The Russians are coming

Russia continues to keep pundits guessing over strategy and tactics. After the Yukos affair, in which an oil-company executive was jailed, foreign investors are nervous about bureaucracy. Turkish firms, especially leather producers and tanners, have shared a close and often daring trading mentality with Russians and their satellite republics. News about Russia via Türkiye is often an excellent weather vane. So far, one Turkish garment producer has sold out to a Russian, Georgian and Azerbaijan consortium. Many of Türkiye's failed tanneries sport a For Sale sign and, if they could find buyers, would sell as a turn-key project with machine park intact. Turkish leather firms selling upmarket garments to Russia note this country's rising per capita income touching $7,000; plus Russian automobile ownership and other positive consumer-society indicators. A healthy trading credit results from imports of $100 billion and exports of $170 billion. It is exaggerating to say that Türkiye is an easier place to do business than Russia. However, rising Russian inflation and an increasingly strong rouble are squeezing manufacturers. It is not early to speculate on Russian cash looking for a safer home; it is already a reality in the tourist/holiday sector. Türkiye has recently attracted record direct foreign investments. So, all those empty Turkish tanneries may well prove to be an irresistible, neighbourly base for Russian leather producers, who have few tanneries of their own. Türkiye's on-the-cusp position with Europe may be a more subtle attraction.