US-Turkish relations are at their lowest point in recent history. The crisis only appears to be financial, even though it has some painful financial implications for Turkey.
Although Erdogan's incompetent monetary policy made Turkey excessively vulnerable to American economic sanctions, the reason for sanctions is a political one. That's not a conspiracy theory, that's an open secret. Even the mainstream Western media, like Reuters have no qualms in spelling out the real reasons for the crisis in US-Turkish relations:
"Erdogan is not simply an autocrat at home; he is one who has taken on an international role that often challenges US interests. Ankara has growing ties with Iran that includes help with busting US sanctions against Tehran; supported Jihadist movements in Syria, including some affiliated with al Qaeda; enjoys a close relationship with Hamas in the Palestinian territories, supports Islamist extremists in Libya and, perhaps most importantly, is developing an entente with Vladimir Putin's Russia."
The key words in this litany of American grievances are 'Russia' and 'Putin'. Washington is trying to send a message: if anyone disobeys Uncle Sam on foreign or domestic policy, the punishment will be swift and ruthless, all previous agreements be damned. The only problem with this policy is that it can backfire in the most spectacular fashion. Trump's bet (or bluff) is that Turkey can't survive without bending its knee to the State Department and begging the IMF for assistance. Surely, such a surrender will imply the ousting of Erdogan, just to prove the point that the US vassals must always be obedient. However, what happens if Turkey survives without yielding to Trump's demands and without IMF assistance? The whole playbook of international relations will be rewritten. Russia, a country with an unflinching foreign policy, despite all sanctions leveled it, has set a dangerous precedent. If Erdogan sets another such precedent, then disobedience toward Washington will become the new rule.
Stabilizing the Turkish economy will not be easy, but it can be done without betraying the country's national interests. Protecting the country from another CIA-inspired coup or even a foreign military intervention disguised as a military coup will be problematic, but still feasible.
It all boils down to three crucial elements. First, Erdogan must understand that a significant number of Turkey's "economic wounds" are self-inflicted and stop trying to boost the economy using the printing press. It will make things worse. Judging by the latest actions of the Turkish monetary authorities, like the measures designed to make "shorting" the lira prohibitively expensive for speculators, there is some hope that a more prudent financial policy is being implemented.
Second, Ankara needs new reliable partners, who would be willing to offer political, diplomatic and economic support, while being brave enough to withstand the unavoidable bullying from the Beltway war hawks. Third, Turkey must find a way to wean its economy from foreign dollar financing, which is much easier said than done, especially in times of economic hardship.
Fortunately for Ankara, Trump's foreign policy makes it easy to find countries willing to lend a helping hand to another target of US sanctions. The New York Times reports that "Qatar pledged to invest $15 billion in Turkey after a lunch in Ankara, Turkey's capital, between President Recep Tayyip Erdogan and Sheikh Tamim bin Hamad al-Thani, the emir of Qatar."
The sum is not extraordinary, but Qatar's $15 billion (the equivalent of either 1/3 or 1/4 of the bailout likely to be offered by the IMF) come with no strings attached regarding domestic policies, unlike the IMF programs.
As for political and diplomatic support, Russia and China are willing to demonstrate their solidarity with the Turkish leadership.
Hürriyet reports: "China is supporting Turkey's efforts for national security, stability and economy, State Councilor and Minister of Foreign Affairs Wang Yi said after speaking with his Turkish counterpart Mevlüt Çavuşoğlu on the phone on Aug. 18."
Russian political support went even further. On Saturday, Erdogan was re-elected as chairman of the ruling Justice and Development Party (AKP). Top-ranking Russian officials were guests of honor at the Justice and Development Party convention. Russian State Duma [lower house of parliament] Speaker Vyacheslav Volodin met with Turkish Parliament Speaker Binali Yildirim. Coordination between Russia, Iran and Turkey on the Syrian crisis was a top priority on the meeting's agenda: "Russia, Turkey and Iran have joined efforts on combating terrorism and helped the Syrian government to fight against the terrorist state," Volodin said during the meeting in Ankara. "In these difficult times, we need to strengthen our solidarity," Yildirim replied.
It is obvious that showing any kind of solidarity with Russia on Syria is not going to please anyone in Washington, so it can be argued that the Turkish leadership is more predisposed to defiance than to surrender.
Interestingly enough, after the meeting with Foreign Minister Mevlüt Çavuşoğlu, Volodin said that "opportunities for cooperation between the two countries on various international fora have been discussed".
There are three obvious avenues for such cooperation: the UN, the Parliamentary Assembly of the Council of Europe and the World Trade Organization, where both Russia and Turkey are challenging the unilateral American tariffs on steel. As for PACE, where the Russian delegation has been banned for a couple of years, Turkey is supporting the Russian position that no national delegation can or should be deprived of its rights.
Speaker Volodin also had an unannounced meeting with President Erdogan himself, and so far no official statements have been made in the aftermath of the meeting.
It is quite possible that the deliberate opacity of the meeting's agenda is a political message in itself. THe Russian media reports that "Volodin hinted that the meeting was Erdogan's way of underscoring the specialness of his relationship with Vladimir Putin."
At the very least, the Turkish leader showed that he is not alone and Turkey is in no way isolated, from a diplomatic point of view.
Turkey can count on its crucial role in Russian gas transit to Southern Europe, on the Russian anti-aircraft weapon systems it wants to acquire, or the Chinese investment in the "Belt and Road" initiative, on credit from Qatar and on Iranian oil. It can also threaten the EU with another migrant crisis, but that's a worst case scenario. If Ankara plays its cards right, it can weather the storm and show the world that sanctions are nothing more than an unpleasant but still-reasonable price for the freedom from Washington's diktats.
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