Turkey welcomes Russian oligarch money — but it’s risky for its economy
Eclipse, the private luxury yacht of Russian billionaire Roman Abramovich, anchors at Cruise Port in Marmaris district of Mugla, Turkiye on March 23, 2022.
Anadolu Agency | Anadolu Agency | Getty Images
Russian oligarch wealth is on the hunt for a new home, and Turkey is quickly establishing itself as a welcome host.
Turkish Foreign Minister Mevlut Cavusoglu told CNBC Saturday that he’d welcome sanctioned Russian oligarchs into the country as both tourists and investors, as long as their business dealings adhered to international law.
It came a day after President Recep Tayyip Erdogan said that “certain capital groups” could “park their facilities with us,” in what was seen as a direct reference to the recent arrival of several Russian-owned luxury assets in Turkey, including two luxury yachts and a private jet belonging to billionaire Roman Abramovich.
The comments have sparked speculation that Turkey — a non-EU country but a NATO member — may be actively encouraging investment from blacklisted billionaires as it seeks to shore up its embattled economy. Already, wealthy Russians are actively seeking investments there, according to Reuters reports.
But any prospective gains could be short-sighted for a country orchestrating a delicate balancing act between Russia and the West.
“Attracting Russian money could hurt Turkey in the long-term,” Defne Arslan, a senior director at the Atlantic Council in Turkey and former economist for the U.S. Embassy in Ankara, told CNBC.
Striking a fine balance
Turkey is seeking to tread a fine line in the ongoing war in Ukraine.
While strongly criticizing Moscow’s unprovoked invasion, it has stopped short of implementing sanctions like those imposed by the U.S., EU, U.K. and others, saying it opposes them on principle.
Instead, it has adopted the role of a neutral mediator, facilitating peace talks between Russia and Ukraine. Negotiations in Istanbul on Tuesday appeared to raise hopes of a breakthrough after Moscow agreed to cut its military assault on Kyiv and Chernihiv, while Ukrainian negotiators proposed adopting neutral status in exchange for security guarantees.
If they’re parking their yacht, that’s OK. But Ankara will be very cognizant about Turkey becoming grounds for sanctions.
Emre Peker
director and Turkey specialist at Eurasia Group
Turkey’s stance of nominal neutrality is largely understood given its close economic and diplomatic ties with Russia, particularly regarding energy, defense, trade and tourism. As such, Western allies have not pressured Turkey to join sanctions, nor are they likely to punish it for not doing so.
That makes it a legitimate outpost for assets belonging to sanctioned Russians. Indeed, an influx of foreign investment and luxury assets could provide a boon for the beleaguered Turkish economy, which slipped into crisis mode last September as unorthodox interest rate cuts pushed already spiraling inflation higher.
However, Western tolerance is likely to wane should Turkey begin actively soliciting sanctioned wealth, according to Emre Peker, director and Turkey specialist at political risk consultancy Eurasia Group.
“If they’re parking their yacht, that’s OK,” Peker said. “But Ankara will…
Read More: Turkey welcomes Russian oligarch money — but it’s risky for its economy