TURKEY CRISIS: Looking Beyond the US Sanctions


In 2018 Turkey’s currency, Lira, hit record lows. The value of the currency nosedived and lost more than 50% of the value against the dollar since 2017. The stock market fell by 17% while government borrowing costs rose to 18% a year. Inflation in Turkey hit 15.9%. In most of the nations the central bank is independent of the government and no one tells it what to do with the interest rates. This means it can keep control of inflation by raising the interest rates when necessary. But in Turkey, Mr. Erdogan has control over the central bank reins and he is famously averse to interest rates. Though his economic policies yielded some results in the beginning but in the long run it has done more harm than good. The worsening relations with the US had led to severe sanctions being imposed on Turkey such as increasing import tariffs on steel by 50% and 25% on aluminum. Further, the increase in domestic consumption had led to Turkish companies borrowing heavily to profit from the construction boom and is now struggling to repay the loans in Dollars and Euros. The backbreaking sanctions made the investors wary and they are pulling out from Turkey.


The 64 year old incumbent president, Recep Tayyip Erdogan, comes from a conservative religious background and has inclination towards religious politics. He was the mayor of Istanbul but was sentenced in 1998 to 10 months prison for inciting religious hatred after he read verses of Ottoman poet Ziya Gokalp at a public event. The country’s constitutional court banned his Welfare Party on the grounds that it was threatening the Kemalist nature of Turkey, especially secularism.
Fresh out of jail in 1999, he formed the Justice and Development Party (AKP) and started mobilizing supporters on an Islamist conservative agenda. People supported the AKP as they were sick of the pre-2002 regime which was corrupt and dominated by Istanbul bourgeoisie and army. And Recep Tayyip Erdogan was elected as president in 2002.  Under Mr. Erdogan’s rule Turkey has seen an average growth rate of 7.5% between 2002 and 2011. Mr. Erdogan has kept the reins of the central bank in his hands and is famously averse to interest rates. The falling inflation and interest rates boosted domestic consumption.
The military in Turkey has always shown itself as ardent supporter of secularism and democracy. This had led to tensions with the AKP. On 15th July 2016, a faction of the army blocked the bridges over the Bosporus strait in Istanbul and tried to seize power to protect democracy from the President. Unable to get popular support either from the rest of the military or from the civilians the coup was short-lived. Mr.Erdogan went for a massive purge in the government and private institutions. Ankara blamed Erdogan’s former ally Mohammed Fetullah Gulen, a Turkish religious preacher living in the US for the coup, and accused tens of thousands to be the supporter of the Gulenist network. Thousands were arrested and sacked, including judges, academicians and security personnel. Over 100 journalists were put behind bars and 15 universities, 1000 schools, 28 TV channels, 66 newspapers, 19 magazines, 36 radio stations, 26 publishing houses and 5 news houses have been shut down so far. In the same purge, American pastor Andrew Brunson from North Carolina, USA was accused of supporting the Gulenist network and political unrest and was arrested.
A referendum was held on April 2017 on 18 amendments to rewrite the constitution and replace the current parliamentary system with an executive presidency. With 51.4% electorate voting Yes, the President now has powers to appoint more than half the members of the nation’s highest judicial body, dissolve national assembly, impose a state of emergency and rule through decrees. The amendments also guarantees 2 five year terms for the President.


Turkey is charter member of UN, an early member of NATO, IMF and the World Bank. It has always been in the league with big players. In 2016 Turkey had been gunning for Donald Trump’s presidential win. Mr. Trump’s security adviser was paid to lobby for Turkey. There was a confidence that Mr. Trump and Erdogan could form a strongman partnership to strengthen ties.
For the release of the American pastor the Trump administration had rolled for Turkey after protracted bargaining. Concessions included lowering of an anticipated multimillion dollar fine on Turkish state lender Halkbank for evading Iran sanctions, extraditing convicted Halkbank manager, Mehmet Hakan Atilla to serve remainder of his sentence in Turkey and securing the repatriation from Israel of another Turkish national, Ebru Ozkan, accused of links with Hamas. In exchange Turkey would release Brunson. Ozkan was freed and allowed to fly back to Turkey on 16 July 2018 but Andrew Brunson, the American pastor was not released even after his third courtroom hearing on 18th July 2018. This was the immediate trigger for the US to impose sanctions and the US-Turkey relations plunged to new lows in decades. Severe sanctions were imposed by the US, increasing import tariff rates on steel by 50% and on aluminum by 20%. It had also imposed sanctions, on Interior Minister Suleyman Salyu and Justice Minister Abdulhamit Gul by freezing their U.S based assets because of alleged roles in the Brunson case.
The pastor was detained for the past 2 years even before the hearing, so the question was why make it an issue now?  The US-Turkey relationship had been an important alliance with Turkey serving as a bridge between the Middle East and the west. Turkey was bombing Kurdish fighters in Syria who are armed by the US to fight against the ISIS. Ankara sees the Kurdish militants as terrorist who have waged insurgency inside Turkey since 1980s. But the US sees them as partners on the grounds against ISIS. The tensions heightened with reports that US was forming new border force in Syria comprising Kurdish fighters. The ill-conceived involvement in Syrian civil war has cost Ankara dearly.
Additionally Mr. Trump’s declaration of Jerusalem as the Israeli capital drew flaks from Turkey. Ankara has abandoned cooperatives ties with Israel and developed “strategic” relations with Tehran to help it circumvent US sanctions. Turkey under Erdogan has also deepened ties with Russia, China and Qatar and has worked to establish itself as a Middle East power with its own strategic objectives. It was here that Ankara decided to buy S-400 missile defence systems from Russia for which the US has threatened to impose more sanctions. However, a defiant Turkey went ahead with the deal and the first S-400 deliveries are scheduled in July 2019. The deal is likely to draw sanctions under the 2017 CAATSA (Countering America’s Adversaries Through Sanctions Act) of the USA.
While the sanctions have been back breaking for the economy, Mr. Erdogan has asked the Turks to use ‘the gold under the pillow’ and support Lira and also said: “don’t forget, if they have their dollars, we have our god”. Continuous spat with the US have plummeted Lira to new lows with the threats of new sanctions.


The economic crisis which started in 2018 has precipitated itself in 2019 as political upheaval evident in the recent Istanbul mayoral elections. Elections conducted in March 2019 were annulled by the High Election Board on flimsy grounds of technical faults. This resulted in depletion of support to the ruling party in the recent reelections and the opposition wining by about 55% votes. The high handedness of Mr. Erdogan and his party is clearly visible to the voters.
Mr. Erdogan has often said that whoever wins Istanbul wins Turkey. So, the elections results are significant because one-fifth of the population lives in Istanbul and contributes to about 30% of the national GDP. The disenchantment with Mr. Erdogan’s policy is visible as well in other big cities of Ankara and Izmir where opposition leaders have been elected. The Anatolian heartland where Mr. Erdogan draws huge support also has seen depletion in support the recent years.
One of the major reasons for this change in the voters’ support is because of way the economy that has been mismanaged in the recent years. Mr. Erdogan has invested heavily and unwisely in giant and prestigious projects like a new airport in Istanbul, slated to be worlds largest, and constructing bridges and gigantic mosques that have depleted resources and driven the government into debts of huge proportions. With the construction boom turning into bust and inflation soaring to new levels the average voter has been hit hard. This has also alienated the religiously observant bourgeoisie who were backbone of the AKP financially.
Other reasons can be summed up as the constant quarreling with Fetullah Gulen and the antiKurdish rhetoric. Thousands of supporters of the Gulen movement mostly the educated and skilled of the population have been jailed since 2016. This has adversely affected the education system of the country as most universities and schools were run by the supporters of the Gulen movement. The anti-Kurd rhetoric has turned most moderates towards the opposition.


The next presidential and parliamentary elections are 4 years from now so it is too early to conclusively speak about the political future of Turkey. Given Mr. Erdogan has concentrated power in his hands and misused it to muzzle the media and harass all kinds of opponents it is hard to say what can take place 4 years from now. However the voters’ want for change clearly indicates that the democratic traditions in Turkey are still alive in the heart of the people.

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