Will Turkey make new crisis from distract currency's historic low? - analysis

Every time the ruling regime is embattled at home, it creates a fake crisis.

Turkish President Tayyip Erdogan attends a meeting of his ruling AK Party via video link in Ankara, Turkey March 4, 2021. (photo credit: PRESIDENTIAL PRESS OFFICE/HANDOUT VIA REUTERS)
Turkish President Tayyip Erdogan attends a meeting of his ruling AK Party via video link in Ankara, Turkey March 4, 2021.
(photo credit: PRESIDENTIAL PRESS OFFICE/HANDOUT VIA REUTERS)

Turkey’s lira is at historic lows to the US dollar and other currencies – which is bad news for Turkey’s economy and for its middle class.

While a slightly weaker currency can sometimes be good for exports, because cheaper export goods can be acquired abroad easier, having the currency decline too much is evidence of a bad economy and can lead to chaos and instability.

Ankara and its right-wing religious-nationalist ruling party have been destabilizing the Middle East and Eastern Mediterranean for years, often threatening members of NATO, as well as challenging, at various times, Egypt, the UAE, Saudi Arabia, Cyprus, Armenia, Israel, India and many other countries.

Turkey has also launched an unprecedented series of open-ended military adventures, leading to ethnic cleansing in Syria’s Afrin, an attack on US-backed anti-ISIS fighters in 2019, the bombing of Yazidi minorities in Iraq’s Sinjar district, attacks on Kurds and even illegal renditions and kidnappings around the world directed at Turkish dissidents.

In Ankara’s case, the decline of the currency didn’t lead to wars and instability; rather Turkey’s ruling party has appeared to thrive on crises at home and abroad, leading to concerns about how this may harm the country’s economy.

 Turkish President Tayyip Erdogan speaks during a news conference in Istanbul, Turkey October 16, 2021 (credit: REUTERS/MURAD SEZER) Turkish President Tayyip Erdogan speaks during a news conference in Istanbul, Turkey October 16, 2021 (credit: REUTERS/MURAD SEZER)

The ruling AKP Party came to power in the early 2000s with promises of economic reform. In fact, Turkish President Recep Tayyip Erdogan was once thought of as an economic positive for Turkey.

But years of increasing authoritarianism, the persecution of every critical journalist and imprisoning people for making jokes and other random acts have led the country into the doldrums.

TURKEY POSES as a rising regional leader. It has signed deals with Russia to buy the S-400; has built a TurkStream pipeline with Russia; has signed a deal with Libya’s embattled government to grab up energy resources in the Eastern Mediterranean; and is claiming to be working more closely on economic issues with Iran, China, Russia, Azerbaijan and even Iraq, Poland, Ukraine and other states.

Because Ankara’s media are almost all controlled by the government or support the ruling party, they generally parrot regime narratives, so it is impossible to trust any details that come from Ankara’s media or the minions that are linked to Ankara and push its narratives in foreign media. False reports about Ankara’s “reconciliation” with regional states or about “drone sales” will often appear but have no connection to reality.

Thus Turkey pitches itself as a rising power with drone sales in Europe, the Middle East and Africa and other connections, but it’s often hard to confirm the details.

The story of the currency weakening, however, is one that can be confirmed. Turkey’s lira continues to see record lows. This week it reached 10.42 lira to the US dollar. It has seen these spikes in weakening before, in August 2018 and in November 2020, when it reached 6.29 and 8.52, respectively, to the dollar.

It’s not always clear what event triggers the weakening of the currency. Some point to foreign policy blunders and the way Turkey’s regime continues to provoke crises.

For instance, in October it threatened to expel 10 ambassadors of Western democratic states after those countries critiqued Ankara’s human rights record.

The regime also threatened to invade and ethnically cleanse Kurds from Kobani and other parts of Syria. Turkey has always occupied illegally a swath of northern Syria, and hired mercenaries and extremist groups, some linked to al-Qaeda, to harass minorities, expelling Kurds, Christians and Yazidis.

But Ankara’s designs on Kobani and other areas apparently were opposed by Russia and the US, unlike in October 2019 when US president Donald Trump gave Turkey a green light to invade and destroy parts of Syria where the US-backed Syrian Democratic Forces were located. For now, the Biden administration hasn’t turned over US policy in Syria to Erdogan.

HOWEVER, THE Syria and ambassador crises may not be the only things going on. Turkey ostensibly is trying to reconcile with the UAE and has been conducting high-level meetings with Iran. Ankara’s is one of several authoritarian regimes called out on a recent cover of The Atlantic. The story argued that these regimes are “winning” as they work to undermine the US and other Western democracies.

The recent Iran-Turkey meetings included talks for a draft of a “long-term cooperation road map” to increase ties, Iranian Foreign Minister Hossein Amirabdollahian said this week. Tehran has a 25-year agreement with China, and Turkey may want something similar.

“We hope to finalize the road map in a future visit to Tehran by Mr. Erdogan, the eminent Turkish president,” Amirabdollahian said this week, as he hosted his Turkish counterpart Foreign Minister Mevlut Cavusoglu in Tehran.

Ankara is also telling its own media, and friendly reporters in Western media, that it is going to begin a “new era” in relations with the United Arab Emirates. It is planning to host a major visit, but these reports have also been fed to certain media to create a buzz and put the UAE in an awkward position. Depending on what happens in the next week, Ankara could brag that it has also created new inroads in the Gulf.

But Turkey probably needs more than just a meeting. It already has close ties to Qatar, and together they backed the Muslim Brotherhood and groups like Hamas around the region. But in general Turkey’s role in Libya, Idlib and other areas has not led to much stability. Its investment in the Kurdistan Region of Iraq is another matter: Turkish hotels and industry have helped transform the area into Iraq’s most successful region.

TURKEY IS also pushing itself as a mediator in the Lebanon-Gulf crisis. Saudi Arabia and its allies have been angered by comments in Lebanon that have justified the Iranian-backed Houthis who are fighting Saudi Arabia. Turkey wants a larger role in Lebanon. And it has now also created a crisis with Israel over detaining an Israeli couple.

This points to mixed messaging. Turkey wants to build ties with Iran and the UAE. It claims to be selling its drones all over the world now, from Poland to Ukraine to countries in Africa. However, the currency keeps declining. It seems there is a lack of confidence in Ankara after years of countries hearing one piece of propaganda while seeing threatening behavior at the same time. Turkey provoked crises with Greece, for instance, in 2020.

It appears that Ankara’s behavior – from attacking US protesters in Washington in 2017 to the invasion of Afrin in 2018 – was enabled by the Trump administration. Currency declines in November 2020 may represent the concerns investors had after Turkey’s ally in the White House lost the election on November 3. The currency declined as Trump lost the election, capping a 30% decline in 2020. It bounced back on November 8, 2020, when there was a shake-up at the central bank.

Turkey has taken other strange steps that may have affected its currency. In addition to relying on ties with Russia and Iran, it became close to the authoritarian Maduro regime in Venezuela. Caracas supposedly sold Ankara a large amount of gold reserves in 2019.

It’s not known what may come next. In the past, every time the ruling regime was embattled at home, it created a fake crisis. It has threatened various European countries, from the Netherlands to Austria, has bullied countries around the world and has stoked conflicts in Syria, the Caucasus and other places. None of these crises has helped Turkey when it comes to the economy.