How did Turkey reach the brink?

August 16, 2018

Alan Maass and Hakan Yılmaz provide the background for understanding Turkey’s financial turmoil — and its increasing conflicts with former allies in Washington.

A FINANCIAL crisis in Turkey is causing panic and plunges in international markets — and increasing tensions among and between some of the world’s most heavily armed governments, including the U.S. at the top of the heap.

Turkey’s currency, the lira, has lost 40 percent of its value against the dollar in the last six months — with half of that drop coming in August alone. Any product related to imports will cost people in Turkey more. The currency crisis is the prime reason that the country’s annual inflation rate is estimated at as high as 100 percent.

Beyond the impact on world stock markets, Turkey’s financial turmoil shows signs of spreading. The value of India’s currency hit a historic low measured against the dollar. And because of Turkey’s connections to the European Union, the euro has also fallen against the dollar.

Turkey’s crisis has been developing for some time, but it reached a new stage this month when the Trump administration escalated pressure on the government of Recep Tayyip Erdoğan with sanctions against two top officials and a steep increase in tariffs — charges levied on imports from Turkey.

A display board shows the fall in the value of the Turkish lira at a currency exchange in Istanbul
A display board shows the fall in the value of the Turkish lira at a currency exchange in Istanbul

The international media have been warning about the threat of a financial and economic crisis in Turkey for some time. In the Turkish media, the crisis has been much less discussed due to many mass media organizations being controlled by the government, which is led by Erdoğan’s Justice and Development Party (AKP).

Erdoğan has spent the last years building up the power of the presidency, and he has responded to threats to his and his party’s rule by turning to intensified nationalism. It was no surprise when, as the value of the lira reached a low point, he called on people to show their patriotism by selling dollars in exchange for lira to bolster the currency’s value.

Erdoğan won re-election as president in a snap vote in late June, and he has continued to tighten his grip since. For example, he combined the ministries of finance and treasury and put his son-in-law in control of the consolidated ministry.

The government’s long-standing image as a friend to Western capital has been transformed by Erdoğan’s nationalism and authoritarianism, and the escalation of international tensions, particularly with the U.S., that he is contributed to is threatening greater instability, both inside Turkey and in the region beyond.

THE U.S. moves against Turkey are connected immediately to the Erdoğan government’s refusal to release an evangelical American pastor — but conflicts between the two longtime allies and fellow NATO countries have been growing for some time, and have only intensified under the Trump regime.

The pastor is Andrew Brunson, who leads an evangelical church in the Turkish province of İzmir. Since the botched military coup against Erdoğan in July 2016, Brunson has been under investigation for alleged ties to the Gülen movement that is accused of plotting the overthroew. The Gülenists are socially conservative and pro-business Islamists who were early allies of the AKP until increasingly falling out with the ruling party.

Brunson is also accused of being connected to the Kurdistan Workers’ Party (PKK), a Kurdish nationalist organization that has fought an armed struggle against the government — and of participating in the 2013 Gezi Park uprising, initially an occupation over land development in Istanbul that became a social rebellion with echoes around the country.

There is little to no evidence that Brunson was involved with any of this. The accusations from Erdoğan and the AKP are typical of how they have used the excuse of the coup to crack down against all political and social currents they perceive as a threat, no matter how disconnected they may be from the plot.

In the U.S., though, right-wing politicians have ties to evangelicals like Brunson, including Vice President Mike Pence and Secretary of State Mike Pompeo. This why the Trump regime’s concerns about the post-coup crackdown in Turkey have been limited to only some dissenters.

Since Erdoğan’s re-election in June, the U.S. has pressed harder for Brunson’s release. At the start of the month, the Trump administration announced it was imposing sanctions on two top government officials: Justice Minister Abdulhamit Gül and Interior Minister Süleyman Soylu.

Then, on August 10, Trump said that he would okay the doubling of tariffs on steel and aluminum imports from Turkey. Commerce Secretary Wilbur Ross once again used the claim that additional trade penalties were necessary when imports “threaten to impair national security.”

The value of Turkey’s currency, already headed downward, suffered a huge plunge.

THE CONFLICT over Brunson is currently the most talked-about factor in the deteriorating relationship between the U.S. and Turkey, but it isn’t the only point of friction.

These tensions are in contrast to much of the rest of the AKP’s 16 years since taking power. Erdoğan maintained positive relationships with the U.S. Barack Obama was a fan and once referred to Erdoğan as “a man of principle and also a man of action.”

This began to change as Erdoğan and his party have faced greater challenges to their rule, first revealed by the Gezi uprising. But it’s not because the U.S. government is concerned about human rights for those who dissent in Turkey.

One major factor is the war in Syria, which borders Turkey to the south. When the regime of Syrian dictator Bashar al-Assad attempted to drown the pro-democracy uprising in blood, Turkey generally sided with the U.S. in opposing Assad, though not necessarily giving more than rhetorical support to the rebellion.

But the situation got more complicated with the rise of ISIS as another face of counterrevolution in Syria. ISIS became the prime enemy for the U.S. government, even to the extent of arming Kurdish forces, which the U.S. has traditionally opposed to preserve its alliance with a Turkish government that views the oppressed Kurds as an existential threat.

In the successful assault on ISIS strongholds in Syria this past year, the Kurdish People’s Protection Units played the decisive role among ground forces that displaced ISIS, with air support from the U.S.

Turkey’s hostility to the U.S. alliance with the Kurds was turned into action earlier this year when Turkish forces invaded Kurdish areas in northern Syria. The attacks have largely succeeded in displacing Kurdish domination.

The U.S. was never a reliable ally of the Kurds, but Turkey’s invasion threatened U.S. aims for finishing off ISIS. More importantly, Turkey’s willingness to strike a deal with Russia, the main backer of the Assad regime, has alarmed the foreign policy establishment in the U.S.

Last September, the Erdogan government signed a contract to buy Russia’s surface-to-air missile system — which would mean that Russian military technicians would be setting up shop in a country that is part of the U.S.-dominated NATO military alliance.

Thus, when members of Congress passed legislation in June to halt the transfer of F-35 joint strike fighters to Turkey, they demanded both that Brunson be released — and that the Russian missile system deal be canceled.

WITHIN TURKEY, the turn to nationalism and repression by Erdoğan and the AKP is a response to challenges that predate the 2016 coup.

One year before the botched mutiny, the AKP lost its parliamentary majority for the first time due to the success of the People’s Democracy Party (HDP), a left-wing party based primarily among the oppressed Kurds, but which won wider support among liberals and other minorities around Turkey. It was a sign that the discontent expressed in the Gezi Park uprising was still building.

The Erdoğan regime reacted by escalating the long-term war on the Kurds, carrying out scorched-earth assaults in the southeastern parts of the country that are predominantly Kurdish. Leaders of HDP, including presidential candidate Selahattin Demirtaş, were arrested and thrown in prison.

In the most recent snap election called for late June, Erdoğan continued to target the HDP, falsely linking party leaders to the coup attempt. He even threatened to have Demirtaş executed.

With the help of an alliance with the far-right Nationalist Movement Party, Erdoğan has rebuilt the AKP’s base of power, but his nationalist appeal has depended on Turkey continuing to experience economic growth based on the AKP’s pro-business model that attracts Western investment.

That’s what makes the financial upheaval and looming economic crisis so destabilizing.

Earlier this month, the government presented its 100-day action plan to begin its new term in office which promised more public-private partnerships in government projects, called for shutting down hospitals in low population regions and replacing them with smaller clinics, and marginally increased pensions though they will remain below the poverty line.

The new economic plan did little to win over international investors. The government has resisted standard monetary responses to inflation such as raising central bank interest rates. One reason for this might be that Erdoğan feared a move that might slow economic growth.

The Erdoğan regime will continue to rely on repression and control of the media, but they are also playing to nationalism by claiming that the currency crisis is caused by foreign governments. Turkey “will not lose the economic war,” the president said in a speech last week. “They might have their dollar, but we have our god.”

The AKP can rely on a higher level of popularity whipped up by nationalism. Erdoğan also benefits from the lack of any effective opposition to his rule within the mainstream.

The main opposition party, the Republican People’s Party (CHP), has been embroiled in infighting since the election between former presidential candidate Muharrem İnce and rival party leader Kemal Kılıçdaroğlu. İnce has been trying to get Kılıçdaroğlu to resign after a poor showing for the CHP, where İnce, as presidential candidate, managed to get more votes than the party itself.

On the left, the HDP, devastated by the impact of repression, has been unable to build on the mood of popular discontent against Erdoğan that was clear in the campaign and in the very narrow victory — almost certainly due to fraud — in the preceding referendum to give himself more power.

At their convention, HDP officials said the party would focus on the grassroots level rather than restrict itself to parliamentary politics. A statement by the imprisoned Demirtaş warned HDP members not to become passive and urged them to “get out of vacation mode.”

The pressures and turmoil caused by the currency crisis, along with a likely slowdown in international investment and trade, will contribute to a worsening economic situation for the working class.

This and the repression of the regime will dent the cult of personality that Erdoğan has tried to build up to win support among workers. But without an active opposition from below, his rule is unlikely to be ended on its own, even as the country’s economy approaches the brink.

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