Turkey and Russia will seal a loan agreement for the purchase of the S-400 anti-missile system worth $2.5 billion on Friday. President Recep Tayyip Erdoğan has said Turkey will borrow the loan in Russian rubles instead of United States dollars, so the debt will be less for Ankara.
“They will arrive in Ankara this Friday and the credit agreement will be signed. Such a step will be taken for the first time. We will not borrow in dollars, we will borrow in rubles. The treasury’s debt will be much less,” Erdoğan told journalists on Dec. 27.
The amount corresponds to 3 percent of the total debt, he said, elaborating on the advantage of purchasing in rubles.
Erdoğan expressed his will to make purchases with other countries in local currencies as well.
Ankara and Moscow had already reached the agreement for the purchase of four batteries of S-400 surface-to-air missiles, but the deal had been waiting for the final phase, financing the purchase through a loan provided by Russia.
Turkish Defense Minister Nurettin Canikli said on Dec. 27 that a deal had been reached with Russia over the purchase of two S-400 defense missile systems and four batteries, confirming a top Russian representative’s comments. He said the last hurdle had been the financial aspect of the contracts.
Russia will supply Turkey with four S-400 surface-to-air missile batteries for $2.5 billion under a deal that is almost complete, Sergei Chemezov, head of Russian state conglomerate Rostec, told the Kommersant daily on Dec. 27. Turkey will pay 45 percent of the cost up front with Russia providing loans to cover the remaining 55 percent, Chemezov said.
Moscow expects to begin the first deliveries in March 2020, he said. Chemezov told Kommersant that Turkey was the first NATO member state to acquire the advanced S-400 missile system.
In 2013, Turkey stated it had chosen the Chinese bidder Precision Machinery Import-Export Corporation (CPMIEC) in a four-way competition (against U.S., European and Russian rivals). In 2015, Turkey scrapped the bid and the initial deal with the CPMIEC.
In 2017, Ankara announced that they were in discussions for a deal with Russia for the procurement of the S-400 system.
President Erdoğan said on Oct. 13 that Turkey was also interested in acquiring a future Russian air and anti-missile system, the S-500—which is under development.
“In our talks with [Russian President Vladimir] Putin, we are not thinking of stopping with the S-400s. We have had talks for the S-500s, too,” Erdoğan said earlier.
The deal has caused concern in the West because Turkey is a member of NATO, but the Russian missile system cannot be integrated into NATO’s military architecture. Relations between Moscow and the Western military alliance are fraught.
The agreement is Turkey’s most significant deal with a non-NATO military supplier and comes amid strained relations between Ankara and several Western countries.