Vladimir Putin and Recep Tayyip Erdogan pledged to deepen economic ties

Recep Tayyip Erdogan and Vladimir Putin have pledged to deepen economic ties between their countries as Moscow seeks to ease Western sanctions imposed over its invasion of Ukraine.

After a four-hour meeting at Putin’s residence in Sochi on Friday, the Russian and Turkish presidents issued a joint statement pledging to increase bilateral trade volumes and deepen their economic and energy ties.

Deputy Prime Minister Alexander Novak, Moscow’s chief energy official, told reporters that Turkey had agreed to start paying for Russian gas in rubles, according to Interfax.

He added that Putin and Erdogan discussed further development of banking relations and settlements in rubles and lira.

Novak said the deals would “take our trade and economic relations to a new level in basically every area,” including transportation, industry, agriculture, tourism and information technology.

Although both leaders nodded at the tensions between them, including the conflict in Syria, the economic fallout from the war in Ukraine provided reasons for rapprochement.

Western sanctions have largely isolated the Russian economy from the global financial system and left it struggling to replace banned imported goods or to find markets for its energy exports.

Turkey suffers from a massive trade imbalance caused by rising global energy prices – itself caused in large part by the way the Russian invasion disrupted markets. Ankara is looking for foreign capital to bridge the gap.

The United States and other Western allies were concerned about Erdogan’s contradictory stance on the invasion of Ukraine. The deputy US Treasury secretary met Turkish officials and bankers in Istanbul in June to warn them of becoming a conduit for evading Russian sanctions.

The Sochi meeting comes as Ukraine’s intelligence services recently showed NATO countries a document it says they intercepted from Moscow that contained proposals for Turkish-Russian cooperation, according to a Ukrainian intelligence official and Western diplomat. The latter said he believed the document was genuine.

People said 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 Washington Post was the first to report that Moscow was seeking Ankara’s help to circumvent Western sanctions. It is unclear whether Turkey, a member of NATO, will accept these proposals.

Putin and Erdogan previously suggested that the two countries could use their currencies for trade exchanges. Such a move would allow Russia to sidestep the US-denominated global oil market while enabling Turkey to limit the damage to its dwindling foreign currency reserves by paying for energy in Turkish lira.

Erdogan tried to play the role of mediator between Ukraine and Russia. Ankara supplied Kyiv with armed drones and was instrumental in securing a UN deal to lift the Russian naval blockade and allow Ukraine to resume grain exports from its Black Sea ports.

But Turkey also refused to accede to Western sanctions against Moscow, threatened to veto Sweden and Finland membership in NATO and allowed ships carrying wheat and corn from Russia-occupied parts of Ukraine to deliver their cargo to Turkish ports.

Putin and Erdogan said the grain deal “must be implemented in strict accordance with its spirit and letter,” including allowing the resumption of Russian grain and fertilizer exports that Moscow said had been hampered by sanctions.

The United States and the European Union have never imposed direct sanctions on Russian agriculture, but they issued clarifications that effectively roll back restrictions on it last month in conjunction with the agreement over Ukraine’s ports on the Black Sea.

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