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Vladimir Putin and Recep Tayyip Erdoğan vow to deepen economic ties

Recep Tayyip Erdoğan and Vladimir Putin have pledged to deepen economic ties between their two countries, while Moscow aims to soften the blow of Western sanctions imposed for the invasion of Ukraine.

Meeting the Turkish president at his residence in Sochi on Friday, Putin said government delegations had discussed “all key areas” of cooperation. Erdoğan praised productive meetings on politics, economics and trade, which he said would open “another page” in relations between the countries.

While both leaders nodded at tensions between them, including the conflict in Syria, the economic fallout from the war in Ukraine has prompted rapprochement. Western sanctions have largely removed the Russian economy from the global financial system and made it difficult to replace banned imported goods or find markets for its energy exports.

Turkey is suffering from a yawning trade imbalance caused by rising global energy prices – themselves largely caused by the way the Russian invasion has disrupted markets. Ankara is on the hunt for foreign capital to fill the gap.

The US and other Western allies are concerned about Erdoğan’s ambivalent stance on the war in Ukraine. The US deputy treasury secretary met with Turkish officials and bankers in Istanbul in June to warn them not to become a channel for evading Russian sanctions.

The meeting in Sochi comes after Ukrainian intelligence agencies recently shared with NATO countries a document they say they intercepted from Moscow containing proposals for Turkish-Russian cooperation, according to a Ukrainian intelligence official and a Western diplomat. The latter said he believed the document to be genuine.

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

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

Erdoğan has tried to play a role as a mediator between Ukraine and Russia. Ankara has supplied Kiev with armed drones and played a key role 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 ships carrying wheat and maize from Russian-occupied parts. from Ukraine to deliver their cargoes to Turkish ports.

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