Russia and Turkey have an important trade partnership which is expected to be valued at $100 billion by 2023, however, the future of the economic ties between the two countries has come under question after the downing of a Russian SU-24 warplane by two Turkish F-16 fighter jets on Tuesday.
The Russian jet which flew over Turkey’s southern border province of Hatay was warned 10 times in five minutes before being shot down.
Following the incident, Russia’s Foreign Minister Sergey Lavrov stated that his country will not wage a war against Turkey. Instead, an economic response is likely.
Russian Prime Minister Dmitry Medvedev said that Tuesday’s incident could jeopardise major bilateral trade and infrastructure deals between Turkey and Russia.
Medvedev has asked his cabinet to draw up economic measures which may include the freezing of some joint investment projects and restricting food imports from Turkey.
Russia’s federal tourism agency Rosturizm in response to the incident urged tour operators to end sales of holidays in Turkey.
The following day, Dmitry Gorin, Vice President of the Association of Tour Operators of Russia told RIA Novosti news that leading tour agencies cancelled charter flights and suspended sales of tours to Turkey.
Tour agencies such as Pegas Touristik, Coral Travel, Intourist and TEZ Tour have stated that they will continue selling package tours in Turkey.
Since the cessation of flights to Egypt, Turkey has become the most desired alternative destination, the tour agencies pointed out.
Turkey has been the favoured destination for Russian travellers for 13 years. Last year, about 3.3 million Russians contributed $3.7 billion to the Turkish economy.
The total trade between Turkey and Russia reached $31.6 billion in 2014.
The main commodity Russia sells to Turkey is oil and gas while Russia buys agricultural produce, machine tools and services from Turkey.
Turkey is Russian state-run natural gas company Gazprom’s second biggest export market after Germany.
Moscow is planning a gas link to Turkey through a new Turkish Stream project as an alternative pipeline is planned to bring gas to Europe through Turkey, bypassing Ukraine.
Its aim is to pump 63 billion cubic metres (bcm) of gas per year - 47 bcm of which will be delivered to Europe - by 2020.
Russia's state Atomic Energy Corporation (Rosatom) is set to start the construction of Turkey’s first nuclear power plant station - the Akkuyu nuclear power plant - in its southern province of Mersin. Russia will finance the plant, which is valued at $22 billion.
The construction will begin in 2016 and the planned four reactors will become fully operational in 2023 according to the agreement between the countries signed in 2010.
Russia being largely dependent on oil revenues has been suffering from a declining economy in recent years amid a fall in oil prices and western sanctions imposed on the country over the conflict in Ukraine.
Russia losses about $2 billion in revenue for every dollar the price of oil falls and according to an estimation made by Russian Prime Minister Vladimir Putin in April western sanctions are likely to cost the country over $100 billion.
Russia’s economy did not show signs of improving in the third quarter of 2015 as its gross domestic product (GDP) fell 4.1 percent compared to the same period last year.
The International Monetary Fund (IMF) has forecast the Russian economy would contract by 3.8 percent in 2015 followed by a slightly lower contraction of 0.6 percent in 2016.
Since the start of 2014, the Russian ruble lost almost half its value against the US dollar while inflation has soared in the country.