Erdogan is struggling with economic instability in his country, where inflation has hit 79.6 percent and the lira is sliding against foreign currencies. The troubles have hit his popularity with Turkish voters, meaning he could lose both parliamentary and presidential elections, which must be held by next June.
During Friday’s four-hour meeting, Erdogan agreed with Putin to pay for Russian natural gas partly in rubles, to increase trade volume between the two countries and allow Russian firms to set up business in Turkey’s free trade zones. He said on Saturday that five Turkish banks had adopted the Russian payment system Mir. The two leaders also agreed to cooperate in combatting terrorism in Syria, and in transport, agriculture, finance and the construction industries.
Erdogan needs to continue helping Putin or he may be ousted next year, said Igor Korotchenko, a Russian defense pundit.
"We're not diminishing the role of the Turkish people in making their choice,” Korotchenko told Rossiya-1, according to Britain’s Daily Express newspaper. "We're not diminishing Erdogan's part in this either, but in the modern world, such a mighty, self-sufficient power as Russia influences elections held by other nations in favor of certain politicians.”
Tim Ash, senior emerging markets strategist at BlueBay Asset Management in London and a veteran Turkey watcher, said on Twitter on Sunday that the talks with Putin and their outcome were “not a good look” for Turkey.
“Erdogan… seems to be going out of his way to boost trade with Russia, to help Russia ride thru sanctions and benefit and profit from this at the same time,” Ash said.
Erdogan has refused to sanction the Putin government or Russian businessmen for the war in Ukraine and has claimed a leading role in brokering a deal between Moscow and Kyiv to resume Ukrainian grain exports. He says Russian oligarchs are welcomed in Turkey as tourists or investors.
While Western governments have praised Turkey for brokering the grain deal, they are becoming very concerned about deepening economic and trade ties with Russia, warning that Ankara could be hit by punitive retaliation should it help Russia evade sanctions, the Financial Times reported on Sunday citing six Western officials.
Countries could call on their companies and financial institutions to exit Turkey if Erdogan follows through with the plans he outlined after the meeting with Putin, one senior Western official said.
Some individual EU member states could take action, one official said. "For example, they could ask for restrictions on trade finance or ask the large financial companies to reduce finance to Turkish companies… I would not rule out any negative actions [if] Turkey gets too close to Russia."
The United States, which has already sanctioned Turkey for purchasing Russian missiles in 2019, has warned countries repeatedly that they could be hit with “secondary sanctions” if they help Russia evade punitive measures. U.S. deputy Treasury secretary Wally Adeyemo held meeting in Turkey in June with government officials and bankers to warn them against becoming a conduit for illicit Russian money.
Korotchenko said next year’s elections overrode everything else for Erdogan, and Putin held sway over the result.
"Let's not forget the most important thing - the election of 2023,” he said. "Without support of Russia, without Putin's support, the keys to Erdogan's presidency are in the hands of the Russian leader if we're being honest… That's why the friendship with Russia, and personal contacts between Putin and Erdogan are the advantages that will enable the Turkish voters to vote for Erdogan next year.”
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