Sputnik reached out to Alexander Kazamias, Senior Lecturer in Politics at Coventry University and former visiting research fellow at both Princeton and Edinburgh University, for his insightful observations into the matter.
Sputnik: US president Donald Trump doubled tariffs on Turkish steel and aluminum imports 10 August, citing detained pastor Andrew Brunson. Is this a legitimate reaction, or are the tariffs related to something bigger?
Alexander Kazamias: To begin with, the case of pastor Brunson is a big issue in itself. Since the failed Turkish coup of 2016, President Erdogan has been dropping broad hints about what he sees as the subversive role of the US against his government and its support for the Gulenist Movement, which he regards as the main instigator of the 2016 coup. Although evidence is weak, Pastor Brunson is officially suspected of being a link person between US intelligence and the Gulenist movement in Turkey. His trial, therefore, carries enormous political symbolism. This symbolism is clearly understood in Washington and it is one of the main reasons why Trump has started a trade war with Turkey.
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Consequently, the notion that Erdogan and Trump have blown an individual case out of proportion underestimates the long history of subterranean tension between Washington and Ankara that goes back, effectively, to the immediate aftermath of the Arab Spring in 2011, if not before. At the same time, you are right in implying that the dispute between the US and Turkey goes much deeper than Pastor Brunson and the 2016 coup. Washington appears to be applying a policy of ‘containment' vis-à-vis Turkey with the aim of diminishing its growing geopolitical presence in the Middle East and, possibly, frustrate its recent rapprochement with Russia. Trump is particularly concerned about Turkey's good relations with Iran and Qatar, its role in the Syrian Civil War and its escalating dispute with his most important Arab ally, Saudi Arabia.
Sputnik: Turkey and Qatar are both major allies of the United States. What is their relationship to Washington and how are those relationships changing?
Alexander Kazamias: For several years, Turkey and Qatar have been awkward allies of the US. Due to a mixture of geopolitical and ideological reasons, both have embraced a different view of international relations and have clashed with Washington's other major allies in the region, especially Israel and Saudi Arabia. Qatar, because of its sympathies to some Islamist movements (expressed through the influential Al-jazeera network) as well as its friendly relations with Iran, has found itself under an economic and travel blockade since June 2017 by four close US allies (Saudi Arabia, Egypt, UAE and Bahrain). Turkey, by contrast, supported Qatar throughout that crisis and Qatar has now reciprocated with the crucial $15bn investment package announcement to Turkey, which helped the lira claw back.
Similarly, Turkey under the AKP has adopted a more ambitious foreign policy than its traditional Western-oriented diplomacy before 2002. Under Erdogan, Turkey has been asserting its political independence and seeking to combine NATO membership and EU ties with greater involvement in the Middle East, especially on the side of Islamist regimes. Its normal relations with Iran have been a major irritant for Israel, Saudi Arabia and the US. Turkey's role in the Syrian Civil War, especially its opposition to the upgraded role given to the Kurds by the US, have been a further source of tension with Washington, Tel Aviv and Riyadh. Also, its vocal stance on the Palestinian question has been another source of similar discomfort.
READ MORE: Erdogan: Attack on Turkish Economy is No Different From Attack on Flag
Most importantly, though, what I believe has been a game changer for Donald Trump is Turkey's policy of military encirclement toward Saudi Arabia, which escalated after the outbreak of the Qatar crisis last year. This policy involves the stationing of Turkish troops in Qatar and the establishment of military bases in Somalia and, potentially Sudan, both facing the Arabian Peninsula from across the Red Sea. These daring actions have led the Saudi Crown Prince, a ruthless young ruler who enjoys Trump's personal friendship, to accuse Turkey last March of belonging to a "triangle of evil" with Iran and Islamist terrorism. Two weeks later, the Saudi Crown Prince met Donald Trump and urged him to adopt a tougher stance toward Iran.
At this stage, it is unclear how far Turkey's rapprochement with Russia has impacted on the breakdown in its relations with the US. One must assume that it has played some part, but my assessment is that the last straw for Washington has been the military encirclement of Saudi Arabia by Turkey and the strategic benefits arising from it for Iran.
Sputnik: The Anadolu news agency reported that several European figureheads have slammed US president Donald Trump's unilateral sanctions against the world. What effects are Trump's trade war having on the global economy? Who's the biggest winner?
Alexander Kazamias: There is no question that Trump's trade war with Turkey could spark off a global currency crisis. As a result, the French and Italian governments, whose banks are exposed to the Turkish market, would prefer a speedy resolution to the crisis. To this end, Erdogan claims to have received positive assurances from President Macron about his commitment to the stability of the Turkish economy. At the same time, Germany is opting for a more cautious approach. Although it, too, has an interest in avoiding the spread of the crisis to the Eurozone, Chancellor Merkel has a more complex set of priorities to balance. From her early moves, it appears that she prefers to facilitate a negotiated settlement between her two NATO allies, but in so doing, she would probably try to avoid clashing with the US President over this issue.
Have you got any further predictions for the Turkish Lira? Has it always been this volatile? Will switching to trade in other currencies salvage the Turkey's economy?
Alexander Kazamias: Under the ruling AKP, the Lira has been a weak currency. Well before the crisis, in 2014, it traded at 2TL to the US$ and in 2017 its rate had fallen to 4TL to the US$. This is so because Turkey relies on substantial amounts of FDI and external borrowing, whilst running a large trade deficit. Meanwhile, because of his Islamist ideology, President Erdogan is reluctant to raise interest rates much above inflation, currently around 16%. However, since the start of the present crisis, the Turkish Central Bank has forced lenders to borrow on the dearer 19.25% overnight rate, which amounts to a de facto interest rate increase of 1.5 percent from the official 17.75%.
Turkey under President Recep Tayyip Erdogan has shown that a Country can be both Islam & developed same time ... Erdogan is the only leader alive who has transformed a country in less than 15 Years from backwater to developed. Hardliners in US & Europe can’t accept it.
— Donald B Kipkorir (@DonaldBKipkorir) August 19, 2018
Switching trade to other currencies, which the Turkish President publicly called for, is something that cannot happen overnight. Such a strategy would require a great deal of preparation and collective planning involving several committed economies. In the short and medium term, what could sustain the Turkish economy is a combination of smart diplomacy and the possible containment of Trump's unilateralism by the EU. Several reports indicate that French, Italian, Spanish and to a lesser extent German banks are fairly exposed to the Turkish market. Consequently, if the US extends its trade war with Turkey, a further fall in the rate of the lira could force Turkish businesses to default on their European creditors, thus spreading their national crisis to the whole of the Eurozone. That is why Erdogan has turned to France and Germany. For the same reason he also made other gestures of good will toward the EU, like the recent release of the two Greek soldiers, which European Commission President Jean Claude Juncker had urged him to free.
The views and opinions expressed by the speaker do not necessarily reflect those of Sputnik.
