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Thursday, 03 December 2020

Struggle and chaos

As Erdogan continues his foreign adventurism, the Turkish economy continues to plummet, writes Sayed Abdel-Meguid

Sayed Abdel-Meguid , Tuesday 4 Aug 2020
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In his televised teleconference with ruling party rank and file on Saturday, 1 August, Turkish President Recep Tayyip Erdogan gave reassurance to “Muslims from Palestine to Syria and from Arakan to Turkistan” who celebrated the Feast of Sacrifice (Eid Al-Adha) “under difficult circumstances”: they could now look to Turkey which, thanks to 18 years of Justice and Development Party (AKP) rule, has become a “power that offers a source of hope for oppressed Muslims everywhere”.

The previous day, on an inspection tour of military units in Edirne near the Greek border, Turkish Defence Minister Hulusi Akar vowed that his country and its armed forces would spare no effort in defending Turkish “rights and the rights of the Turkish Republic of Northern Cyprus,” as he called the Turkish-occupied northern part of Cyprus, “in the Aegean and Eastern Mediterranean”. The Turkish military had the necessary might to do this, he stressed.

Erdogan’s and Akar’s statements expressed the double-barrelled ethnocentric nationalism wrapped in religious chauvinism that characterises the “Blue Homeland” creed. Authored by former Turkish Rear Admiral Cem Gürdeniz in 2006 and adopted by Erdogan, the concept now manifests itself in Turkey’s aggressive pursuit of its maritime claims in the Aegean and Eastern Mediterranean which is part and parcel of Erdogan’s grand design for Ottoman imperial revival.

The jingoistic rhetoric was primarily for domestic consumption, of course. Mounting disgruntlement has been sapping the AKP’s popular base and AKP apparatchiks, in particular, needed a pep talk. So, Erdogan, in his speech Saturday, patted them on the back and gave them pointers on how “to increase our friends and reduce our enemies” on the domestic front. They have their work cut out for them in view of the domestic repercussions of the impacts of Ankara’s foreign policy approach which follows precisely the inverse formula towards friends and foes abroad, not least when it comes to Ankara’s maritime policy in the Aegean and Eastern Mediterranean.

On 21 July, Greece put its forces on high alert when Turkey announced that one of its gas and oil exploration ships would sail into Greek waters, and then sent a pair of Turkish F16s into Greek airspace over Strongyli and Megisti islands. On 28 July, Greek Foreign Minister Nikolaos Dendias warned that Turkey’s provocative behaviour was disruptive to peace in the Eastern Mediterranean and undermined NATO’s cohesion. The EU, which in mid-July had given Turkey a month to bring its provocative behaviour under control or else face sanctions, voiced its sympathy with Athens and anger at Ankara. Then, at last, Washington stepped off the fence and came down squarely in favour of Europe and against Turkey’s encroachments into Greek and Cypriot economic waters. Erdogan was left with little choice but to back down “temporarily” in order to give a chance to Spanish mediating.

This is how Ankara plays its games of brinksmanship. Turkish political analysts who risk criticising their government’s foreign policies, and warn of its destabilising effects on the Middle East as a whole, have been among the first to caution that the tendency of certain powers to look the other way when Turkey behaves aggressively in the Eastern Mediterranean have only emboldened Ankara further. They note, in particular, the adverse effects of Washington’s policy of appeasement towards Ankara, ostensibly as a means to counter Russian expansionism. Perhaps recent remarks by Acting Assistant State Department Secretary for European and Eurasian Affairs Philip Reeker are a sign that Washington is waking up to the need for a different approach. The US “is deeply concerned about Turkey’s stated plans to survey for natural resources in areas over which Greece and Cyprus assert jurisdiction in the Eastern Mediterranean. We are concerned about actions that are provocative and raise tensions in the region,” he said.

In addition to EU sanctions, Turkey may soon be staring at harsher US sanctions over the purchase and deployment of the Russian S-400 missile defence system. On 21 July, the US House of Representatives passed legislation that will finally compel President Trump to affix his swaggering signature to the sanctions bill despite his mysterious fondness for the Turkish strongman. In a statement when introducing the legislation, one of the bill’s sponsors, Adam Kinzinger, said: “Turkey ignored warnings from NATO members about this arms deal with Russia and accepted their first instalment of the Russian-made S-400 missile defence system. We need to make it very clear that their actions will not be tolerated and will be met with serious consequences. Our legislation does that and makes the actions by Turkey an explicitly sanctionable offence.”

The legislation was part of the annual defence authorisation bill that passed 295-125 on 21 July. About a week later, US Secretary of State Mike Pompeo told Senator Bob Menendez in a Senate Foreign Relations Committee hearing that the White House was continuing “to evaluate how to apply sanctions in order to achieve our end objective”. In an interview with Bloomberg TV, Pompeo said: “There could be more sanctions to follow but frankly what we’d really like is for the S-400 not to become operational. That’s our objective.” Last year, Turkey was eliminated from the Pentagon’s F-35 programme and Turkish pilots were prevented from continuing their training and given a few days to leave US soil, decisions taken not by Trump but by the Pentagon for national security reasons. As the “objective” has not been achieved in the intervening year, Congress clearly wants tougher action.

Ahmet Berat Conkar, a Turkish MP from the ruling AKP and deputy head of the Turkish Delegation to the NATO Parliamentary Assembly, had predictably warned the US Congress to go easy or else they would risk jeopardising the US-Turkish alliance. Congress seemingly has run out of patience towards an ally that is not acting like one.

The Turkish economy and the Turkish people continue to pay for Erdogan’s follies abroad, as well as the woes of his son-in-law’s fiscal policies at home. Over the weekend, the value of the Turkish lira took another plunge, surpassing the TL 7.00 per dollar threshold again and attaining its weakest level since mid-May. Excessive government borrowing and spending and a record shortage in foreign currency reserves have investors and financial markets worried. Reports that the Turkish Central Bank and other government banks sold off some $110 billion since the beginning of the year in order to prop up the local currency has done little to reassure foreign financial circles. Then, as liquidity continued to dwindle as Eid Al-Adha approached, banks were handed down instructions, straight from the Presidential Palace, to pump hard currency into urban centres.

Last week, the Central Bank’s net reserves sank to $28.7 billion, the lowest level in months. True, according to official figures, gross reserves have inched to $51 billion. But economic analysts are sceptical because they believe that much of it is borrowed money or gold. The lack of transparency surrounding Turkey’s fiscal management does not help.

Dollar denominated sovereign bonds have also plummeted in value. Last week, the 2030 issue registered its largest single weekly drop since the coronavirus pandemic struck in March. According to financial experts, the rush to sell these bonds “leaves no shadow of a doubt that the Turkish lira will be prey to heavy pressures which will accelerate its loss in value”. They add that this phenomenon will be difficult to control in the long run “in the absence of an effective and credible fiscal system”.

Can that be achieved? Sergey Dergachev, portfolio director at Union Investment, is not optimistic. He warned of the risks of Turkish confrontation with France, Greece and others over Mediterranean energy exploration plans, and over Ankara’s military involvement in Libya. “Turkey is involved in many geopolitical hotspots and the problem is that those adventures are costly and uncertain,” he said.

*A version of this article appears in print in the 6 August, 2020 edition of Al-Ahram Weekly

 

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