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Ukraine crisis pushes Turkish builders, exporters into turmoil

by DAILY SABAH

ISTANBUL Feb 25, 2022 - 3:59 pm GMT+3
Lorries are seen near the Kapıkule border gate along the Turkish-Bulgarian border, Feb. 25, 2022. (IHA Photo)
Lorries are seen near the Kapıkule border gate along the Turkish-Bulgarian border, Feb. 25, 2022. (IHA Photo)
by DAILY SABAH Feb 25, 2022 3:59 pm

Turkish contractors and exporters have found themselves in a tight spot, with fears over the swings from Russia’s military intervention into Ukraine.

Concerned over their businesses, exporters are having their trucks stuck at borders and have complained of already having difficulties in getting their payments.

The invasion was unleashed early Thursday with a series of missile strikes quickly followed by a ground assault from the north, east and south in an attack that could rewrite the global post-Cold War security order.

Moscow’s action caused a barrage of financial sanctions meant to isolate, punish and impoverish Russia, with punitive measures aiming to impede its ability to do business in the world’s major currencies, namely dollars, euros, pounds and yen.

Both Russia and Ukraine are among the most important markets for Turkey, given the close links in trade, energy and tourism.

Russia’s assault threatens to have a major impact on the domestic market, said Erdal Eren, the head of the Turkish Contractors Association (TMB), stressing that the intervention triggered major risks for industries that do business with the two countries.

“We have over 100 sites under construction in Russia. Our works there total over $20 billion (TL 275 billion),” Eren told private broadcaster Bloomberg HT on Friday.

'Great trouble'

The invasion also hit Turkey’s fresh fruit and vegetable sector, with queues of trucks stuck on borders in Ukraine and Belarus.

Exporters may have to direct their goods meant for Russia and Ukraine toward the domestic market to avoid spoiling of the fruits and vegetables, said Eastern Black Sea Exporters Association (DKIB) Chairperson Saffet Kalyoncu.

Some 1.5 million tons of fresh fruit and vegetables were sent to Russia last year and 500,000 tons were shipped to Ukraine, Kalyoncu said.

“But exporters may direct the products that cannot be sent to these countries to the domestic market so that the goods in their hands do not go bad,” he told Anadolu Agency (AA).

Kalyoncu also said exporters were experiencing problems with their receivables in their top regional market after the ruble plunged in value against the dollar and the euro.

“Russian buyers are postponing their orders. Large customers are abstaining from paying money due to volatility in the ruble,” he stressed.

The same goes for Ukraine, the industry’s fourth-largest market, Kalyoncu added.

“In this environment, there is no way to collect receivables in the short term. Thus, exporters are in great trouble.”

At least 100 trucks stuck

At least 100 trucks have been stuck at the border after Belarus shut its crossings with Ukraine, Kalyoncu said, calling for an urgent solution that would enable drivers to travel back to Turkey.

He said it would take a very long time for the Ukrainian market to return to pre-intervention shape, stressing the difficulty to find alternative markets in the short run.

“Agreements with grocery stores are made in periods of at least six months. Therefore, it is very difficult to turn to the European market in the short term.”

Nejdat Sin, the chairperson of the Mediterranean Fresh Fruit and Vegetable Exporters Association also stressed they had trucks stuck at the crossing in Ukraine and Belarus.

“The situation is currently unclear. It is in all of our interests that the war ends as soon as possible,” Sin said.

Sales to Russia dropped 5% year-over-year in 2021 to around $10.45 million, said Uludağ Fresh Fruit and Vegetable Exporters’ Association (UYMSIB) Vice-Chair Senih Yazgan.

Yazgan said the invasion showed that the drop in exports to Russia may continue.

“The resolution of the uncertain situation and the elimination of the possibility of war is our greatest wish as exporters.”

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