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Russia said on Tuesday it signed a contract to supply Turkey with additional air-defense missiles, but Ankara quickly rejected the claims that a new purchase agreement was inked.
The contract includes local production in Turkey of components of the Russian S-400 missile-defense system, according to Dmitry Shugaev, head of Russia’s Federal Service for Military-Technical Cooperation.
Turkey’s defense procurement agency SSB denied that a second purchase agreement had been signed, saying there had been no change in the terms since an initial deal was inked in 2017.
Ankara’s swift denial highlights the evolving nature of its balancing act since Russia’s invasion of Ukraine began. The Turkish government arms Kyiv with deadly drones to help it defend itself against Moscow, but also refrains from joining Western sanctions targeting individuals and state companies in Russia, the single largest source of gas and crude oil for Turkey’s $800 billion economy.
But a new agreement for purchase of advanced Russian missile systems in the middle of a war that resulted in widespread international condemnation of Russian actions could reignite tensions with NATO members including the U.S., which remains opposed to Turkey’s purchase of the S-400s.
Turkey’s five-year credit default swaps, a measure of sovereign credit risk, rose as much 7.2% to 726 points and the benchmark Borsa Istanbul 100 Index dropped as much as 3% after the state-run Tass news service carried the Russian defense official’s claims of a new deal. The benchmark index quickly reversed losses after the Turkish denial and was trading 0.6% higher as of 5:24 p.m. in Istanbul.
Putin, Erdogan Rapport
Russian President Vladimir Putin hosted his Turkish counterpart Recep Tayyip Erdogan for talks in Sochi less than two weeks ago. Putin praised Turkey’s role in brokering a deal last month to allow Ukrainian grain shipments to leave Black Sea ports safely, even as the North Atlantic Treaty Organization member state has sold advanced combat drones to the government in Kyiv to help it repel Russia’s invasion.
There’s friction, too, between Turkey and Russia over military operations in Syria, Libya and regarding the conflict between Azerbaijan and Armenia.
The US barred Turkey from working on and receiving Lockheed Martin Corp’s advanced F-35 stealth fighter jets after Ankara ignored warnings from Washington and NATO not to buy the first S-400 system because of potential intelligence risks.
Tensions eased at a NATO summit in June when President Joe Biden told Erdogan he supported the sale of F-16 jets to modernize Turkey’s air force, after Ankara dropped objections to Sweden and Finland joining the military alliance in response to Russia’s war in Ukraine.
The F-16 sale won approval last month in the US House provided Turkey accepted conditions on their use.
Turkey has refused to scrap the S-400 battery it acquired after dropping talks over a comparable U.S. Patriot system because Washington wouldn’t share technology.
Implementation of the new contract has already started, Shugayev said, in comments reported by Tass that were confirmed by his spokesman.
SSB’s head said in 2019 that the procurement body was seeking a second S-400 system that would include a transfer of know-how to Turkey and joint production.
Russia’s readiness to agree on local production would be the “main news” of the purported deal, said Ruslan Pukhov, head of the Center of Analysis of Strategies and Technologies, a defense-industry consultancy in Moscow. Turkey’s purchase of the system is a “political gesture” to Russia aimed at easing tensions over Ankara’s weapons sales to Ukraine, he said.
Putin and Erdogan pledged deeper economic cooperation at their summit in Sochi, emphasizing “trusting relations” between their two countries. They agreed to shift gradually to payment in national currencies for some 26 billion cubic meters of gas that Russia supplies to Turkey annually.
Russia has also provided much needed foreign-exchange liquidity to Turkey by transferring billions of dollars to a Turkey-based subsidiary of Rosatom for completion of a nuclear power plant that’s under construction on the Mediterranean coast.
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