US sanctions on Turkish ministers threaten strategic partnership
Saturday 04/August/2018 - 12:45 PM
"Financial Times" newspaper- By "Laura Pitel":
Turkey reacted with fury to a US decision to hit two government ministers with sanctions and threatened retaliation. Even opposition parties egged Ankara on، suggesting punitive steps against the Trump administration.
Yet، as Turkish assets took a hammering، analysts warned that an escalation of the dispute risked inflicting serious damage the country’s fragile economy. Many predicted that Recep Tayyip Erdogan would be the one to blink first as the combative Turkish president balances his nationalist instincts against the broader repercussions of a deepening dispute with the world’s superpower.
“Erdogan cannot afford a full-blown crisis with the US given the fragility of Turkey’s economy،” said Wolfango Piccoli، of the consultancy Teneo Intelligence. “In the short term، the US sanctions can be used to rally support around the flag. But economic reality will soon kick in، forcing Erdogan to reconsider his defiant stance.”
The Trump administration’s unprecedented decision this week to impose sanctions on Turkey، a Nato ally، marked a decades-long low in the fraught relationship between Ankara and Washington.
The row threatens not only Turkey’s economy، but also co-operation that ranges from counter-terrorism and to efforts against drug smuggling. It could also push Ankara to double down on its efforts to build stronger ties with non-western powers.
US officials are aware of the risks of derailing a strategic partnership with a country that borders Syria، Iraq and Iran، hosts an important US air base and is home to about 3.5m Syrian refugees. But it is the strong economic relationship between the west and Turkey، which relies on foreign capital inflows، that is likely to make Mr Erdogan wary of escalating the dispute.
The US measures، announced in retaliation for the detention of a jailed American pastor، place Turkey in a small club of nations whose citizens have been targeted by the Global Magnitsky Act، which was originally designed to penalise Russia. The others include South Sudan، Pakistan and the Democratic Republic of Congo.
The sanctions، which have imposed asset freezes on Turkey’s interior and justice ministers، appeared to be intended as a warning shot rather than a direct hit.
But Turkey was already feeling the impact. The measures sent the Turkish lira plummeting to a new low of TL5.09 to the dollar on Thursday.
The falling currency، which has lost a quarter of its value since the start of the year، will turn the screws on Turkish corporates burdened with foreign currency debt، and fuel inflation that topped 15 per cent in June. That، in turn، risks scaring away investment that is essential to a country that must attract more than $200bn in foreign financing each year.
And if Turkey does not release Andrew Brunson — the Evangelical preacher at the centre of the spat — tougher US action could follow that would batter an $880bn economy that is deeply integrated into the western financial system.
Turkey has sought to diversify its relationships as tensions with former allies have ratcheted up in recent years and Mr Erdogan’s image has soured in western eyes. The president has boosted ties with Africa، China and Qatar. His decision to purchase an S-400 missile defence system from Russia is one of several irritants that has fuelled growing anger in Washington.
But analysts say that it would take decades to unravel Turkey’s financial relationship with the west.
“Look at the American and European companies in Turkey،” said Behlul Ozkan، an associate professor of international relations at Istanbul’s Marmara University. “Their investments are worth billions of dollars . . . Turkey cannot be a prosperous country while fighting with the US or the EU.”
Those hoping for a quick resolution to the crisis point to Mr Erdogan’s record of dramatic U-turns، especially when economic factors are at stake. They include an apology to Vladimir Putin after the Russian president imposed harsh sanctions in retaliation for the shooting down of a Russian fighter jet in November 2015. Turkey’s pliant media happily U-turned with him.
But some observers fear the US dispute is different.
Mr Erdogan has stoked a wave on nationalism in recent years، with anti-Americanism at its core. Many among the Turkish public feel anger and bemusement at US support for Kurdish militants in Syria who are linked to a movement Ankara designates as terrorist group، and which this week was blamed for a bomb attack that killed a Turkish woman and her 11-month-old son.
There is also widespread suspicion at US officials’ refusal to extradite Fethullah Gulen، a Turkish cleric exiled in Pennsylvania whom Mr Erdogan accuses of ordering a 2016 coup attempt.
Berat Albayrak، the new finance minister and Mr Erdogan’s son-in-law، said on Thursday that Turkey’s priority was “to ensure that this process is settled through diplomacy”، suggesting that Ankara may be reluctant to rush into a knee-jerk response.
But analysts warn of the danger that، even if both sides want to de-escalate، the disagreements between the US and Ankara are so numerous and complex — and the personalities so volatile — that something could go wrong.
“The question is whether we reach a point where cooler heads prevail،” said Sinan Ulgen، chairman of Edam، an Istanbul-based think-tank. “That’s the scenario that we all hope for. But as things stand، we cannot totally rule out a more severe break in the alliance.”