By Swann Collins, investor, writer and consultant in international affairs, Eurasia Business News, August 5, 2022

Turkish President Recep Tayyip Erdogan (left) and his Russian counterpart Vladimir Putin (right).

The presidents of Russia and Turkey, Vladimir Putin and Recep Tayyip Erdogan, during their talks in Sochi today, agreed on the transition to partial payment of Russian gas in rubles. This was announced by the Russian Deputy Prime Minister of Russia Alexander Novak.

“The presidents agreed that we start gas supplies and get their payment partially in rubles,” Mr. Novak told Russian journalists. The Russian official did not specify how exactly the procedure for paying for energy resources in Russian currency will take place.

According to the Deputy Prime Minister, the presidents also discussed the construction of the Akkuyu nuclear power plant and the Turkish Stream gas pipeline. Mr. Novak did not disclose the details of the negotiations on this topic.

On March 31, Russian President Vladimir Putin signed a decree on the payment for gas supplies to “unfriendly countries” in rubles. According to the scheme approved by the Kremlin, “unfriendly” countries must transfer currency to special settlement accounts in Gazprombank, after which the financial institution converts funds into rubles on the Moscow Exchange.

If Turkey effectively starts paying Russian gas in rubles, and not anymore in dollars, such a move will greatly strenghten the currency policy of Russia and its Chinese ally. Moscow and Beijing have been working together since 2014 to build an alternative currency system, free of US dollars.

The US dollar was already excluded from the structures of the Russian National Welfare Fund in June 2021. On July 28, the Russian Federal Accounts Chamber  recommended revising the currency structure of the National Welfare Fund (NWF), excluding from it the currencies of countries that imposed sanctions on Russia. More could be announced in coming months.

The President of the Russian Federation Vladimir Putin and President of the Republic of Turkey Recep Tayyip Erdogan met in Sochi, Russian Federation, on August 5, 2022.

Talks in closed mode lasted just over four hours. Following the negotiations, the heads of state adopted a joint statement, released by the Kremlin. Here are the main points :

“Despite the current regional and global challenges, the leaders reaffirmed their common will to further develop Russian-Turkish relations on the basis of respect, recognition of mutual interests and in accordance with their international obligations.”

The two presidents held extensive consultations on the issues of the bilateral agenda of Russian-Turkish relations and agreed on the following: to increase the volume of bilateral trade on a balanced basis and achieve the set goals; to meet the expectations of the opposite side in the fields of economy and energy; To take concrete steps to increase cooperation on issues that have long remained on the agenda of both countries, in such sectors as transport, trade, agriculture, industry, finance, tourism and construction.

On regional issues, Vladimir Putin and Recep Tayyip Erdogan “stressed the key importance of sincere, frank and trusting relations between Russia and Turkey in achieving regional and international stability.“

Both leaders “recognized the important role of constructive relations between the two countries in the conclusion of the Initiative on the Safe Export of Grain from Ukrainian Ports.” The need to ensure the full implementation of the Istanbul package deal in accordance with its spirit and letter, including the unimpeded export of Russian grain, fertilizers and raw materials for their production, was emphasized.

Recent developments in Syria were also among the issues raised by Mr Putin and Mr Erdogan. Both presidents confirmed that they attach great importance to the advancement of the political process. The importance of preserving the political unity and territorial integrity of Syria was stressed during the talks. The determination to work together and in close coordination with each other in the fight against all terrorist organizations was also reaffirmed.

Lastly, a firm commitment to the sovereignty, territorial integrity and national unity of Libya was declared. Vladimir Putin and Recep Tayyip Erdogan stressed the importance of holding free, fair and credible elections based on the broadest possible consensus and reaffirmed their support for the ongoing political process based on and under the leadership of Libyans themselves.

The heads of state agreed to hold the next meeting of the High-Level Cooperation Council in Turkey.

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© Copyright 2022 – Swann Collins, investor and consultant in international affairs.