The webinar entitled “Forget the Turkey you Thought you Knew” was held online on Wednesday, April 21, 2021. The event was hosted by Menas Associates and focused on Turkey’s relations with the west that have undergone a strategic shift in the past five years. The webinar analyzed foreign relations with the MENA region, EU and US, domestic politics, scenarios for mid-term, macro-economy, and business environment. Amongst other issues that were discussed are Turkey’s external self-confidence and domestic political pressures, the EU’s response to Turkey’s policies in the Mediterranean and the plight of its four million Syrian refugees, and Turkey’s way of managing domestic COVID-19 risks.
The event brought together important speakers such as David Tonge, Istanbul-based director of IBS Research and Consultancy, and Patrick Curran, a senior economist at Tellimer.
David Tonge discussed mainly the changes of the nature in Turkey which have been come to mark a country that turned out so different from that which has been thought was going to be a role model for the Islamic world. He started debating the relations between Biden’s administration and Turkey. The US president, Joe Biden has telephoned President Recep Tayyip Erdogan six years ago to apologize that he has accused Turkey of aiding ISIS and other extremists in Syria. Today, after Joe Biden became the US president, he still hasn’t telephoned the Turkish President. He also highlighted the fact that US-Turkey relations will be tested because Biden’s first public reference to Turkey will be a possible Armenian genocide recognition.
David Tonge also stated that Turkey has fewer friends than for a long time. It was involved in disputes with Greece, its critical approach to Ukraine, it has been a part of the Syrian War and other tensions with Egypt, Libya, and Saudi Arabia. Biden’s administration may impose 20 billion dollars sanctions on Turkey. Furthermore, as a recent European Union report wrote, the country is making provocative threatening actions in most of the surrounding regional conflicts.
On the other hand, Turkey faces in many ways the most favorable International environment since the Second World War. This may be not the most stable time but the Cold War confrontation has given the possibility to Turkey to precede the West in decline. The US is no longer prepared to influence the region and Western Europe has lost its power after the Eurasian Crisis. Indeed, the Syrian refugee crisis has rebalanced the EU-Turkey relationships in a way in which Turkey is no longer a supplicant. Turkey is now stronger than any competitor in the region.
David Tonge has also explained the policy that was implemented in 2003 by Ahmet Davutoglu. According to this policy, Turkey should use its policy and geostrategic location as a force for regional and global peace. The history is that of the Ottoman Empire, whose four-century control of the Arab world is often neglected in accounts of the Middle East. Davutoglu argued that Turkey would gain security through working with countries in its region to help them solve their problems in a proactive and visionary way. He also championed Turkey’s commitment to advance democracy domestically stating that democracy is the biggest soft power.
Under the Leadership of Erdogan, Turkey has started thinking globally and its foreign policy was responding to the entrepreneurialism of Turkish business, especially in the Middle East. Turkish approaches were reciprocated by King Abdullah of Saudi Arabia, who made two visits in quick successions, the first by a Saudi ruler for four decades. Little investments were attracted but Turkish trade has changed its structure. The exports and the imports from the countries from the organization of the Islamic Corporation have doubled. All these games at the expense of the EU.
Turkey also became an outspoken critic of Israel after killing Palestinians in 2008-2009 and led aid convoy. This policy of playing the good neighbor to the Islamic world combined with changes inside the country caused Turkish stars to rise. In the west, in the anguish of the post 9/11 world Turkey was embraced as a modernized Islamic country. Politicians in the west presented the country as a role model that blended the Islamic belief with modernity. At the end of 2011, President Obama included Erdogan among the five world leaders with whom he has able to forge “bonds of trust”. Turkish soap operas glittered on screens from Cairo to Caspian and the Balkans and aspirations to soft power had become reality.
David Tonge also discussed AK party’s strategies highlighting its overseas aid program. AKP boosted Turkey’s aid program, spreading this widely and drawing in support from Turkish industrialists and religious orders. Egypt was a major recipient under Morsi. Official aid jumped to 700 million dollars a year, Turkish entrepreneurs added another half-billion-dollar in investments and suddenly Turkey was ubiquitous from the Muslim Countries to Africa and Latin America. The main players in this were TIKA (Turkish Cooperation and Coordination Agency) and Directorate for Religious Affairs.
David Tongue also explained the “New Turkey” concept as a part of Erdoğan’s foreign policy when he ran for president in 2014. This New Turkey no longer seeks the safety of the pack but has chosen the role of a lone wolf. Dr. Ibrahim Kalin, Erdoğan’s chief aide, said that this concept represents “valuable loneliness”. This concept implied that Turkey will start looking for respect rather than friendships, recasting its alliances as transactional relationships. Turkey has become a regional power in its own right, economically forceful, and militarily significant.
David Tonge said that Turkey’s problem was not abroad, but at home. Erdoğan’s electoral victories have been aided and depended on depriving his opponents of fair campaigning and polling conditions. A slowing economy has increased his vulnerability and to mitigate this he has allied with Devlet Bahçeli’s Nationalist Action Party. The price of this has been accomodating Bahceli’s ultra-nationalist demands in foreign policy.
Debating Turkey’s role in Syria, David Tonge said that Erdoğan’s continuing support to the Muslim brotherhood can be linked to the religion-driven policies evident in earlier AKP years. Such policies were also initially evident in Turkey’s policy in Syria. From 2011, Turkey became a highway for weapons to opponents of Bashar al-Assad. Gulf nations funneled cash and weapons to rebel groups, with this developing into CIA’s Timber Sycamore Program. The recipients were a motley bag and there were some awkward moments. In 2013, Turkish police arrested thirteen men in Adana with chemical precursors for Al-Qaeda.
The New Turkey – confrontational, enmeshed with Russia. Ankara’s recent charm offensive has not found much response. Nothing suggests that Turkey is about to return to the fold of the rules-based post-war order. Its new role involves using a hard strength tempered in decades of conflict against the Kurds and backed by a formidable domestic arms industry. Erdogan’s New Turkey is thus regarding the place in the sun which obsequiousness to the West hand long denied them. Its symbol is the drone. For the opposition, there are no votes in challenging this.
The default style of the New Turkey is confrontational and likely to continue so. As Turkey follows self-interest, no treaty is sacred.
The rewards of recent years have their risks. Squalls could develop in Syria, where Turkish troops are dependent on the cover provided by Moscow. That Erdogan should be prepared to sell armored drones to Kyiv must come close to one of Putin’s red lines. The relationship with Russia is enmeshed and multi-dimensional and more portentous than that with the US.
Turkey’s Syrian gamble has been successful on three levels – in establishing a new level of dialogue with Russia, in allowing Turkey to challenge U.S backing for Kurdish factions supporting the PKK, and in curbing the role of Iran in Syria.
Patrick Curran has presented Turkey’s economic outlook. He stated that since the AKP has come into power Turkey has undergone different economic cycles. Early in the 2000s, there were a lot of positive structural reforms and institutional improvements that led to sustainable economic growth. After the global financial crisis, this growth has slowed down and the composition and the quality of this growth have declined.
In 2018, Turkey was in the middle of a credit-driven growth boom which led to inflation to rise of about 25%. This has caused the sacking of Central Bank’s governor Murat Cetinkaya in July 2018 after he tried to tame inflation by hiking the interest rate by 625 basis points to 24%. Patrick Curran said that independence at Central Bank has become a concern and led to the currency crisis.
Patrick Curran explained that the domestic confidence in Lira became limited. Elevated imports of non-monetary gold are another lagging indicator of low confidence in the lira. Lack of confidence in the lira has also pushed dollarization above 55% and it has since moderated slightly and remained at high levels. He also clarified that reserves have dropped to alarming levels because they have started to pick up and gold reserves remained high, on the other side, net reserves are deeply negative once FX swaps are factored out.
Turkey has been relying on external financing which means that financing needs over the short term are incredibly high. Short-term external debt has reached over 190 billion dollars which dwarfs gross reserves by nearly four times, but very little of this pertains to the government and much of it is sticky categories like banks and trade credits.
Patrick Curran has also mentioned the market reaction to the Central Bank crisis. He stated that foreign flaws have swung sharply negative again. Non-resident capital flows began to recover after Governor Agbal was hired, but they have reversed since his sacking. On the other hand, the stock of equities and domestic government debt held by non-residents remains near 10-year lows, reducing the risk of a capital flight.
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About the author:
Ghina ALRIHANI holds a bachelor’s degree in Turkish and French Philology and finished her master’s degree in Economic Diplomacy where she studied international relations, economic and public diplomacy, foreign policy, and security studies. Her main interests are migration, migration policies, EU relations, Middle East, and Turkey.