Associate Professor Evren Bolgun | How Bright Will Our Economy Be As We Enter The New Cold War Environment?

As of last night, I had thought of writing a short review for the current economic outlook of the Turkish economy for this week. As you know, as of 10:00 on Monday next week, we will have learned about the 2021/4th quarter growth of Turkey. double digit “%11th” We will have closed the last year with a high growth rate approaching the levels. However, 2022 is expected to close with a much lower growth rate. In this context, I would like to analyze the shine in our economy more by bringing together some macroeconomic data such as real sector confidence index, capacity utilization, credit card expenditures, credit growth trends, retail sales, industrial production, foreign trade balance, employment, etc. I would like to make an assessment on the possible effects of the Russia-Ukraine war on the Turkish economy, which is currently much more urgent than the economic outlook of Turkey.

As we will remember, the concept of Cold War was used to describe the hostile relations and ideological conflict that developed between the USA and the USSR after the Second World War. This conflict manifested itself not through overt military actions, but through economic pressure, propaganda and an arms race. During the Cold War period, the great states, especially the ‘‘Super States’They have meddled in the internal affairs of smaller and weaker states to indoctrinate them ideologically or to gain advantages for themselves. For this period, mostly Churchill’s 1946 ‘‘iron curtain’ His speech is considered the beginning, the fall of the Berlin Wall in 1989 or the dissolution of the USSR in 1991 as the end. (one)

During the Cold War, these two countries struggled to preserve and even expand their spheres of sovereignty in a bipolar world. For this reason, while embarking on a great arms race, they also tried to impose their ideology on the world. (2nd)

After the end of the Second World War, the USA and Russia started to direct the world politics during the Cold War period. These two powerful states adopted different policies from each other in this new period.

Since the announcement of the Monroe Doctrine, the USA has officially and openly started the policy of making alliances with other states, that is, the period of cooperating with the states outside of its continent, by putting an end to its policy of isolation in foreign affairs. (3)

On the other hand, the Soviets, in addition to following an expansionist policy, entered into a race with the USA in terms of technology. The states that were against the spread of communism preferred to unite against the USSR. After the clash of the two world views, the Eastern Bloc under the leadership of the Soviets and the Western Bloc under the leadership of the USA emerged. (4)

In the struggle that became more open as of the end of the Second World War, Turkey made an effort to position itself in the Western bloc. The fact that he was criticized by the victors of the war as a result of the controversial neutrality policy he followed in the war created the concern in the ruling circles, especially İnönü, that Turkey would be alone in the face of the post-war Soviet expansionist threat. İnönü had to develop internal and external policies such as the transition to a multi-party system in order to position Turkey on the side of the democratic world. In a sense, this was a continuation or necessity of Atatürk’s modernization and security-oriented policies in those years. At the beginning of the Cold War, under the leadership of İnönü, Turkey’s main foreign policy goal was to prevent the Soviet threat and, accordingly, to develop cooperation with the West in political, economic and military fields. (5)

The main reason why I started this week’s article with a short reminder in the context of international relations is that, as I mentioned in the title, the world’s occupation policy approach, which was previously implemented by Putin in Georgia and Crimea, is Russia’s relationship with the West due to the Ukraine policies, which have been supported by the West for a long time. the possibility of transitioning to a new cold war period.

The hot war situation that started between Russia and Ukraine has unfortunately caught the Turkish economy on the wrong foot. Turkey has important commercial relations with Russia and Ukraine, especially in energy, tourism, agriculture and food products. According to TUIK 2021 data, Russia ranks 10th in Turkey’s exports with $5.8 billion. Ukraine, on the other hand, ranks 20th with $2.9 billion. On the import side of Turkey, Russia ranks second with $29 billion, and Ukraine ranks 12th with $4.5 billion. As a result, when we evaluate in terms of total foreign trade volumes, Russia is at the level of $34.8 billion, while Ukraine is at the level of $7.4 billion. As a result, the sum of both countries is in Turkey’s foreign trade. $42.2 Billion level size. The fact that these 2 countries, with which we have a very high amount of foreign trade, have passed into a hot war environment, will adversely affect the Turkish economy in 2022, especially in the Tourism, Energy, Construction, Agriculture/Food sectors.

If we continue with the economic effects of the event, based on the TUIK data, the Russian and Ukrainian markets represent approximately the total number of foreign tourists coming to Turkey. 27.5% of forms. It is very clear that the course of summer holiday reservations, which are made especially in March and April, will be interrupted significantly if the current environment continues.

Ukraine is the 3rd country that sends the most tourists to Turkey after its bilateral relations, especially in the field of military/defense, have improved in recent years. The number of tourists coming to Turkey from Ukraine at the end of 2021, after the number of tourists that hit rock bottom in the 2020 pandemic environment and the tourism income period, increased by 100% and rose to the third place after Germany with 2 million 18 thousand people. The tourism sector, which hit rock bottom in 2020 due to Covid-19, spent some of its deep wounds in 2021 by wrapping it up. Especially since Russia lifted the ban on Turkey, a total of 10 million tourists flowed to our country throughout the year compared to the previous year. Thus, those who came to Turkey in 2021 The number of Russian tourists is 4.5 million reached the person. In 2020, 2 million Russian tourists came to our country. As a result, throughout 2021 6.5 Million from Russia and Ukraine A little more than one person has come to our country. Considering that tourists spend an average of $865 per person, approximately $5.6 Billion We earn an amount of tourism income from Russia and Ukraine. It is clear that if the hot war conditions continue until the summer months, we will be deprived of a large part of this income.

Turkish business people have an investment of around $4.5 billion in Ukraine. When we consider that nearly 700 Turkish companies operate in Ukraine and that there is employment of nearly 30 thousand, it is clear that the Ukrainian market is not something to be taken lightly.

According to the information given by Erdal Eren, the President of the Turkish Contractors Association (TMB), the total of the projects of the Turkish contractors under construction in Russia is $21 billion. Eren is the most important market for Turkish contractors since 1972. $95 billion in Russia announced that it had undertaken a $ business. In 2021 alone, the total amount of commitments undertaken over 30 projects in Russia is $11 billion. The total amount of projects undertaken in Ukraine since 1972 is approximately $9 Billion. Therefore, it is clear that both countries contribute significantly to Turkey’s foreign exchange income in terms of the construction sector.

Another sector that we are most sensitive about in the hot war environment that these two countries are going through is energy. The natural gas and oil agreements made in the past years are evolving into another phase with the price of Brent Oil, which has reached over $100 as of today. Turkey produces electricity over natural gas. About from Russia in 2021 61 Billion m3 We bought gas. In other words, Turkey’s total annual natural gas imports 40% Russia covers the majority. While Turkey may face the risk of cutting off the gas by Russia if it will sided with Ukraine in the face of the war, it is possible that the energy supply interruptions that may arise from Russia are partially covered by other producers such as Qatar, Azerbaijan, Nigeria, etc. We may be faced with such situations.

In the field of Agriculture/Food, Turkey buys wheat from Russia and Ukraine. Annual import of agricultural products such as Sunflower, Dry Legumes, etc. $4 Billion We pay an approximate amount. In addition, tomatoes, peppers, lemons, citrus fruits, etc. $1.5 Billion We have exports of agricultural products around.

It is very clear that the 2022 economic plans of the government, which has been advancing especially for 2 years over the discourse of high exchange rates, low interest rates, high production, high exports, and current account surplus, have been turned upside down as of this week. Turkey’s energy balance by the end of 2021 -$42 Billion. As of the end of last year, the price of Brent oil per barrel decreased from $77 to $102 today in just 2 months. increased by 32% When we take this into consideration, it is clear that our energy import costs for 2022 will increase considerably. It is very clear that the current account deficit bill of Turkey, which closed last year with a current account deficit of approximately $15 billion, will rise rapidly with the increasing energy costs.

According to calculations, oil prices For every $10 increase, Turkey’s Current Account Deficit will reach $4.5 Billion. increases to a close level. We need to consider that if the average Brent oil price remains at $100 in 2022, an additional cost of $15 billion will arise if the Current Account Deficit is realized at the level of $10 Billion, and $110. In the short-term, if the hot war situation intensifies, it has been started to be pronounced by foreign research groups that there is a possibility that the price of Brent oil may rise to the levels of $130-$150.

Oil prices, which declined for a short time during the full closure period in the middle of 2020, continue on their way with an accelerating momentum since 2020. However, this latest incident in our region shows that the damage to our energy cost may be great.

I hope that the hot war environment does not last long and people do not continue to die.

Last word: “There is enough suffering in the world. I don’t even want to think about any more.” – Agatha Christe


  1. Baskin Oran, Turkish Foreign Policy, Communication Pub., CI, 17th Edition, Istanbul, 2012, p.536
  2. Onur Oymen, Unarmed War (Diplomacy as an Art of Struggle), Remzi Bookstore, 7th Edition, Istanbul, 2011, p. 111.
  3. Rıfat Uçarol, Political History (1879-2014), Der Publications, 10th Edition, Istanbul, 2015, p. 943.
  4. Ahmet Çelik, The Cold War Process and Its Effects on Turkey, Ph.D. Thesis, Fırat University, Institute of Social Sciences, Elazig, 2018, p. 114.
  5. Cihat Göktepe, Süleyman Seydi, “Turkish Foreign Policy at the Beginning of the Cold War”, Bilig, P:72, (Winter, 2015), p. 197-198.

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