Neither Turkey not Russia have reported any adverse consequences from the boycott; although Turkish exporters have been shifting their gaze to new markets in the Middle East and Africa. Russia wants to increase import from Sudan and Ukraine closed its borders to Russian products.
Ukraine boycotts Russia
The Russian border is closed for a list of products from the Ukraine. These sanctions follow Ukrainian rapprochement with the EU. Ukraine's response to these measures was to announce a boycott of Russian products that will go into effect on January 10th. The boycott will last until August 5, 2016. The list of boycotted products includes various goods, from cookies to cigarettes and baby food to vodka.
President Putin signed a decree for the transportation of Ukrainian products to Kazakhstan. This trade is only possible if it meets strict requirements, which include the goods being tracked and only going through Belarus.
Russian crisis in 8 points
The Russian economy is still in crisis. The prosperity of the country hangs on oil and gas revenues. Research shows that 70% of Russia's GDP is dependent on oil revenues. The Moscow Times made a list highlighting 8 aspects of the crisis.
If the oil price falls to $50 per barrel it would cost Russia some $160 billion in lost annual exports. By mid-December, the price of oil had fallen to less than $40 per barrel. Russia's response was to maximize output and ramp up exports of gas and metals, prices of which have fallen sharply.
Due to the West's sanctions the country does not have access to technology, and foreign debt can also not be refinanced. The loans must be repaid, which means capital across the border disappears. In the long term a lower debt burden is positive, but in the short term a chunk of GDP leaves the country.
The weak Ruble has had some positive effects: the Central Bank was able to maintain capital reserves instead of taking action to defend the currency. In addition, imported products are much more expensive, which has positively effected the balance of trade.
No more high prices, but smuggling is happening
The Russian government does not expect that the boycott of Turkish products will result in considerable changes in prices. According to the government, they have found new suppliers for the products. The price increases that have been showing in the market are usual for this time of the year, says the Kremlin. Moscow is aware that Turkish exporters want to sell their products on the Russian market via illegal routes. There is talk of smuggling routes via Azerbaijan and other areas.
Russia wants lower Iranian import levy
Putin asked the Eurasian Economic Union to lower import levies on Iranian products. The request will be further worked on this month. Russia is interested in tomatoes, citrus, dates and cucumbers from Iran.
Turkish prices have not fallen due to the boycott
According to the Turkish Union of Agricultural Chambers (TZOB), the boycott has not resulted in lower fruit and vegetable prices. According to figures from the TZOB, the prices for cucumbers, tomatoes, oranges and zucchinis have even increased. Although, these price increases were noted in December, before the boycott officially began.
Turkey's Plan B: Middle East and Africa
Turkish exporters have a Plan B to make up for the lost exports to Russia: focus on trade with Africa and the Middle East. The exporters and the government are in talks with various countries. The Turkish government is also working on measures to mitigate the effects.
Russia asks Sudan to increase export
Russia asked Sudan for an overview of the volume of fruit, vegetables and nuts that they can export to Russia in 2016-2017. Russia would like to import as much as possible from Africa; including, onions, cabbage, potatoes, cucumbers, tomatoes, bell peppers, mangoes, grapefruit and melons.
Free Trade Agreement between Israel and Ukraine
Ukraine and Israel have reached an agreement on free trade for the first half of the year. This was confirmed by the Ukrainian President on December 23rd, "We have made a decision to more quickly enter into the free trade agreement. This will take place in the first half of 2016."
