Which Turkish construction companies will continue to work in Russia?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The tragic incident in the Syrian sky, which occurred on November 24, 2015, dramatically affected the relationship between Russia and Turkey. This affected almost all spheres: political, trade and economic, tourism and construction. The latter is especially acute, because today Turkish construction companies in Russia own a lot of construction projects that need to be completed. What decision did the authorities make?

Su-24

On the morning of November 24, 2015, a Russian Su-24 bomber returning to base from a combat mission was shot down by Turkish fighters on the Turkish-Syrian border. The backstory for this case begins in June 2012. Then the Syrian air defenses shot down a Turkish F-4 fighter. In response, the rules for the use of armed force were revised and a decision was made to intercept objects (sea, air, ground) moving towards the Turkish border and violating it.

Regarding the case with the Russian Su-24, the Turkish side claimed that there was a violation of the air border. However, an international investigationconfirmed this version. In addition, the ejected navigator of the Russian bomber, Oleg Peshkov, was shot at and killed during the landing. Members of the Russian rescue operation, which was sent to help the second navigator, Konstantin Murakhtin, also became victims. All these violations became the reason for the deterioration of Russian-Turkish relations.

Consequences

The tragic incident had many consequences. In particular, sanctions measures were taken that affected Turkish food and textile products. Since January 1, 2016, charter air transportation, tourism relations and hiring workers from Turkey have been banned. The restriction of the activities of Turkish organizations on the territory of the Russian Federation for the provision of services and the performance of certain types of work brought particular damage to intereconomic relations. First of all, this affected the construction industry.

White List

Back in November 2015, literally immediately after the incident with the Su-24, State Duma deputy Vadim Solovyov proposed to liquidate Turkish construction companies in Russia. And since the beginning of 2016, this proposal has only been partially implemented.

It is unprofitable for Russia itself to refuse the services of Turkish developers right away. Therefore, the government has prepared a "white list". He clearly decides which Turkish construction companies will remain in Russia and continue to work despite the sanctions. Such a move was justified by the simple fulfillment of contractual conditions. Only bythe completion of the construction of certain facilities and the terms of contracts with Turkish developers, sanctions against them will come into force, and they will leave the Russian market. Contracts with them will no longer be concluded. An example of such temporary “privileges” are unique projects (for example, preparations for the 2018 World Cup) that Turkish construction companies are supposed to implement in Russia.

The list was made up of: Enka, Esta Construction, Ant Yapi, Renaissance, Odak and others. The new decree allowed these companies to continue operating in 2016, but limited the number of workers from Turkey in them. These are large Turkish construction companies in Russia, whose sales for a couple of quarters of the normal working regime bring hundreds of millions of dollars. The rest of the firms that signed contracts after the decision was issued are forced to leave the Russian market.

Business move

Of course, the new state of affairs did not suit the Turkish construction companies in Russia, the list created negative prospects for most of them. The million-dollar income received from the Russian market is dominant for most of them. Therefore, some Turkish construction companies in Russia, which, despite the sanctions, want to continue to work, have resorted to legal tricks. They started re-registration of business for Russian citizens, legal entities that are not connected with Turkey. Thus, they automatically continue their legal activities in the Russian construction market.

Investment projects

Sanctions on Turkish construction companies in Russiahave a reverse, negative side for the state itself. Before the entry into force of the decree, large investment projects were approved, the interruption of which today could bring losses, primarily to the Russian state budget and companies. Such projects include the construction of the Akkuyu nuclear power plant and the gas pipeline, called the Turkish Stream. And if there were no hopes for the gas pipeline due to inappropriate use, then the cancellation of the Akkuyu construction project, with a multi-billion dollar profit in the future, was a significant loss for Rosatom.

Forecasts

If Turkish construction companies in Russia completely leave the market, this will not create an economic disaster. And although 70% of residential properties in Moscow today belong to Turkish companies, and the state budget itself receives considerable income, the market will adapt within two to three years, and the loss of developers will be replenished. The strategic policy of gradual displacement of Turkish companies also contributes to positive prospects.