assistance could well be tied to changes in policy.