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 areas: political, trade, economic, tourism and construction. The latter is particularly acute, because today Turkish construction companies in Russia own many construction projects that require completion. What decision did the authorities make?
Su-24
On the morning of November 24, 2015, a Russian Su-24 bomber, returning to the base from a combat mission, was shot down by Turkish fighters on the Turkish-Syrian border. The background to this case begins in June 2012. Then the Syrian air defense shot down the 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 of the Russian Su-24, the Turkish side claimed that there was a violation of the air border. However, an international investigation did not confirm this version. In addition, the ejected navigator of the Russian bomber - Oleg Peshkov - was shot at and killed during a landing. Members of the Russian rescue operation, which was aimed at helping the second navigator, Konstantin Murakhtin, also became victims. All these violations were the reason for the deterioration of Russian-Turkish relations.
Effects
The tragic incident brought a lot of consequences. In particular, sanctions measures were taken that affected Turkish food and textile products. Starting January 1, 2016, charter flights, tourist relationships, and hiring workers from Turkey were banned. Particular damage to inter-economic relations was brought by the restriction of the activities of Turkish organizations in the Russian Federation on the provision of services and the performance of certain types of work. This primarily affected the construction industry.
White list
Back in November 2015, literally immediately after the incident with the Su-24, State Duma deputy Vadim Solovyov was asked to liquidate Turkish construction companies in Russia. And since the beginning of 2016, this proposal has only partially begun to be implemented.
Immediately from the services of Turkish developers to refuse is disadvantageous to Russia itself. Therefore, the government has prepared a “white list”. He clearly decides which Turkish construction companies will remain in Russia and continue to work contrary to sanctions. Such a move was argued by the simple fulfillment of contractual conditions. Only after the completion of the construction of certain objects and the terms of the contracts with Turkish developers will the sanctions against them 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, preparation for the 2018 World Cup), which Turkish construction companies should implement in Russia.
The list was compiled by: Enka, Esta Construction, Ant Yapi, Renaissance, Odak and others. The new resolution allowed these companies to continue working in 2016, but limited the number of workers from Turkey in them. These are large Turkish construction companies in Russia, the sales of which in the course of a couple of quarters of the normal working regime bring hundreds of millions of dollars. The remaining firms that entered into 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 Turkish construction companies in Russia, the list created negative prospects for most of them. Millionth income from the Russian market is dominant for most of them. Therefore, some Turkish construction companies in Russia, which, contrary to sanctions, want to continue to work, resorted to legal tricks. They began re-registering the business into Russian citizens, legal entities that are not connected with Turkey. Thus, they automatically continue their legitimate activities in the Russian construction market.
Investment projects
Sanctions on Turkish construction companies in Russia have a negative side for the state itself. Prior to the entry into force of the resolution, major investment projects were approved , the interruption of which today may cause losses, primarily to the Russian state budget and companies. Such projects include the construction of Akkuyu NPP and a gas pipeline called the Turkish Stream. And if there was no hope because of the inappropriate use of the gas pipeline, the cancellation of the Akkuyu construction project, with a multi-billion dollar profit in the long run, 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 housing facilities in Moscow today belong to Turkish companies, and the state budget itself receives considerable income, within two or three years the market will adapt and the loss of developers will be compensated. Positive prospects contribute to the strategic policy of the gradual crowding out of Turkish companies.