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Why Turkey might be useful for Ukraine?

Author : Oleksandr Okhrymenko

16:49, 15 March 2016
Why Turkey might be useful for Ukraine?

Author : Oleksandr Okhrymenko

For Ukraine it is easier to find the common language with Turkey rather than with Russia or Poland

16:49, 15 March 2016

Due to the fact that Ukraine has decided to conclude the free trade zone agreement with Turkey, it should first understand what could be useful for Turkey, and why Ukraine could be useful for this country.

president.gov.ua

Turkey's gold reserves at the beginning of 2016 amounted to $ 111.4 billion compared with the Ukrainian foreign exchange reserves, which amounted only to $ 13.6 billion. But during the 2015, Turkey's gold reserves decreased by almost $ 11.8 billion. Turkey's balance of payments had the deficit, which had to be covered with the expense of reserves.

At the end of 2015 the current account deficit of Turkey's balance of payments amounted to $ 32 billion. In many ways, Turkey's current account deficit was formed due to the deficit of foreign trade in goods, which amounted to about $ 48 billion. In 2015. Speaking about Ukraine, the current account of the balance of payments for 2015 turned out to be minus $ 250 million. As in Turkey, the foreign trade in goods pumped up, by the end of 2015 a deficit of about $ 3.2 billion was recorded. The size of the deficit is different, but the essence is the same. Both Turkey and Ukraine are dependent on imports of energy resources and petrochemical products, and it is not possible to get the surplus on trade in goods. But for Foreign Trade, Turkey and Ukraine have a positive balance of services. In 2015, Turkey received $ 24 billion by the export of services surplus, and Ukraine got $ 2 billion The main source of income of the Turkish exports of services is the foreign tourism, which has brought Turkey an income of $ 21 billion for 2015. Ukraine’s main source of income from the export of services are services for the supply of pipeline gas from Russia to the EU.

Related: Turkey interested in privatization of Ukrainian coal mines

Approximately $ 800 million Turkey received from abroad through private remittances. Ukraine is ahead of Turkey, as private remittances to Ukraine for 2015 exceeded $ 2.4 billion. Part of Ukrainians are working in Turkey. So that part of the currency comes from Turkey, albeit in small quantities.

As for the financial account of the balance of payments, Turkey by the end of 2015 was able to boast a surplus of $ 22.8 billion, while Ukraine had only $ 0.65 billion. And it is largely due to the IMF loans. Turkey also previously took loans from the IMF. But Turkey can boast a surplus of portfolio foreign investment by the end of 2015 in the amount of 15.4 billion dollars. Ukraine on its portfolio investment has a deficit of $ 0.26 million. But for foreign direct investment in Ukraine by the end of 2015 has a surplus of about $ 3 billion, and Turkey had a deficit of $ 11.7 billion.

Related: Ukraine and Turkey step up to protect Crimean Tatars

Turkey rather actively attracts investment into the country through the sale of securities of banks and companies. There are many investments in the form of foreign loans and debt securities. But there is foreign investment in the business in Turkey. For 2015 these investments were about $ 12 billionб in the same time Turkey itself has invested in other countries about US $ 5 billion in free circulation of capital. It is a common thing for Turkey and the dream is unattainable for Ukraine.

Related: Ukraine and Turkey to increase turnover up to $10 billion

As for investors, most investorsthat invest in Turkey, are from Spain, followed by the Netherlands, on the third place is Luxembourg, while the fourth is Russia. Turkey invests most money in the Netherlands, the UK and the U.S. Obviously the Netherlands for Turkey plays the role of offshore buffer, like Cyprus for Ukraine. In the area of ​​investment, Turkey is the most money invested in various offshore companies, the banking sector, light industry and construction sector. So do not expect a significant investment from Turkey to Ukraine after the signing of a free trade area agreement. Ukraine is simply not interested in Turkey as compared to the Netherlands. But it will be possible to think about the expansion of cooperation between Turkey and Ukraine in the offshore. This will open up new schemes and new opportunities for our business and Turkish business as well.

Related: Turkey supports Ukraine in countering Russian aggression

Turkey is much richer than Ukraine, and it is a fact. In this case, Ukraine could follow the example of Turkey to develop its business on the Turkish model. It is close to us, and we have a lot in common: offshores, orientation to the export of goods, but it is impossible to block the import of goods, and, most importantly, the dependence on foreign investment. Both Ukraine’s and Turkey's foreign trade deficit is received due to the overlap of the money in the form of foreign investment. At the same time, we are close to Turkey and its economic model.

In any case, Ukraine has to develop trade and business relationship with Turkey. For Ukraine it is easier to find the common language with Turkey rather than with Russia or Poland. Like Ukraine, Turkey wants to gain visa-free travel and EU membership, but the EU refuses Ukraine and Turkey. Here we are really close as ever.

Related: Turkey and Ukraine will discuss possibility of free trade zone - Dzhemilev

Related: Turkey might become new market for Ukraine

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