Head of Russian business union works to reduce trade barriers with Turkey

Russia is now Turkey's largest trading partner, and Turkey ranks in the top five of Russia's. Unfortunately, Shokhin feels that these figures are far from reaching their potential because of a number of political, bureaucratic and psychological obstacles.

“We want to inform each other about the potential opportunities that exist between the two countries through fairs and official visits and so on,” he said. “[But] we also want to monitor the legislative and administrative barriers in the way of markets in both countries.”

High on his list of obstacles were changes in the legislative environments of the counties, making the investment climate unpredictable.

“Lukoil just bought a chain of gas stations,” he said, referring Lukoil's recent purchase of the Turkish Akpet chain, which operates around 700 gas stations across the country. “But because of new anti-monopoly regulatory legislation, all of these investments are now in question.” Using this as an example, he highlighted the importance of both Turkey and Russia in ensuring that grandfather clauses are applied.

“Of course Turkey and Russia are independent states and can introduce new legislation, but for investors entering markets, it is important to realize projects where the old rules of the game are applied,” he said.

“We believe that we will use the positive political climate of good relations between Mr. [Vladimir] Putin and Mr. [Abdullah] Gül and [Russian President Dmitry] Medvedev and [Turkish Prime Minister Recep Tayyip] Erdoğan to increase bilateral relations.”

But improving relations with Turkey for Shokhin is likely as much a part of boosting trade relations as it is about Russian foreign policy. “Without Turkey, it would be very difficult to realize future projects [in] energy relations [between] Russia and Europe,” he said pointing to the South Stream, the Blue Stream II and the Samsun-Ceyhan pipelines.

“If we realize all these projects with Turkey, energy security in Europe that flows from the Black Sea will be realized and the situation will be more stable. The dependence of consumers [in Europe] which stems from a lack of transit options will be minimized because of different alternative transit countries and alternative supplies.”

The RSPP, Russia's largest industrial and trade organization, has over 1,000 public and private sector member organizations, including such state-owned companies as Lukoil and Gazprom.

His concerns in many ways reflected the nature of the bilateral relationship: While large companies such as oil and gas distributors make up the bulk of Russian businesses operating in Turkey, the opposite is the case for Turkey. Small and medium-sized enterprises (SMEs) make up the bulk of Turkish companies operating in Russia.

“For Russia, it's big companies working in Turkey and so on. It's easier for them to work with the Russian bureaucracy.” Turkish companies are not always so lucky. Delays at the border, which some have said have cost Turkey tens if not hundreds of millions of dollars, were but one of the obstacles Shokhin hoped to improve. Unlike some who have pointed to political motivations behind the delays, he attributed them to red tape.

“That's why, I believe, if we simplify and clarify [bureaucracy and legislation], it would significantly increase trade,” he said.

He even mentioned recent legislative enactments in Russia that made it easier for companies to produce in Russia. “We would like to see Turkish companies producing in Russia,” he continued, noting that “the general strategy of the Russian government is the modernization of the economy, to modernize, to increase the value added.”

To this end, he announced that they would be cooperating with TUSKON at an upcoming trade fair in January to promote Turkish electronics products in Moscow.

“We also want to explain to Russian consumers that the quality of Turkish goods is high,” he said, noting that there is often an incorrect image of Turkish products.