After a four-hour meeting at Putin’s residence in Sochi on Friday, the presidents of Russia and Turkey issued a joint statement pledging to increase the volume of their bilateral trade and deepen their economic and energy ties. Deputy Prime Minister Alexander Novak, Moscow’s top energy official, told reporters that Turkey had agreed to start paying for Russian gas in rubles, according to Interfax. Putin and Erdogan discussed further development of banking ties and settlements in rubles and pounds, he added. Novak said the agreements “will bring our trade and economic relations to a new level in basically every area,” including transport, industry, agriculture, tourism and IT. Although both leaders have nodded to tensions between them, including the conflict in Syria, the economic consequences of the war in Ukraine have created grounds for rapprochement. Western sanctions have largely cut off the Russian economy from the global financial system and left it scrambling to replace banned imported goods or find markets for its energy exports. Turkey suffers from a gaping trade imbalance caused by rising global energy prices – the same caused in large part by how Russia’s invasion has disrupted markets. Ankara is looking for foreign capital to fill the gap. The US and other Western allies are concerned about Erdogan’s ambivalent stance on the invasion of Ukraine. The US deputy treasury secretary met with Turkish officials and Istanbul bankers in June to warn them against becoming conduits to avoid Russian sanctions. The meeting in Sochi comes as Ukrainian intelligence services recently shared with NATO countries a document they say was intercepted by Moscow that contained proposals for Turkish-Russian cooperation, according to a Ukrainian intelligence official and a Western diplomat. The latter said he believed the document was genuine. The proposals include ways to help Russia avoid sanctions with the help of Turkish banks and cooperation in other areas, including energy and industry, the people said. The Washington Post was the first to report that Moscow was seeking Ankara’s help in circumventing Western sanctions. It is not clear whether NATO member Turkey will accept these proposals. Putin and Erdogan have previously suggested that countries could use their own currencies in trade. Such a move would allow Russia to avoid the U.S.-denominated global oil market while allowing Turkey to limit the damage to dwindling foreign exchange reserves by paying for energy in Turkish lira. Erdogan tried to act as a mediator between Ukraine and Russia. Ankara supplied Kyiv with armed drones and was instrumental in securing a United Nations agreement to lift the Russian naval blockade and allow Ukraine to resume grain exports from Black Sea ports.

But Turkey has also refused to join Western sanctions against Moscow, threatened to veto Sweden and Finland’s NATO membership, and allowed ships carrying wheat and corn from Russian-held parts of Ukraine to deliver their cargoes to Turkish ports. Putin and Erdogan said the grain deal “must be fully implemented in its spirit and letter,” including the possibility of resuming Russian grain and fertilizer exports that Moscow said were hampered by sanctions. The US and EU have never directly imposed sanctions on Russian agriculture, but issued clarifications that effectively overturned restrictions against it last month alongside a deal on Ukraine’s Black Sea ports.