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Geopolitical buzz in Turkey seems to be on the rise
Tensions in the eastern Mediterranean, Libya, resurfaced the S-400 problem with the testing of these anti-aircraft missile systems, and then the crisis in Nagorno-Karabakh, where Turkey is showing «activity. “And then the US presidential election. What are the risks for Turkey on the geopolitical front?
I think it is appropriate to remember that Turkey is in a complex region, characterized by geopolitical risks and tensions. This is only part of Turkey’s history, which the country has learned to live with and sometimes even use to its advantage. I always give an example of how Turkish companies learned to operate in unsafe conditions, for example in Syria, Iraq and Libya. Turks, as a rule, voluntarily go where others fear to trade and are engaged in trade: selling household appliances or food at good prices. Therefore, obvious geopolitical risks can also offer opportunities.
Given the above, I believe that we are witnessing a much more assertive Turkish foreign and security policy in the region than ever before under President Erdogan. We have seen Turkey intervene in the Libyan conflict and resort to gunboat diplomacy in the eastern Mediterranean over the gas problem. Turkey took the lead in Cyprus (opening of the abandoned tourist area of Varosha), thus irritating the Greek Cypriots and the EU, and also plays a much more serious role in the Nagorno-Karabakh conflict, supporting Azerbaijan with the supply of Turkish military equipment, which appears to have a decisive influence. In Nagorno-Karabakh, it demonstrated its high-tech unmanned technologies, which also played a decisive role in the Libyan conflict.
Why does Turkey need all of this?
I believe that Erdogan has adopted Putin’s strategy in Syria. He realized that only by intervening in the conflict and playing high stakes can he gain leverage that will be useful elsewhere. Turkey has gone from being a Russian violin keeper in the Nagorno-Karabakh conflict to a key member of the orchestra, now there is no music without it, peace or war.
What about relations with the West and the risks of sanctions?
Of course, the West has warned Turkey about sanctions in relation to events in the Eastern Mediterranean, Cyprus, the S-400, the Turkish bank Halkbank, and general trends in democracy and human rights. But so far nothing has happened. Turkey called it a Western bluff, it knows that its membership of NATO is strategically important to the West, it guarantees the security of Europe, helps with migrants and the achievement of peace in Syria. I think this gives it additional influence in Libya and Nagorno-Karabakh.
Erdogan took over Putin’s strategy in Syria
How does all of this fit into the US elections?
Of course, Erdogan wants Trump to win, as Trump has shielded the Erdogan administration from pressure from the US Congress to demand sanctions. For whatever reason, Trump likes Erdogan and has a special relationship with the Turkish leader. On the contrary, Erdogan distrusts Biden because the latter was part of the Obama administration, which most Turks believe led Turkey through a difficult hour during the 2016 coup. Many Turks think that the United States played a role in the knock. But the Erdogan administration understands that Biden’s victory is now obvious, and all this show of strength by Turkey in the region is a temporary matter, because then there will still be a summit or meeting with Biden. And I really believe that this will happen, a restart of relations between the United States and Turkey is coming. In short, Turkey is too important to the Western alliance and, despite all its fears about democracy and human rights, following the logic of Realpolitik, the Biden administration will not want to cede Turkey to Russia. This would be a strategic disaster for the United States and the West.
They can trade jokes first to calm the atmosphere, but the atmosphere will eventually calm down. After all, both sides value strategic relations: the Turks look west, and not east or northeast, toward Russia. They send their children to study in Europe or the United States, not in Moscow. Shopping is also much better in London, Paris or New York than in Moscow. Turkey may seem quite isolated in the region these days, but not in the way it did before when Ahmet Davutoglu was foreign minister. So the Persian Gulf or the Middle East could become an alternative market for Turkey to the West; here it is worth noting that Saudi Arabia initiated a boycott of Turkish products.
Will the relations between Turkey and the West ultimately end well?
Yes, given that two-thirds of Turkey’s trade, investment and finances come from the West, what real options does Turkey still have? And the West needs Turkey as a bastion of regional security. And there are win-win energy solutions in the Eastern Mediterranean: the West and Turkey need new energy supplies to get away from their strategic rival, Russia.
And even if the Greeks and Greek Cypriots may not like it, Turkey is at the center of all these events, and for the pipelines to be safe, it must participate in any deal that concerns them, so that the long-term conditions are met. Western leadership is also needed, which was lacking under Trump, but under Biden, I believe that the desire to once again strengthen Turkey’s position in NATO and overthrow Russia will push the United States to participate directly in peacekeeping.
What about the economy?
This address is really disappointing and everything should go very well. Turkey should be the best market among developing countries. You have so many opportunities – a strong public finance profile (debt ratio less than 40%), strong / durable / dynamic banks, good trading location (the only country in the region that produces anything) with a truly dynamic international standard of industry groups, and it could be a winner if multinationals move their capacity out of China, and Turkey has a decent industrial skills base, favorable demographics and a centennial professional market and commercial culture.
This should make it the pinnacle of growth in emerging markets. But there is also the political economy of the world of Erdogan. In short, Erdogan sees his electoral success in terms of job creation, investment policies and credit. There is also an ideological aversion to interest rates and, in particular, to high interest rates, which distorts monetary policy to the point of becoming the country’s greatest macroeconomic threat.
Now you may be wondering why Erdogan is constantly in pick mode, why is he so desperate for high growth rates? In my opinion, this is due to the polarized nature of Turkish politics and Erdogan’s fear that, after losing his position, he and his family will be held responsible for any dubious actions during his tenure in power. And given his dependence on a coalition with the Nationalist Movement Party in parliament, Erdogan can never rule out the risk of snap elections, so he always has to keep the economy, I would say, overheated.
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