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Hüseyin Cahit SOYSAL
Board Member
Whether it is Turkey's fate or not, we are a country located in the Middle East, where hot wars have been going on for nearly 40 years. First, the Iran-Iraq war, then the US-Iraq war, then the Syrian war, which continued as proxy wars... About a year ago, Azerbaijan started a war to capture the Nagorno-Karabakh region occupied by Armenia and took this region from the Armenian forces. As if this were not enough, with Russia's attack on Ukraine 4 months ago, a devastating war began between our two neighbors in the Black Sea.
IN PEACE, INTER-COUNTRY GOODS MOVEMENT INCREASES TO THE HIGHER LEVEL…
However, a peaceful environment is inevitable for the development of both international trade and international transportation. The global trade volume, which was only 1 billion dollars in 1945, when the Second World War ended, reached 22 trillion dollars in 2021 when there was relative peace. In other words, if there is peace, there is trade, and if there is peace, the movement of goods between countries increases. War reduces trade volume and causes disruptions in the global supply chain.
The effects of the ongoing war between Russia and Ukraine are not only at the regional level; it has also caused problems on a global scale. This is because Russia is the global energy supplier, and Ukraine is the global wheat and sunflower supplier.
WHAT DESTRUCTIVE EFFECTS DID THE WAR HAVE?
When we list what happened, we can quickly see how devastating the effects of the war were.
-Heavy commercial and political sanctions: The United States and European Union countries implemented heavy commercial and political sanctions against Russia, which attacked Ukraine. Russia counteracted and stopped natural gas and oil deliveries to some countries. He wanted more from this, and to prevent the ruble from losing too much value, he required countries that buy natural gas or oil products from him to pay in rubles. This situation inevitably created price increases in energy supply at the global level. While pre-war barrel prices of Brent oil were traded in the 100-dollar range, they rose to 130 dollars. As of today, it is in the $115 range.
-Rise in oil prices: Increases in oil prices, which are used as energy input in the production of almost all products, have caused price increases at the global level and increased inflation rates.
-Wheat crisis: Russia and Ukraine, called the "breadbasket of the world," supplied approximately 30 percent of global wheat and 80 percent of corn. On March 7, wheat prices on the Chicago Stock Exchange rose more than 5 percent, reaching a 14-year peak. The Food and Agriculture Organization of the United Nations (FAO) announced that 30 percent of the fields in Ukraine will not be cultivated in the 2022-2023 season due to the war. This was perceived as a dangerous signal for the global food crisis.
-Withdrawal of US companies from Russia: When the war started, major US companies such as Coca-Cola, McDonald's, Starbucks, Levi's, Airbnb, Apple, Visa, Mastercard, Ford, and Boing withdrew from Russia. This was one of the actions that dealt a blow to the Russian economy.
Reducing growth forecasts: The IMF President stated that the global economy's growth will slow down due to the war. The IMF reduced its 2022 global growth rate forecast from 4.4 percent to 3.6 percent. Likewise, the World Bank reduced its global growth rate forecast from 4.1 to 3.2.
HOW DID THE WAR AFFECT GLOBAL TRANSPORTATION?
Naturally, the Russia-Ukraine war also dealt a significant blow to international transportation. In particular, the mines laid in the sea by Ukraine to stop Russian warships almost stopped Black Sea shipping. Two mines dragged by the waves from here were detected and destroyed just outside the Bosphorus.
Examining the far-reaching effects of the war, which caused widespread disruptions in the global supply chain, on transportation is a crucial step in understanding the magnitude of the issue:
-Difficulties experienced by Turkish truck drivers: Approximately 250 trucks with Turkish license plates traveling in Ukraine were stranded in the country when the war started. Some of these were vehicles returning from Ukraine, some from Russia, some from Belarus, and some from Kazakhstan. Some of them were trucks carrying cargo to these countries or Ukraine. Every vehicle moving on Ukrainian highways was being shot because it was perceived as a threat by both sides. In this situation, the best thing to do was to remain stationary in a truck park. However, there was a significant problem. Some trucks were carrying fresh fruits and vegetables. Truck drivers, who received approval from their headquarters in Turkey, distributed them to the public free of charge. However, all the truck drivers, who had prepared themselves for a 10-15 day trip, ran out of money in their pockets as the time got longer, maxed out their credit cards, and started to spend the night only in the truck. With Turkey's initiatives in front of the two countries, these vehicles, waiting to board Ro-Ro ships and in TIR parks along the road, were first transported to Turkey via Romania.
-Passing through Romania without documents: Perhaps the only positive contribution of this crisis to Turkey was Romania's decision not to require road pass documents from vehicles with Turkish license plates transiting through its country. Romania, which made the Turkish delegation suffer in the Land Transportation Joint Commission (KUKK) meetings for years, put the sails down when it came to war and by the protocol signed between the parties as a result of the KUKK Meeting held in Istanbul on 29-30 March 2022, transit transportation should be carried out without a pass document, as in bilateral transportation. It was agreed upon.
-Wheat and sunflower oil remaining in the Port of Odesa: When the war started, thousands of tons of wheat and sunflower oil, loaded onto ships in the Port of Odesa in Ukraine to be exported to various countries around the world, could not be put on the market because the boats could not leave the port. Türkiye was also negatively affected by this. However, countries such as Egypt and Yemen, which had no chance of producing these products due to their geographical conditions, faced serious hunger threats.
-Nordic Stream Pipeline construction halt: Natural gas is still being shipped to Germany via the Nord Stream Pipeline, extending from Russia to Germany under the sea. In this way, Russia does not suffer from Ukraine's wrath and displeasure. However, when the war started, Germany stopped constructing the "North Stream - Pipeline." It also wants to end the natural gas supply it receives from the first line at the first opportunity. However, considering the low transportation costs of the current line and the difficulties in obtaining alternative natural gas from other countries, it is stated that Germany will continue to purchase natural gas from the first line for many years.
-TIR queues in Georgia reached 50 kilometers: After the Ukrainian line was closed, trucks with Turkish license plates tried to get to Russia via Georgia. The queues of trucks at the "Verhniy Lars" gate between Georgia and Russia reached 50 kilometers. As Russia made crossing gates easier, the queues gradually decreased.
Amidst the challenges, there are also opportunities. While the Ro-Ro ships continue their voyages from Turkey to Russia, the possibility of a new trade route has emerged. Russia has announced plans to add a Ro-Ro service to the Istanbul - Novorossisk line, potentially opening up a new avenue for trade.
-Ukrainian army's mining of port entrances: Turkey has increased its initiatives with the Russian and Ukrainian governments to ship agricultural products, which are closely related to the world regarding food security, from Ukrainian ports to their destination countries. Russia stated that it could, in principle, allow this transport operation; However, he noted that this attempt would yield challenging results because the Ukrainian army also mined the Ukrainian port entrances.
I HOPE OUR REASON WILL VIOLATE…
As mentioned before, a "peaceful environment" is one of the indispensable conditions for international trade and transportation. The world has become so globalized and small that even a regional war could endanger world energy and food supply security. Common sense will prevail, and Turkey will implement its development and growth policies effectively without being affected by regional wars.
