Identifier
Created
Classification
Origin
08MOSCOW2697
2008-09-09 11:07:00
CONFIDENTIAL
Embassy Moscow
Cable title:  

RUSSIAN CUSTOMS HOLDS UP TURKISH IMPORTS

Tags:  ETRD EINV ECON PREL TU RS 
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RR RUEHWEB

DE RUEHMO #2697/01 2531107
ZNY CCCCC ZZH
R 091107Z SEP 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 9903
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 3472
RUEHKV/AMEMBASSY KYIV 0286
RUEHIT/AMCONSUL ISTANBUL 0774
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHDC
C O N F I D E N T I A L MOSCOW 002697 

SIPDIS

DEPARTMENT FOR EUR/RUS
STATE PLS PASS USTR (BHAFNER)

E.O. 12958: DECL: 09/08/2018
TAGS: ETRD EINV ECON PREL TU RS
SUBJECT: RUSSIAN CUSTOMS HOLDS UP TURKISH IMPORTS

REF: A. ANKARA 1602

B. ANKARA 1584

C. MOSCOW 2579

D. MOSCOW 2620

E. MOSCOW 2655

Classified By: Ambassador John R. Beyrle, Reasons 1.4(b,d).

C O N F I D E N T I A L MOSCOW 002697

SIPDIS

DEPARTMENT FOR EUR/RUS
STATE PLS PASS USTR (BHAFNER)

E.O. 12958: DECL: 09/08/2018
TAGS: ETRD EINV ECON PREL TU RS
SUBJECT: RUSSIAN CUSTOMS HOLDS UP TURKISH IMPORTS

REF: A. ANKARA 1602

B. ANKARA 1584

C. MOSCOW 2579

D. MOSCOW 2620

E. MOSCOW 2655

Classified By: Ambassador John R. Beyrle, Reasons 1.4(b,d).


1. (C) SUMMARY: In the wake of the Georgia conflict, Turkish
imports appear to be the latest target of Russian scrutiny
following heightened trade tensions with the United States,
EU, and Ukraine. Russian customs officials have imposed
100-percent inspections of every Turkish truck at the Russian
border since July 16, except for those carrying perishable
goods such as fruits and vegetables. The average wait-time
at the border for Turkish imports of textiles, clothing,
equipment and other goods has increased from 1-2 days before
the inspections began, to at least 7 days, according to
Turkish diplomats here in Moscow. If senior-level dialogue
cannot resolve the situation within a few days, Turkish
diplomats told us similar customs inspections could be
imposed on Russian goods entering Turkey, and Turkey may
withdraw its support for Russia's WTO accession. END SUMMARY.

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RUSSIA IMPOSES TOUGH CUSTOMS MEASURES ON TURKISH GOODS
-------------- --------------


2. (C) Since the outbreak of the Georgia conflict, the GOR
has raised trade issues with many of Russia,s major trading
partners. Russia has stated it will revisit WTO commitments
on U.S. poultry imports and EU aviation fees (Refs C, D),and
announced it is considering restrictive trade measures on
Ukrainian imports (Ref E). Lengthy inspections of Turkish
trucks at the Russian border appear to be the latest example
of these Russian trade salvos. We met recently with the
Turkish Embassy for a fuller understanding of the customs
dispute with Russia.


3. (C) In a meeting with EconOff on September 4, Commercial
Counselor Alper Kurtoglu from the Turkish Embassy in Moscow
told us that Russian customs officials had been insisting on
full inspections of every Turkish truck crossing the Russian
border since July 16, except for trucks carrying perishable
goods such as fruits and vegetables. Kurtoglu noted that
most Turkish trucks enter Russia through the Black sea port
of Novorossiisk, where they arrive via ship, already
fully-loaded from Turkish Black Sea ports. The average wait
time for Turkish trucks to clear Russian customs had
increased from one or two days before the heightened
inspections began, to at least seven days. In some cases,
Turkish trucks had been held up for as long as 40 days.
Although the embassy did not have any hard figures, Kurtoglu

noted that estimates of the financial losses to Turkish
exporters and logistics companies from the customs delays had
been at least one billion dollars, with some press reports
putting the potential damage as high as three billion dollars.


4. (C) Kortuglo said the stakes are high for Turkey.
Statistics peg two-way trade between Russia and Turkey at
$22.5 billion in 2007. Trade reached $16.8 billion during
the first half of 2008, making Russia Turkey's biggest
trading partner on the basis of total trade volume. While
much of Russia's exports to Turkey are in the form of basic
commodities like oil and gas, Turkey's exports to Russia
include textiles, clothing, machinery, fruits and vegetables.
Kurtoglu also noted that Russian tourists had become a
significant source of revenue for Turkey. Some 2.5 million
Russian tourists now visited Turkey every year, and Russian
tourists had consistently occupied either the first or second
spot in recent years for the greatest number of tourist
arrivals. Turkish contractors have also been major players
in Russia's construction boom and now have contracts worth at
least $25 billion.

--------------
RUSSIAN MOTIVATIONS
--------------


5. (C) Kurtoglu noted that initially Turkish officials
believed the inspections had been implemented following
Russian President Medvedev's June 20 visit to the Ivanovo
region, the center of Russia's textile and clothing industry.
During Medvedev's visit, domestic clothing and textile
producers had reportedly complained about customs fraud from
foreign competitors, and Medvedev had pledged to look into
the matter. During Turkish demarches to Russian customs and
foreign affairs officials since the burdensome inspections
began on July 16, Russian customs officials acknowledged that
there was an order from Medvedev to enhance inspections, but
they had denied that Russia was singling out Turkish trucks
for any discriminatory treatment at customs checkpoints.


6. (C) Kurtoglu said with the burdensome inspections having
continued for over six weeks, some Turkish officials now
believe that the inspections have continued for political
reasons, perhaps to punish Turkey for granting passage
through the Bosporus to U.S. naval vessels carrying
humanitarian aid to Georgia. In Kurtoglu's view, the
inspections were a blatant violation of WTO rules on
technical barriers to trade. However, since Russia was not
yet a WTO member, Turkey had little choice but to try to
resolve the issue through diplomatic channels, or resort to
retaliatory trade measures on Russian goods.

--------------
TURKISH RETALIATION?
--------------


7. (SBU) Russian FM Lavrov and Turkish FM Ali Babacan
discussed the trade dispute during Lavrov's visit to Istanbul
on September 2. During a joint press conference, Lavrov
stuck to the Russian denial that the recent imposition of
stricter customs controls on Turkish trucks was
discriminatory or politically motivated, but he pledged to
help resolve customs clearance problems. Babacan had noted
that he had discussed the issue with Lavrov in a sincere and
constructive way and that it could be overcome with Russia's
"cooperation and flexibility." Kurtoglu said Turkish PM
Erdogan had also sought to downplay the trade tensions in
September 3 public remarks, but if Russia did not resolve the
issue quickly, Erdogan had said he would call Putin and raise
the stakes.


8. (C) In that regard, Kurtoglu confirmed that in August 29
statements to the Turkish press, Trade Minister Tuzmen had
threatened to impose similar customs inspections on Russian
imports and to withdraw Turkey's support for Russia's WTO
accession. Kurtoglu acknowledged that retaliatory inspection
measures might be difficult for Turkey to implement, since
most Russian imports to Turkey were basic natural resource
commodities like oil, gas and mineral oil. Nonetheless, if
customs clearance did not improve within the next few days,
Kurtoglu said the Turkish Government would consider the
option of retaliatory customs inspections of Russian imports
to Turkey and withdrawal of Turkey's support for Russia's WTO
accession.

--------------
COMMENT
--------------


9. (C) As has been the case with the other trade fights
Russia has picked lately, the GOR seems to believe that it is
in the driver,s seat. It exports commodities, which other
countries have to have while importing easily replaceable
consumer goods. This is a novel re-leveraging of what others
might see aQ third world trade relationship where the
Russian economy exports raw materials with little or no value
added while importing manufactured goods. Moreover, as Putin
himself noted recently in connection with the EU, the
dependence is two-way. Russia needs the income from its
commodity exports, and those too can be replaced by other
countries if Russia continues to prove itself an unreliable
trade partner.
BEYRLE

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