On October 8th, the Russian Ministry of Finance and the Turkish Ministry of Treasury and Finance signed an agreement on settlements and payments in national currency, the Russian side announced in a press-release.
As noted in the message, the document is aimed at “expanding and strengthening interbank cooperation, as well as ensuring uninterrupted payments between business entities from the two countries.”
On the Russian side, the agreement was signed by First Deputy Prime Minister – Minister of Finance Anton Siluanov, and on the Turkish side – Minister of Treasury and Finance Berat Albayrak.
Within the scope of the agreement, commercial institutions’ demand for two currencies will be raised and a proper finance structure will be established.
The main goal is said to be an increase and a gradual transition to the use of the ruble and lira in settlements between Russia and Turkey, the creation of an appropriate financial market infrastructure and an increase in the attractiveness of national currency for companies.
To increase the liquidity level, Russian and Turkish issuers will develop instruments for issuing debt securities in the markets of the two countries.
“The signing of the agreement is an important step for the further expansion and development of mutually beneficial and equitable trade and economic cooperation between Russia and Turkey,” the statement said.
The agreement will further enhance the use of Russia’s National Payment Card (MIR) and Financial messaging system of the Bank of Russia (SPFS) in Turkey. The SPFS is an alternative of the US-controlled “independent” SWIFT.
“The agreement between the Government of the Russian Federation and the Government of the Republic of Turkey also provides for further expansion of the infrastructure for accepting Russian Mir cards in Turkey and the connection of Turkish banks and companies to the Russian analogue of SWIFT – the Bank of Russia financial message transfer system (SPFS),” the statement said.
At the same time, the two countries intend to organize the interaction of national financial message transmission systems with the subsequent possibility of connecting other countries to these systems, the Russian Ministry of Finance explained.
The agreement also provides that the parties intend to support the further opening and expansion of the use of direct correspondent accounts opened between commercial banks of states for the development of cross-border settlements.
Trade between Russia and Turkey is also on the rise, in 2018 it grew by 16%, up to $25.5 billion, while mutual investments went up to $20 billion.
The stable economic relations between the two countries aren’t a recent occurrence. Since the 1990s, Turkish contractors are actively engaged with sophisticated and high-profile construction projects in Russia including those for the Sochi Olympics and the 2018 FIFA World Cup. Those implemented in recent years only amount to $70 billion in value.
Turkey-Russia leaders target the trade turnover reaching an ambitious $100 billion in a foreseeable future, second only to the current Russia-China trade exchanges totaling $107 billion.
In April 2019, Russia’s Direct Investment Fund and Turkey’s Sovereign Wealth Fund signed an agreement on a $1 billion investment platform to facilitate implementation of their joint projects.
“I believe,” commented President Putin that, “with such investment capital our business communities will be able to raise at least $5 billion for miscellaneous projects.”
The two countries are also a part of the Astana format focused on the resolution of the Syrian conflict and the negotiations appear to be making progress at every meeting, together with Iran.
Russia also recently finalized the delivery of the S-400 missile defense system to Turkey and there are reported plans for Turkey to purchase Russian fighter jets after being booted out of the F-35 joint strike fighter program by the US.
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