Moscow: Russian President Vladimir Putin raised the temperature in an increasingly bitter dispute with Turkey over the downing of a Russian warplane last week, saying the country’s “ruling gang” has lost reason as he threatened more punitive measures following economic sanctions.

“Only Allah knows why they did this,” Putin said Thursday in his annual state-of-the-nation address, drawing applause from his audience at the Kremlin. “And it seems that Allah decided to punish the ruling gang in Turkey by stripping it of common sense and reason.” Repeating accusations that Turkey is making money from Daesh’s oil trade, Putin vowed that Russia “won’t forget those who shot our pilots in the back”.

Putin showed no signs of backing down from his conflict with Turkish President Recep Tayyip Erdogan, the worst confrontation between Russia and a member of Nato since the Cold War. The crisis sparked by the downing of the warplane has complicated Putin’s efforts to form an anti-terror alliance with France and the rest of the US-led coalition after a wave of terrorist attacks. Daesh has claimed responsibility for killing 224 people by blowing up a Russian tourist plane over Egypt in October and the Paris attacks last month that left 130 people dead.

“Erdogan has a very long memory and the relationship will struggle to recover from this,” Timothy Ash, a credit strategist at Nomura International Plc in London, said. “The religious angle being used by Putin is unlikely to go down well in the region, where Erdogan is still seen as a defender of the Sunni faith.”

The Russian leader reiterated his call for a joint front under the United Nations to defeat terrorism, saying it’s impossible to achieve that goal “through the efforts of a single country”. He compared the fight against Daesh to the struggle against Nazism, saying the battle is a fight for justice in which Russia is playing a leading role. He began the speech by asking for a moment’s silence to honour the memory of Russian servicemen killed in Syria.

On his part, Turkish President Recep Tayyip Erdogan said Turkey had proof that Moscow was involved in illegal oil trade with Daesh in Syria, countering Russian allegations that Ankara was importing oil from the terrorists.

“We have the proof in our hands. We will reveal it to the world,” the Turkish leader said in a televised speech in Ankara. Erdogan labelled as “immoral” Russian claims that his family was involved in alleged oil dealings with Daesh.

The top diplomats of Turkey and Russia were set to meet on Thursday for the first time since Ankara shot down one of Moscow’s warplanes, as dozens of foreign ministers gathered in Belgrade for the annual ministerial council of the Organisation for Security and Cooperation in Europe (OSCE).

US Secretary of State John Kerry meanwhile said that defeating Daesh won’t be possible without finding troops to fight on the ground, calling for a political transition in Syria that would allow “all nations” to fight the group together.

With Russian Foreign Minister Sergei Lavrov and other foreign ministers from OSCE countries looking on, Kerry said a “political transition” in Syria was necessary to bring more countries into the conflict.

“If we get political transition in place, we empower every nation and every entity to come together, the Syrian army together with the opposition, together with all the surrounding countries, together with Russia, with the US and others to go and fight Daesh,” Kerry said. “Just imagine how quickly can the scourge be eliminated, in a matter of literally months, if we are able to secure that kind of political resolution.”

- with inputs from agencies