Moon of Alabama Brecht quote
August 10, 2018

How Turkey's Currency Crisis Came To Pass

Updated below

President Erdogan of Turkey often asserts that 'foreign powers' (meaning the U.S.) want to bring him down. He says that the 'interest lobby' (meaning (Jewish) bankers), wants to damage Turkey. He is somewhat right on both points.

Since last week the Turkish lira is on an extended down-slide. Today alone it lost nearly 20% of its value. It will likely take the Turkish economy with it and Erdogan need someone to blame for it.

But while foreign powers and banks surely use the crisis for their own aims, it its Erdogan's economic policy that is foremost to blame. The long boom he created with borrowed foreign money is finally turning into a bust.

Here is a recap of how it came to this.

The larger political picture:

During the U.S. induced 'Arab Spring' U.S. President Obama joined with Qatar and Turkey in an attempt to install Muslim Brotherhood governments throughout the Middle East. When Hillary Clinton left the position of Secretary of State and John Kerry took over, the Obama administration changed its position. It endorsed the coup against the elected Egyptian President Morsi and it refrained from actively using the U.S. military to bring the Syrian government down.

Especially with regards to Syria Turkey was left holding the bag. Erdogan had bet on the U.S. plan to overthrow the Syrian government. His invitation of Syrian refugees and support of radical Islamists fighting in Syria had cost a significant amount of money and brought a lot of trouble with it. The Turkish trade route through Syria to the Gulf countries was closed. Economic relations with Iran suffered. Erdogan needed to get something out of it.

But U.S. policies had turned against him. The Gezi protests in 2013 had all the signs of a  U.S. color revolution attempt. They failed. In 2014 the Obama administration began to support the Kurdish PKK/YPG forces in Kobane, east Syria. The PKK is a terrorist organization which tries to create its own country in the eastern part of Turkey, north Syria and north Iraq. The U.S. alliance with and arming of the Kurds created a PKK/YPG dagger pointed at Turkey's underbelly.

In response to a Turkish led attack on Latakia and Idleb in mid 2015 Russia deployed its forces to Syria. In hindsight it was the point where Erdogan's game in Syria was over. The U.S. would not launch a war against the nuclear armed Russia. Syria would not fall. But Erdogan played on.

In November 2015 the Turkish air defense ambushed and shot down a Russian jet. Russia responded with a total stop of all economic exchanges with Turkey.  These were not the needle prick sanctions the U.S. often uses, but a total abrupt end of all trade relations including millions of Russian tourist visits in Turkey. The economic damage for Turkey was huge. Erdogan had to submit to Russia. Putin was gracious and allowed Erdogan to save his face. The Russian government offered a lucrative pipeline deal and other sweeteners. In mid 2016 the CIA arranged for a hard coup against Erdogan but Russian intelligence warned Erdogan and the coup failed. Turkey is asking the U.S. to hand over Fethullah Gulen which it accuses of instigating the coup. Gulen is a Turkish preacher with a large following and a long time CIA asset who resides in Pennsylvania.

Flipping Turkey from the "western" to the "eastern" camp can be seen as part of Russia's Black Sea strategy. It is repeat of a mid 19th-century plan executed under Tzar Nicholas I. The current plan is so far successful. But it collides with the U.S. plans to revive NATO for another lucrative Cold War. Thus the current U.S. plan is to use Turkey's economy problems to finally bring Erdogan down.

The larger economic picture:

Outside of his country Erdogan is much disliked. His arrogance and autocratic style do not leave a good impression. But within Turkey he had a very successful career and continues to be supported by a majority of his people. The reason behind this is the long economic boom he created.

In 2002, when Erdogan became prime minister, Turkey was recovering from a recession. Erdogan's predecessor Kemal Derviş had implemented some significant reforms.  Erdogan took credit for the results. He additionally discarded a number of cumbersome regulations and cleaned up the bureaucracy. He invited foreign investment. The program worked well. The economy grew at a fast pace and many Turks were pulled from poverty. A few became rich. The early years of economic success under his rule are remembered well. Inflation was steady at a relatively low rate even while money was freely available and the economy grew. But Erdogan's expansive economic program also made Turkey more vulnerable.

Turkey has a chronic current account deficit. It imports more goods and services than it exports and has to borrow foreign money to pay for the difference. In the early Erdogan years a lot of money flowed into Turkey. But it was invested in unproductive matters. New housing expanded a booming Istanbul. New splendid bridges and airports, lots of shopping malls and more than 10,000 new mosques were build as well as a 1,000 room palace for Erdogan to use. His cronies in the building industry got very rich.

But productive industries that create products to export to other markets are harder to build than mosques. Erdogan never made them a priority.  Thus Turkey's current account deficits grew from 1% of its GDP to about 6% of GDP. This was clearly unsustainable.

During the boom the Turkish central bank interests rates came down from earlier heights but were still kept higher than elsewhere. The industries and banks borrowed in euros or dollars which carried less interests but this also meant that they took on a high currency risk. If the Turkish lira was to fall the loans would have to be paid back in hard currencies from revenue made in a diminishing lira.

Under normal circumstances Turkey's central bank would have engineered one or more mild recession during the 16 year long boom. Some of the accumulated waste and bad loans would have been discarded. Consumption of foreign goods and the current account deficit would have come down. But Erdogan has a curious understanding of economic theory. He believes that high interest rates cause inflation.

Every time the Turkish central bank increased its interest rate to keep inflation in check and to stop the lira from falling Erdogan found harsh words against it and threatened its independence. The relatively cheap money kept flowing, the Erdogan boom kept going, but the structural problems became worse.

Since early 2017 inflation in Turkey picked up. It since increased from 8% to now 15%. The currency went down. The value of 1 lira fell from US $0.30 in 2016 to US $0.20 a week ago. During the last few days it crashed another 25% to US $0.15. It now takes more than 2,000 lira to pay back the principal of a 1,000 lira loan taken out in U.S. dollars in 2016. The Turkish industries and banks have borrowed some $150 billion in foreign currencies. Only those who export most of their products in hard currencies will be able to pay back their loans. The others are practically bankrupt.

The bill for the long boom is coming through. The Turkish lira is crashing. No foreigners want to loan Turkey more money. For taking such a high risk they demand extremely hight interest. Turkey will soon be unable to pay for its imports, especially for the hydrocarbon energy it needs. Unfriendly relations with the United States will make it difficult to ask the International Monetary Fund (IMF) for an emergency loan. It would come with very harsh conditions such as demands to 'reform', i.e. end, the benefits Erdogan has channeled to his followers.

The current escalation:

The escalation of the currency crisis during the last week coincided with the escalation of a minor conflict with the United States.

After the 2016 coup attempt Turkey imprisoned U.S. pastor Andrew Brunson, who had long worked in the country, and charged him with terrorism. Last week a deal was arranged to exchange Brunson for a Turkish person held in Israel on terrorism charges. Turkey had expected more from the deal. It wants to free Mehmet Hakan Atilla, a Turkish banker, who the U.S. imprisoned for having breached U.S. sanctions on Iran. (He indeed did so by arranging a gold for oil trade with Iran. A trade from which Turkey, and especially Erdogan's immediate family, profited.)

Last week the U.S. side says that Erdogan went back on the exchange deal:

The deal was a carom shot, personally sealed by Trump, to trade a Turkish citizen imprisoned on terrorism charges in Israel for Brunson’s release. But it apparently fell apart on Wednesday, when a Turkish court, rather than sending the pastor home, ordered that he be transferred to house arrest while his trial continues.

Trump and the evangelical vice president Pence went berserk:

Thursday morning, after a rancorous phone call with Erdogan, Trump struck back. The United States “will impose large sanctions” on Turkey, he tweeted. “This innocent man of faith should be released immediately.”

Vice President Pence chimed in, saying in a speech at a religious conference that Turkey must free Brunson now “or be prepared to face the consequences.” Secretary of State Mike Pompeo called his counterpart in Ankara.

The U.S. went on to sanction two cabinet ministers of its long time NATO ally. But Erdogan would not give in. The markets reacted to the public sanctions and counter-sanctions threats. The lira began to crash from 4.80 lira per dollar to 5.20 per dollar. On Wednesday a Turkish delegation traveled to Washington to further negotiate the issue but the talks failed. The lira went to 5.50 per dollar. The financial markets became alarmed. The fall out of the spat threatens to impact European banks.

This morning Erdogan held a speech in which he dismissed fears of a lira crash:

“There are various campaigns being carried out. Don’t heed them,” Erdogan said.

“Don’t forget, if they have their dollars, we have our people, our God. We are working hard. Look at what we were 16 years ago and look at us now,” he said.

Erdogan said he would not "surrender to economic hitmen". The banks which have loaned a lot of money to Turkey might understand that as a threat to default on Turkey's debt.

At noon the lira was falling minute by minute at a 20% per day rate. Erdogan's son in law Berat Albayrak, who was recently made finance minister, held a planned speech on the economy. He was expected to give some numbers on the deficits and to name some concrete measures the government would take to end the lira problem. But he refrained from doing so. He tried to calm the markets by claiming that the Turkish central bank is independent and would act as necessary. No one believes that the central bank in Turkey can act without Erdogan's approval. Erdogan is a self-declared enemy of high interests and the central bank did not intervene today when it was urgently needed.

In the mid of Albayrack's speech Donald Trump personally intervened via Twitter:

Donald J. Trump @realDonaldTrump - 12:47 utc - 10 Aug 2018
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

Steel is one of Turkey's biggest export products. The U.S. imports $1+ billion worth of Turkish steel per year. The White House later said the these tariffs are tied to security, not to trade.

Meanwhile Erdogan held a phone call with the Russia's President Putin to "discuss the economic ties". He may have asked for an emergency loan.

Meanwhile the lira dropped to 6.80 for a dollar.

Erdogan then gave another speech in which he lambasted the U.S. pressure without naming Trump or mentioning his tweet.

At the end of the day the lira stood at 6.50 to the dollar after 5.50 yesterday. Turkish stocks were down some 2%. Stocks of some Turkish banks and steel producers fell 15%. Spanish, Italian and French banks, which lent tens of billion Euros to Turkish banks, also lost. Bloomberg documented today's tic-toc in a live blog.

Where from here:

Erdogan now has the weekend to discuss the issue with his advisors. If no measures are taken by Monday morning, today's crash will gain pace. The lira will fall further. The central bank will have to raise interest raise to 30+% to stop the slide and to attract urgently needed foreign money. The Turkish economy will go into a deep recessions. A number of its banks and companies will go bankrupt. Unemployment will rise.

Erdogan will blame the U.S. and the "interest rate lobby" for the downfall. His followers will believe him. Any hope that Erdogan will go over this is in vain.

But Turkey's problems are structural. The burst of its bubble was long expected. Its foreign account deficit is simply unsustainable. It will have to cut back on imports and boost its exports. It will need large emergency loans.

Yes, the U.S. is using the issue to put pressure on Turkey. But the U.S. is not the root cause of the problem. It only exposes it.

The U.S. pressure is not about Turkey's economy and not even about pastor Brunson. The pressure is, and has been since 2013, to bring Erdogan in line with the U.S. agenda. He will have to stop his good relations with Russia. He will have to stop his purchase of the Russian S-400 air defense system. He may be ordered to stop the Russian pipeline. He must follow the U.S. lead on Syria. As long as he does not do so the U.S. will try everything to bring him down.

The only chance Turkey has to escape from U.S. demands is to further ally with Russia. Putin knows that Erdogan needs him. He will play for time to increase the pressure and then make his own demands. Erdogan will have to give up completely on his plans for Syria. All Syrian land Turkey or its proxies hold must be put back under Syrian government control. Only then will the Turkey's trade route to the Gulf states reopen. Only then will Russia (and Iran) help Turkey though its crises.

On Monday Russia's foreign minister Lavrov will visit Turkey.

Will Erdogan accept the Russian demands or will he flip back to the U.S. side and surrender to Trump and the IMF?  Or will he find a different way to escape from this calamity?

Update (Aug 11, 8:45 utc):

Erdogan has an op-ed in today's New York Times. He reminds of the decades of good relations, lists his charges against recent U.S. action and blames it for the deteriorating relations. It culminates in this:

At a time when evil continues to lurk around the world, unilateral actions against Turkey by the United States, our ally of decades, will only serve to undermine American interests and security. Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.

Posted by b on August 10, 2018 at 20:20 UTC | Permalink

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@ Posted by: Jackrabbit | Aug 11, 2018 4:07:33 PM | 99: Those "3 billion euros" are apparently more complicated than anyone imagined ...

from March 2018 REuters article.
(I tried to find out how much had been paid and how/why the rest was apparently being withheld, but I don't trust the "EU" to not play-politics or crack the whip wrt the money)

Turkey's Erdogan says will ask EU for rest of 3 billion euro aid for refugees

ANKARA (Reuters) - Turkey will ask the European Union about the remainder of a 3 billion-euro ($3.69 billion) fund intended for Syrian refugees during talks in Bulgaria next week, Turkish President Tayyip Erdogan said on Monday.

Turkey has accepted 3.5 million refugees from Syria, and the EU is already spending 3 billion euros to help them as part of a 2016 deal to curb migration into Europe. But Erdogan says the bloc is not delivering on its promises.

“The promises made to us have not been kept ... They said they would give 3 billion euros plus another 3 billion euros of support, but so far 850 million euros have entered our safe,” Erdogan said. “If you’re going to give that money, then do it. This nation has pride and you can’t toy with our pride.”

It's too bad the Russiagate eclipses almost all other news ... Manafort, what a spine-tingling trial (not).
I looked for more info later and didn't find it ... but was amazed that the payment had been held up for as long as it has been given how long the "crisis" had been going on without some compensation to Turkey.

[In the round robin of fall out -- apparently due to sanctions, Iraq "can't" pay its gas bill to Iran for gas already received without violating sanctions. About Future Gas, I dunno]

Posted by: Susan Sunflower | Aug 11 2018 20:27 utc | 101

Jackrabbit @99:

In this case, it would be a mistake to use the past as a predictor of what will happen.

IOW, as the song goes, "it was a new day yesterday, but it's an old day now".

Posted by: Woogs | Aug 11 2018 20:32 utc | 102

Posted by: Jackrabbit | Aug 11, 2018 4:07:33 PM | 99

Turkey GDP per capita since 2008

It is impressive.

Turkey's problems now are of course aggravated by the dictatorship of Erdogan but they are made in the US - not necessarily intentionally.

Fortunately the investor shakeouts appear confined to a handful of countries. Other emerging markets may well adapt to rising US interest rates without creating major upheavals.

But some pressure will likely persist as US interest rates continue to rise — making dollar investments more attractive, while other currencies and regions become more and more unappealing.

The US simply own a massive economy whose actions influence most of the things happening in the world.

Posted by: somebody | Aug 11 2018 20:49 utc | 103

Oil isn't everything, water is a liquid that people tend to forget about, and in that particular region Turkey has a card it can play to make life extremely difficult for Syria and Iraq, countries with substantial energy reserves. It can change, slow, divert, the flow of vast quantities of water thanks to its extensive dams in its territory which allow it to drastically shape the flow in the Euphrates.

The AKP has and continues to have a close relationship with the corrupt KRG (Kurdistan Regional Government). Lots of money and favors go both ways, Turkey will certainly be able to get a large portion of its energy needs met by the KRG, with the remainder pulled from the Baku–Tbilisi–Ceyhan pipeline which it could threaten, although it wouldn't necessarily need to do so, since Azerbaijan and Turkey have extremely close ties. Turkey won't run out of oil, or gas, they could always institute emergency measures and taxes in the highly urbanized areas in a way that would primarily hit CHP supporters hardest. This is why the stupid CHP in 2014 ran ads talking about lowering gas prices in urban centres instead of focusing efforts on higher minimum wages and supports for the working poor. Turkey also has sufficient coal reserves, that people in Istanbul even still make use of to heat their homes.

All of this though, won't save them from the financial weapons available to the US. And the US will continue to use those to punish the existing leadership of Turkey for not being a reliable subject of it. Due to its foreign currency debt, a depreciating lira as B and others have stated, would divert more and more resources for local use to paying off external creditors. At a certain point multinationals won't want to invest or continue their operations in Turkey, because they aren't able to repatriate their money back in a currency worth more than dirt, the local market is crumbling and trade becomes increasingly costly and difficult. Any temporary shortcoming could easily be alleviated by starting to production projects in eastern Europe.

It is game over for Erdogan. China and Russia won't support that idiot, they may pretend to, but will just pick his bones. And even if they wanted to, the Europeans control most of the worlds shipping fleet and insurance underwriters, they could make it extremely difficult for Turkey to continue to export what is already does on amenable terms, forcing producers to take even greater hits to their margin.

The real question is not whether Erdogan will fall or fail to revive Turkey, but how far he will drag it down with his arrogance and/or how long other circles of power will allow him to do so before they intervene and impose a caretaker government that agrees to western demands.

It is very possible the lira will hit 12 to the dollar before December and before this sad chapter of Turkey's history comes to a close.

Posted by: Out of Istanbul | Aug 11 2018 20:50 utc | 104

So, what or who comes after Erdogan? Many seem eager to see the end of him and his various forms of bullshit (I can understand), but seriously, with Gulen-supporters sweep the field and pave the path to a leadership which will stink of US facilitation -- wiil / could that be viability ... another client state with permanent bases and a profound increase in tensions with Russia, China and Iran? Thoughts?

Posted by: Susan Sunflower | Aug 11 2018 20:56 utc | 105


In the past the Turkish military has stepped in when necessary.

But I think Erdogan will make a deal. He knows that his 52% "majority" was reached only via manipulation and that his economy is on the edge. Thumbing his nose at US/NATO is fraught with danger (to himself personally as well as Turkey) and he would require YEARS to transition away from the West.

Posted by: Jackrabbit | Aug 11 2018 21:12 utc | 106

@104 - out of istanbul... turkey has been making it difficult for syria and iraq for quite some time with regard the euphrates... in many other places in the world - the water source and sharing of the resource is worked out... it doesn't appear to be the case with turkey that would like to call all the shots.. good neighbours verses bad neighbours seems to be an open question here..

Posted by: james | Aug 11 2018 21:27 utc | 107

106 Turkish military has been defanged and close to everybody in Turkey thinks that this is a good thing.

Plus Erdogan is doubling down

Turkey ready for trade with partners, including Russia, in national currencies - Erdogan according to TASS

And this could work - as Ruble was hit like Yuan, like Iranian Real. For some reason Turkey has built its gold reserves - as has Russia as has China.

This here is PressTV from April - Russia, Iran, Turkey mull unified payment system

Posted by: somebody | Aug 11 2018 21:55 utc | 108

if only there was some way in all this to get sibel edmonds deported back there. i kid. or not.

excellent work as usual. i tend to focus 99% on the foreign policy of countries and maybe .000001% on their economies (unless there's a major overlap such as the US and its "endless QE, bombs and fraud" strategy). speaking of which, i immediately thought the same thing you stated toward the end: time's up for his expansionist plans for northern syria and elsewhere. also, if he doesn't get back on the good side of the lunatics in the US, there could be a whole lot of kurdish blowback (via the CIA) in his future. they're going colour revolution crazy lately and turkey would be almost effortless at this point.

Posted by: the pair | Aug 11 2018 22:06 utc | 109

Jen @11,

Indeed, the health reform was very popular and the main reason for the initial popularity of Erdogan but since at least 2010, all of the good bits about the health reform started to be rolled back and piece by piece health system become privatized.

The reason Erdogan still in power is because he controls the media, almost 100% of it and even then he needed open manipulation of voting process since at least 2016. Thus there is no need for being nice to the population. He, does, however a large section of population he feeds with government handouts which are hand picked by local party representatives. This parasite class of absolutely useless mass constitute about 15% of the population. He uses them as cannon fodders in times of need, the ones that laid under the tanks are some of those idiots many of which genuinely believes Erdogan would bring back the glorious days of Ottoman empire.

Even then, the reason he still is in power is probably because he has compromising material on the leaders of opposition parties. It is commonly speculated that his poodle and the leader of MHP is actually a pedophile and Erdogan have videos of him. Similar speculations about other party leaders are also made which actually can explain their incredible ineptitude to take advantage at the times of crisis of Erdogan.

Posted by: kemerd | Aug 11 2018 22:12 utc | 110

Why has Erdogan decide to fight over a pastor instead of Trump's Iran sanctions and oil embargo <- Jackrabbit

Well, Erdogan was quite resolute that he will ignore American embargo, and Trump decided to make a pastor to be the official cause of punishment rather than his beloved embargo. I would need to see BWH measurements of the pastor before making an opinion if Trumps cares about him or not.

Trump is a bit clever here. First, the embargo is supposed to start now, and the pastor Whatshisname is in jail for two years. Second, to cite Principles of War of Sun Tzu: kick them when they are down (American translated edition).

However, Trump has the same problem as Erdogan: he is several times less clever than he think he is. Since Turkey has such strategic location, and such strong economic ties to Western (mostly EU) markets, some compromise will ensue. Since Turkey has to make some budget cuts, it would be reasonable to postpone modernization of air force and air defenses for few years and leave the thorny question of the supplier for the happier time in the future. But it would be hard for Turkey to pursue more expensive supplies of oil and gas in the crisis situation, so they would stick to purchases in Iran. Turkey also has to force some debt restructuring, at least in duration, and restructure the balance of payments, and blame nasty foreigners for the economic fall-out, Trump makes a better foil than anonymous bankers. I would also guess than if USA will not relent on sanctions, and especially if the sanctions will escalate, Erdogan will put NATO membership on the table.

Posted by: Piotr Berman | Aug 11 2018 22:35 utc | 111


Trump decided to make a pastor to be the official cause of punishment ...

But Erdogan backed out of a deal for the pastor's release.


Erdogan will put NATO membership on the table.

He hinted at this in his NYT Op-Ed? Why is he so coy about it?

Posted by: Jackrabbit | Aug 11 2018 22:44 utc | 112

Having successfully weathered the coup attempt and taken much vengeance on Gulen supporters (several thousand of which have applied to asylum in Germany and elsewhere in Northern Europe) I wasn't sure if that proxy-alternative was still available to be (attempted to be) inserted. I gather than Gulen supporters, not unlike a massive fraternal order, were well integrated into the nation's bureaucracy for a long time before the falling out and coup attempt. I've seen no discussion of whether a coup would have been attempted without US urging (beyond "support", providing the impetus). That Gulen resides and has refuge in the USA make the connections clear, still I'm not sure that Gulen is in fact irrelevant (I suspect he is even if Trump can't/won't see it).

Yes, as the story usually goes, the military will defend Erdogan until/unless some member or "dissident faction" is convinced to "Save Turkey" by coup.

As domestic American corruption becomes visible, it's strange how "flat" accusations that Erdogan and/or Assad family circle and cronies benefiting from, intrastructure projects and/or reconstruction as the accusation about Erdogan has been and predictions wrt Assad have been already floated. Yes, the rich and well connected do keep getting richer ... steady well-paying jobs matter more than promises or even reform for most people ... Erdogan has not been able to produce jobs in the numbers desired or needed particularly for the better educated professional classes -- Globally, No one seems to have the secret to employing all these eager to be middle class degree holders. (The Saudis need to create 500,000 new "good jobs" by 2020 according to one article I read to address domestic dissatisfaction with promises unkept about same -- They are lagging too)

Posted by: Susan Sunflower | Aug 11 2018 22:45 utc | 113

Syrian MP Fares Shehabi dropped this mic:

"One American tweet put the whole Turkish economy in danger! 7 years of war on Syria using 250k jihadi terrorists , NATO, ISIS, Israel, the Gulf states, 200 news channel, and EU economic sanctions could not destroy the Syrian economy!"

Posted by: Daniel | Aug 11 2018 23:04 utc | 114


Luongo had some interesting points. With Erdogan now having more control over his Central Bank with his new powers he may be able to duplicate what the CBR did at Putins request

"In a letter to banks .....the Bank of Russia wrote (emphasis added):

"Due to the increased levels of credit and currency risks in financial markets, the Bank of Russia recommends credit institutions consider restructuring mortgage loans (including fines and penalties) to individuals in foreign currencies, including the conversion of these loans into Russian rubles."

Most interestingly, the central bank recommends that the banks do not use current foreign exchange rates but instead "use the official exchange rate of foreign determined by the Bank of Russia as of 10.01.2014".

With the ruble relatively stable in recent years the appeal of lower interest rates that came with foreign-currency loans had increased for Russian borrowers. The collapse in the value of Russia's currency over recent months, however, has sent the cost of those debts soaring in ruble terms.

In October last year the exchange rate was 39 rubles to the dollar and 50 rubles to the euro, but the collapse in global oil prices and Western sanctions over Russia's role in the Ukraine crisis have meant that today the equivalent rates are 67.8 rubles to the dollar and 77 rubles to the euro.

Converting the loans into rubles at October 2014 rates would effectively mean taking mark-to-market losses of over 40% - but that might be seen as preferable to even larger losses in the case of Russian borrowers defaulting on their obligations. In effect, the central bank is asking Russian banks to impose losses now rather than allowing the situation to gradually deteriorate.

.......In recent weeks the central bank has moved to make it easier for financial firms to swap loans on their books for cash. In December the central bank announced that banks would no longer have to mark their assets to market and could use the average exchange rate from the previous quarter to assess how much foreign capital they require to cover foreign-currency denominated debt repayments. In essence, the central bank is allowing the banking sector to indulge in a bit of balance sheet fiction during a time of stress."

I dont know enough about Turkeys economic situation to know if they can follow Russias example For one thing they are dependant on oil imports and a lot of their exports are for western markets.

I think their best strategy is to impose capital controls and nationalize certain industries such as their gold industry in which the top 3 mines are owner by foreign companies out of Canada and Australia. They can use the gold mines as central bank reserves much like Venezuela is doing with their oil fields. They can maintain/expand relations with China,Iran and Russia and continue to play the NATO/EU threat to pull out card. They also have leverage over Syria.

Not sure I trust the guy though. Playing too many cards.

Posted by: Pft | Aug 11 2018 23:07 utc | 115

[After update]

Erdogan has just signed his death certificate.

Posted by: vk | Aug 11 2018 23:20 utc | 116

@116 vk
No he has not. The US is not on the "World Island" the rest does not matter much. WE matter. The US is a hegemon failing, for a while, a death scene protracted. The fat lady has started her tune.
Erdogan is no fat lady,and is shrewd, he is hugely popular, and that is it.
Does anybody sane think of V. Putin retiring? Thought not!
Some people love their country.

Posted by: Den Lille Abe | Aug 11 2018 23:41 utc | 117

Despite a few pockets of resistance Nationalism is nothing more than an illusion. The global elite control most nations . The top 17 trillion-dollar investment management firm controlled $41.1 trillion dollars in 2017. These firms are all directly invested in each other and managed by only 199 people who are the decision makers on how and where global capital will be invested. They defeat nations with a weaponized dollar. They control who wins elections and their policies

New book coming out called "Giants-The Global Power Elite "should be an interesting read.

Much of what we see today is simply a power struggle among those globsl elites who are fighting for more of a say in the NWO and those who want to keep the power they have. It has nothing to do with the bottom 99%. They are just Pawns in the Game played on the Grand Chessboard

Turkey is caught between the East and West factions of the Global Elites. Wanting to choose a middle ground that is not yet on the Globalist Menu.

Posted by: Pft | Aug 12 2018 0:07 utc | 118

When you are in the middle of two fighting colossus, you have to retreat and take your side, but you can't try to fight against both of them.

Posted by: Amado Naranjo | Aug 12 2018 0:12 utc | 119

@118 Pft

I have to offer a countervailing view to your perspective on this. The example of Russia seems most appropriate, although one could look to those nations that have experienced successful revolutions, such as Cuba, Iran and China, for other examples.

In Russia, just before Putin came to power, one could say that the security apparatus of the state was about the last man standing. It could indeed have sold out its integrity to the oligarchs to make the foreign predatory conquest complete.

Instead, the security state acted to save its nation, and chose the very best man it could find to lead the effort. I've seen enough documentaries and interviews to know that within Russia, within the Kremlin, the epiphany that appeared to those actors themselves was that the state itself still retained power. I suspect this means that even the Russians weren't completely sure about this. The oligarchs owned the economy, and were running the political life of Russia.

But the security state - the state itself - still held significant power, and exerted it sufficiently to turn the direction of Russia into one led by its institutions of governance, rather than the predators. I choose my words carefully, because this doesn't mean every bad actor was wiped out. But the control was shifted to the state. If it was only by 51 percent versus 49 percent, so be it. This was enough.

So, nationalism, patriotism - whatever we choose to call the force that acts FOR the nation rather than takes FROM the nation - it has a power. It is a power.

Revolutions, I suppose, must be able to succeed because the security apparatus of the state is either allied with the revolution, or sufficiently corrupted and thus weakened that even it cannot prevent the new change from occurring.

John LeCarre in one of his novels illustrated how the intelligence service liked to think of itself as the secret mental health of the nation. Not to go deeply into LeCarre here at present, but I suspect this is true - I mean, that the agencies believe this, not that it is actually true. I certainly don't believe this is true of the US. But in the case of Russia, it was in fact true. The security state was the last moral agent of the nation, and could have sold its morality for a high price, but chose instead to save the nation.

So whenever someone tells me that the elites rule every piece on the board, or that everything is a conjuror's illusion, I look to the many instances we have seen in the world where realpolitik prevails over the wishes of extraordinarily rich men who, despite their omnipotence, never leave their armchairs and cannot compete on the ground with the more nimble actors who actually inhabit that place.

So I offer this perspective, to mesh with yours and hopefully agree that, many times, the fat lady's song simply appears out of the blue :)

And that this happens frequently enough as to cast doubt on the omnipotence of the elites.

Posted by: Grieved | Aug 12 2018 2:44 utc | 120

@118, @120,

I substantially agree with Grieved, and disagree with Pft. In the early 2000s the state that Pft describes may have existed. But I don't think that that is now the case. Today, rather, the 'Globalists' are failing everywhere. There desperation is palpable and is demonstrated in the increasingly desperate attempts to overthrow Trump, as well as in the ludicrous Russia-bashing and the on-going talk of nuclear war.

Below is an excerpt of a comment that I posted on MoA on July 17 that discusses the Globalist failure.

"Remember, when the Soviet Union collapsed at the beginning of the 90s, the ‘Globalists’ (i.e. the international financial elite that controls global institutions, the U.S. Deep State, the EU, etc.) thought that the Global Chess Game was over and they had won. They declared the ‘End of History’. At that time, Russia was in their hands and China was just beginning to emerge. They moved to usurp European sovereignty, through the device of the Euro, and then to consolidate the process of achieving Global Governance through the ‘Project for a New American Century’.

What the Globalists didn’t count on was the re-emergence of Russia as an independent nation and the resistance of China to rule by ‘Global Institutions’. Nor did they expect that their policies of ‘Globalization’ would devastate the economies of the states under their control (for example, the U.S., UK, Europe) and cause internal revolts leading to Brexit, the election of Trump and the rise of ‘Populism’ throughout Europe.
While the Trump-Putin meeting is a good sign-post that the struggle to defeat the ‘Globalists’ is successfully moving forward, I think that it is much too early to declare victory. The ‘Globalists’, for whom a ‘Multi-Polar World Order’ represents an existential defeat, will not give up easily.

Posted by: dh-mtl | Aug 12 2018 4:00 utc | 121

Lets not forget that Turkey is just the first contest.

India is a bigger prize and one that is not as closely tied to EU/US/NATO.

While I believe that Turkey is likely to side with the West, I see India as a toss-up. If, by chance, Erdogan breaks with the West, then India becomes more likely to as well.

Posted by: Jackrabbit | Aug 12 2018 4:03 utc | 122

Trump may well be working on Turkey to help break up NATO. He could say what ever he liked to the Euro's and they will suck it up and stay with NATO, but Erdogan's Turkey will leave NATO if Trump puts enough pressure on.

Posted by: Peter AU 1 | Aug 12 2018 4:19 utc | 123

@ Pft with the link to the Global Power Elite book.....THANKS!

@ Pft & Greived with counter/counter thoughts regarding the evolving geo-political economy

Shit is still flowing into sewage treatment plants and potable water is still being pumped to billions around the world. When the manufactured crisis comes those things will continue to happen in spite of the weeping and gnashing of teeth visible at the surface level.

What is at stake is how those things and the rest are managed and "paid for" in the future. And this decision is not being played out directly but through lots of proxy actions by many actors working individually or in concert with others. And those actors/groups are both private or state directed for private purposes, or as Grieved believes, is public with the best interests of humanity at heart (or some other purpose)

The Turkey currency crisis is another battlefront in a bigger conflict. In spite of understanding the basic control structure that the elite exert through the Western global/national financial institutions and interlocking directorships of multi-national corporations, I believe like Grieved that the Western elites are not omnipotent and will be steamrolled by the China/Russia axis that is asserting its freedom from the unipolar world.

Posted by: psychohistorian | Aug 12 2018 4:20 utc | 124

dh-mtl @121

Hubris-filled exceptionals never expect blow-back sufficient to derail their plans.

In Kissinger's recent interview with the Financial Times, he explicitly said that they had not anticipated Russian ability to absorb pain(!). I take this statement to mean that the TPTB fully intended Russia's hardships in the 1990's and believed that Russia's total capitulation would be the ultimate result of that pain and suffering.

Posted by: Jackrabbit | Aug 12 2018 4:24 utc | 125

Adam Garrie has a good summary of the economic and political ties developing between Turkey and the east, especially as compared with the rifts developing between Turkey and the west:

Turkey is in a Strong Position to Fight and Win The Economic War That Trump Just Made Official

There are several lists of advantages and links to wider sources within the piece. Garrie concludes:

As a proponent of global multipolarity, Turkey seeks positive relations with both its Asian and western partners. However, while the doors to Iran, Russia, China, south and central Asia remain open and inviting for Turkey, the US continues to exercise policies which undermine Turkey’s internal security situation and seek to box Turkey into a single alliance.

The result of such a phenomenon is that Turkey is doing what any nation in a similar position would do – going where it is wanted rather than where it is treated with undue suspicion, counter-productive hostility and overt economic bellicosity.

As always, there may be turmoil on the surface, but the future is created by the underlying fundamentals closer to the ground. Garrie is saying that these fundamentals are quite strong.

Coupled with the Tom Luongo piece cited earlier in this thread that holds a positive view of Turkey's position in this monetary crisis, Turkey seems to be holding more leverage and discretion of choice than might at first appear.

Posted by: Grieved | Aug 12 2018 4:32 utc | 126

Kemerd @ 110:

Thanks for the information about Erdogan's hold over Turkish news media and the leverage he may have over voters and opposition politicians. However, credit where credit is due: it was actually the commenter who calls him/herself "somebody" who put up that observation about Turkey's health insurance system reforms @ 11.

Uncle Tungsten @ 47:

Our, er, "speculations" on worker productivity in Turkey are supported by an article at the link below (I've kept the author's name in capital letters as this was how it appeared in the original link):

GÜNEŞ KÖMÜRCÜLER "Educational and labor productivity problems in Turkey’s economy"

Directing more money into Islamic education for the masses and less into education that would provide young people with vocational skills or skills necessary for critical thinking, analysis and creativity will surely be one of President Erdogan's more unwanted legacies. This is where Erdogan's populism (with the result that his popularity became more entrenched with rural, less-educated and/or more socially conservative voters) is short-sighted.

What Erdogan should have done, should have been to reach out to the middle class and support secular education and pursue policies to maintain and enlarge the middle class. But the article at this link suggests he ignored this demographic:

Borzou Daragahi "Erdogan Is Failing Economics 101"

'... Most developed countries see the middle class as the engine of economic growth and innovation. But Turkey under Erdogan has experienced regressive tax policies that reward the poor and rich at the expense of consumers and civil servants, the mostly secular and urban classes that don’t vote for the Justice and Development Party anyway. Consumption taxes of 18 percent finance much of the economy, while civil servants and salaried payroll workers have their taxes deducted at the source. Indirect consumption taxes levied on consumers make up 70 percent of Turkey’s tax.

Meanwhile, the poor and lower-middle class access government-funded foundations that provide services that range from meal giveaways to remedial education. “Erdogan supporters are more entrepreneurial than the middle class — small-time shopkeepers, self-employed,” Sazak says. “For those people, the taxation is much less anyway. The income tax is self-reported.”

At the same time, regular tax amnesties for corporations and big businesses alleviate the burden on the rich, and experts say they encourage delinquency but also tie the ownership class to the ruling party. Since Erdogan’s party came to power in 2002, the government has offered seven tax amnesties. “If you repeat them again and again, you create the expectation that I should not pay my taxes,” Yesilada says.

“I would call it a Robin Hood strategy,” Sazak says. “Take from your enemies, and give to your supporters.”...'

Posted by: Jen | Aug 12 2018 4:55 utc | 127

@120, @121

"The ‘Globalists’, for whom a ‘Multi-Polar World Order’ represents an existential defeat, will not give up easily."

I disagree that the Globalists have always envisioned a Uni-Polar World Order.

I also believe Putin is a Globalist. He has as much said so himself. He is also a nationalist. Kind of like FDR who was called both a socialist and fascist

All is not black and white . Many Globalists still have a bit of nationalism in them, some more than others. Also as more people become aware of the threat of Globalism more Globalists are presenting themselves as faux Nationalists (anti Globalists) to stay in or come to power. Yet you look at their policies and they continue the Globalists Agenda

Brzezinski warned shortly before his death that infighting amongst the elite, was threatening to derail the move towards a one world government. In 1995 he said "We cannot leap into world government through one quick step.... The precondition for eventual and genuine globalization is progressive regionalization because by that we move toward larger, more stable, more cooperative units."

What is happening is not unexpected but perhaps a necessary step. The elites are fractured along regional (cultural, teligious, ethnic, etc) lines and are fighting for their share of power in the future world order. Some in the US and Europe are trying to ensure they dont give up too much control.

There may also be a faction that wants a NWO where all the regions are dominated by the Anglo-American-Zionist elites. If so get ready for WWIII. Albert Pike did say 3 WW would be required for this to happen but I think nuclear weapons will force cooler heads to prevail

As for revolution almost all revolutions are won by one faction of the elite over the existing faction using those who are easily led and misled

Brzezinski wrote almost 50 yrs ago

"Another threat, less overt but no less basic, confronts liberal democracy. More directly linked to the impact of technology, it involves the gradual appearance of a more controlled and directed society. Such a society would be dominated by an elite whose claim to political power would rest on allegedly superior scientific know­how. Unhindered by the restraints of traditional liberal values, this elite would not hesitate to achieve its political ends by using the latest modern techniques for influencing public behavior and keeping society under close surveillance and control. Under such circumstances, the scientific and technological momentum of the country would not be reversed but would actually feed on the situation it exploits.

......Persisting social crisis, the emergence of a charismatic personality, and the exploitation of mass media to obtain public confidence would be the steppingstones in the piecemeal transformation .... into a highly controlled society."

Although he was referring to the US indeed this is a global concern as elites utilize these tools everywhere

Posted by: Pft | Aug 12 2018 5:43 utc | 128

It will be interesting to see if the European Union will follow the USA on this matter. It doesn't seem that way, but who knows how things will progress in the future.

The European Union and Turkey have a customs union since 1996, which greatly benefits mostly German exporters and of course Turkey itself. Germany, especially, will fight vigorously against any US pressure to change that sweet deal.

P.S. On other news : Greece throws lifeline to Assad by buying phosphates

Posted by: redrooster | Aug 12 2018 5:57 utc | 129

"Despite a few pockets of resistance Nationalism is nothing more than an illusion."

this is very much in a tune with Francis Fukuyama's dictum "end of history". One not to be surprised, the time and events prove him wrong. Very wrong. Charlatans that coming out of neoliberal academia and their books and idea are are fairly easy pray to the test of history and historical materialism.

one part of me like this statement and one part of me see hate it and see it as an illusion. because nationalism is the only what prevent global cabal from real takeover of the world. Nationalism/tribalism is still the most potent social force and a safe card to play with in hands of politicians. Nationalism - apply to emotions, what is the closest thing to your hart apart mother, kids? Your tribe.

Posted by: partizan | Aug 12 2018 6:16 utc | 130

Turkish President Recep Tayyip Erdoğan on Saturday revealed details of his negotiations with the US administration over the release of American evangelical pastor Andrew Brunson, saying the Americans threatened Ankara and told them to release Brunson “by 6 p.m. tomorrow.”

“When this game was proposed to us, we said, ‘We would rather die than accept this sort of belittlement and abasement.’ He [US President Donald Trump] threatened us: ‘You will send him [Pastor Brunson] to us by 6 p.m. tomorrow’,” Erdoğan told party members in Rize province.

“We are not some servant. We are Turkey, standing on our own two feet with 81 million people,” Erdoğan added, underlining that the US has a history of a mere three centuries compared to Turkey’s long history.

This is Tayyip's version of the deal. And I tend to believe him. When you are dealing with the devil one thing is certain, you will get burned. Second thing the US doesn't have partners...remember that.

Posted by: partizan | Aug 12 2018 6:25 utc | 131

@127 Pft
The issue about the ‘Globalists’ (Global Power Elite) is not about being elite, but about democracy. The ‘Globalists’, i.e. those seeking a uni-power world order, are essentially fascists (corporatist-dictators).

Unfortunately for these corporatist-dictators , large-modern societies are too complex to be effectively governed by dictators. Only democracies, where authority is distributed throughout the society based on the principle of legitimacy, and not wealth or force, can build the complex systems necessary to achieve the level of societal development that was achieved in the 20th century. This is the fundamental reason why those former democracies, now under ‘Globalist’ control, such as the US, the UK, much of Europe, etc., are now failing and the populations revolting.

As for democracy, there is no political structure, in the absence of nation-states that enables legitimacy (i.e. the result of democracy) to be transferred to global structures. Thus without nation-states there is no democracy. And without democracy modern societies must regress to a more primitive level of development.

The ‘Multi-Polar World Order’ is essentially a fight for the existance of nation-states (and by extension the possibility of states with authority based on legitimacy) against a ‘Globalist’/fascist dictatorship that seeks to usurp the sovereignty of nation-states and transfer it to global institutions.

Posted by: dh-mtl | Aug 12 2018 7:47 utc | 132


The last paragraph above should read

The ‘Multi-Polar World Order’ is essentially fighting for the existence of nation-states (and by extension the possibility of states with authority based on legitimacy) against a ‘Globalist’/fascist dictatorship that seeks to usurp the sovereignty of nation-states and transfer it to global institutions.

Posted by: dh-mtl | Aug 12 2018 7:51 utc | 133

One or two aspects of the US dollar hegemony is QE (expanding monetary emission aka "printing"), and recently introduced term is QS - Quantitative Squeezing (tapering its release). The result of former is "cheap money" and the later one is "hard money" with it, of course, are coming Interest rates dictated by a lenders. Think of this as mortgage when you are buying a property, the only one thing is certain, that is Uncertainty. Unless you into five percent.

QS and QE are potent tool in the hand of the hegemon and trap for "emerging markets" and "first world" countries. It is like a fire, master-slave relationship. Tentatively, with Tayyip and his clan's there is nothing wrong with what's seems to be the Keynesian economic policy what is more or less employed by FED and ECB. But Turkey IS NOT and doesn't belong to that club! And never will be for the reasons. So any squeezing in liquidity of Fed's sheet is felt by currencies of EM. A problem is the Turks have invested that "cheap money" into unproductive sector, oligarchy enriched themselves and maintain itself on the throne.

This is politics, realpolitiks, in its pure and reading the western media outlets one will get wrong picture. Mixed with hubris of individuals who overplayed its hands, if goes with heated rhetorics, gives combustible mixture. However, probably historical memories of the Turks are very long and their past experience give this type of behavior which is translated as a Nationalism and its leader is labeled as Strong-man.

Posted by: partizan | Aug 12 2018 7:59 utc | 134

Many people do not think of money as a commodity. Monopoly is of course another feature of capitalism and the Central Banks are the primary and the only monopolies of money. With its network of the Central Banks throughout the world distribution of dollar and its hegemony of dollar is guaranteed.

In perfect world QE can be considered as falsification of money, or dollar is counterfeit note, and thus criminal act.

Posted by: partizan | Aug 12 2018 8:08 utc | 135

@ dh-mtl | Aug 12, 2018 3:47:38 AM | 131

I can only weep and cringe at post like that. Believer in "Democracy"....where do you see it? In Nation-states aka tribal one?

Posted by: partizan | Aug 12 2018 8:15 utc | 136

One thing is need to clarified in regard of Quantitative Easing is that money never reach a commoners or ordinary people whether they are in Turkey, US, Germany or Greece and anywhere. It is parked in banks accounts and oligarchies, establishment - CEOs buyback stock and inflate stock prices and indices.

How is the state of Turkey is going to service its obligations remain to be seen. Erdogan's hate for the IMF is well known thing. Turkey and Iran have currency swap deal, which probably is not enough given the size of turkey's economy.

Posted by: partizan | Aug 12 2018 8:37 utc | 137

one more. maybe Qatar will help if the master permit them.

but swaps are short-term remedies. for long term remedy one needs to be unglued from the dominant narrative of capitalist logic.

Posted by: partizan | Aug 12 2018 8:43 utc | 138

excellent article, rarely sane view in sea of western's mainstream orthodoxy.

The European Union is Turkey’s main trading partner, with $84.7 billion in exports. Trade between the United States and Turkey, by comparison, amounts to only $9 billion. Foreign investors in Turkey also tend to be European, not American. U.S. foreign direct investment inflows are exceeded also by the Gulf countries.

Posted by: partizan | Aug 12 2018 9:39 utc | 139

"Trade between the United States and Turkey, by comparison, amounts to only $9 billion"

Quite astonishing! If there is not a military cooperation and F-35 programs relationship between two countries could be considered as a ceremonial or causal ones. So what's the US's leverage over Turkey. Tariffs and sanctions levied against NATO member?

Posted by: partizan | Aug 12 2018 9:49 utc | 140

New York Times has a pretty good summary of Trump's deal with Turkey that did not happen.

Erdogan seems to have a problem with almost everybody nowadays. But Europe needs him for a lot of reasons.

I would say it is an open question who did the miscalculation.

Posted by: somebody | Aug 12 2018 10:34 utc | 141

Syria certainly put the USA perfidy on display. The US shamelessly betrayed and back-stabbed everyone there. Turks, Kurds, Syrians .... US even allies with AlQueda who (supposedly) did 9/11.
Why iran or N.Korea or anyone on Earth would even consider a treaty or deal with the USA after Syria is incomprehensible.

Posted by: Angus | Aug 12 2018 11:32 utc | 142

China/Russia will loan Turkey money just the way UK US do through IMF.

Posted by: AG17 | Aug 12 2018 11:40 utc | 143

Loan money through Asian Bank*

Posted by: AG17 | Aug 12 2018 11:43 utc | 144

Russia has no money to give, however China has. But China is interested in buying strategic assets at the cheapest price possible. Also considering Turkey's support to the Uighurs, China doesn't really trust Turkey at all.

Turkey has been trying over the last 10 to 15 years to get a bigger share of the pie and was willing to use its military strength to back up its claim. All the while playing off the greater powers against each-other in order to get a better deal.

With Russia invading Idlib, Iranian influence in Iraq increasing and the US seemingly leaving the Middle East in order to concentrate on the pacific front, the game is up. Turkey now will be pushed to choose and it will all come crushing down.

Posted by: redrooster | Aug 12 2018 12:01 utc | 145

Grieved @ 120

I think Bill Mitchell would essentially agree with you

The book 'Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World' by Bill Mitchell and Thomas Fazi is divided into 2 parts.

Part 1 The Great Transformation Redux: From Keynesianism to Neoliberalism - and Beyond

Part 2 A Progressive Strategy for the Twenty-First Century.

Chapter 5 in Part 1 is 'The State Never Went Away: Neoliberalism as a State-Driven Project'

He discusses how governments have aided and abetted neoliberal globalization such as

""the liberalisation of goods and capital markets; the privatisation of resources and social services; the deregulation of business, and the financial markets in particular; the reduction of workers' rights (first and foremost, the right to collective bargaining), and more generally the repression of labor activism; the lowering of taxes on wealth and capital, at the expense of the middle and working classes; the slashing of social programmes, and so on""


""Austerity policies are part of a one-sided class war being waged by the wealthy against the elderly, poor, and middle class""

Posted by: financial matters | Aug 12 2018 13:23 utc | 146

@135 partizan

In my definition, a 'nation-state' is any state that has borders and a sovereign government. Nothing to do with tribalism.

Democracy, I would suggest, is when society's leaders are chosen, based on systemic authority (legitimacy), and represent the members of the society. Dictators, on the other hand, are self-selected based on their personal power (wealth or force) and represent themselves first and foremost.

Clearly the Global Power Elite are self-selected dictators. They have captured power in the U.S., U.K., much of Europe and elsewhere. These countries have lost their democracy, and have become corporatist-dictatorships, i.e. by definition fascist.

This Global Power Elite is also trying to usurp the sovereignty of those nation-states that they do not control and transfer it to Global institutions under their control. Thus they are also called 'Globalists' and their project is 'Global Governance'.

However, dictatorships are a primitive form of government capable of only primitive results. That is why every country that they control is failing, and why their entire project to create a system of Global Governance (i.e. global dictatorship) is also doomed to failure.

With respect to Turkey, the object of this blog, the 'Globalists' are trying to take advantage of monetary instability (caused by Quantitative Tightening, huge American deficits and de-dollarization) to push Turkey back in line. However I think that they will fail at this too. Turkey will turn east to align itself with the 'Multi-Polar World Order'.

Posted by: dh-mtl | Aug 12 2018 13:25 utc | 147

in theory sounds right. in practice hardly. call me clueless, i don't know for a country with democracy. i mean literally with that demos and kratia. an act of throwing ballot in box i do not consider a "democracy". we have an illusion of that noun.

even Aristotle when he was thinking of democracy deem that as bogus. Today's (neo)liberal states in search for "efficiency" undermined even more what has left from society, and we are governed more or less by decrees.

it is pretty well researched topic, and Thomas Ferguson in its said this:

The real market for political parties is defined by major investors, who generally have good and clear reason for investing to control the state....Blocs of major investors define the core of political parties and are responsible for most of the signals the party sends to the electorate.

and this is very much that I agree with. so political parties are political entities composed of local/national people who speak the same language of same culture and customs. and why not to say hate to "others". Same totems and insignias and so on. therefore, election are a tribal matters where the chieftain is selected.

electional frauds are entirely different matter and I do not want to address them.

Posted by: partizan | Aug 12 2018 14:03 utc | 148

"Government, Aristotle says, should be by those people with enough time on their hands to pursue virtue."

This is exactly what capitalist state doesn't want.

"The electorate is not too stupid or too tired to control the political system. It is merely too poor.”
— Thomas Ferguson

This is what we have.

Posted by: partizan | Aug 12 2018 14:13 utc | 149

May I say - great article and analysis.

Interesting to note though.

1 Turkish Lira = 1.06 Chinese Yuan
1 TRY = 1.06 CNY.

Almost at parity. Maybe it's time Turkey switched it's focus to the World's 2nd largest economy - perhaps they could tie the TRY to the CNY in a band around parity?

What say China? Russia? Turkey?

Posted by: Julian | Aug 12 2018 14:20 utc | 150

It looks like the Turks are refining their proxy army in Syria. And there seems no intention of returning the area to Syria. Spokesman Afisi says their enemies are "Assad, PKK, and IS" as they build up their Army, police, schools, hospitals, and post offices. Assad? "Assad says Turkey is illegally occupying Syrian land." And that's the only statement of the Syrian view/perspective.

Syrian rebels build an army with Turkish help, face challenges

Posted by: Curtis | Aug 12 2018 14:31 utc | 151


This is not my analysis but an interesting one put forward by foreign observers:

> Bush Jr was Brezhnev (Bush Doctrine<=>Brezhnev Doctrine);

> Obama was Gorbechev (Hope
and Change<=>Peristroika and

> Trump is Yeltsin (zwei Dumpkopfs);

There are a critical difference. The 'Interest Men' who destroyed Gorbechev from without, are the ones destroying USA from within. The USA military anaconda crushing the health out of the US economy is not the garden snake Soviet military which collapsed and dispersed.

¿Then does the remarkable 'arc of history' comparison between the three leaders break down? USA's Mil.Gov UniParty seems as rock-solid as the China Xi Jinping or Cambodia Hun Sen strong man autocracy.

But Trump is running an estimated -$800B Deficit now, thanks to No Taxes for the Interest Men, on top of a $21.3T illegal synthetic onerous odious National Debt. He plans to add another $40B to Pentagon's budget, perhaps more. His 'tariffs' are just an illegal Fed VAT sales tax slush fund, dealing with the exigencies of the Private Fed Bank's soon $400B interest-only...FOREVER...debt service bleed.

As such, he will sign another $1.5T Omnibus Debt Bill Two next month.

The USSR was blown up by the finagling 'Interest Men'and Soviet military budget. USA is being blown up by the finagling 'Interest Men' and the Pentagon budget.

So maybe this is the End of History that Fukuyama postulated, and Trump's role, like Yeltsin, is to act the dancing bear to distract its citizenry from the Great Bust Out. The Final Solution 2020.

Apres Trump, les deluges. Beaucoup.

Posted by: Chipnik | Aug 12 2018 14:42 utc | 152

@148 partisan

Yes, democracy is hard to find now. To find it you must look to countries where the government truly works on behalf of their overall population, and where leaders are chosen without the influence of money or intimidation.

And I agree that elections are not democracy. Once a tool for democratic choice, fundamentally unfair elections are increasingly being used to provide a veneer of legitimacy for profoundly undemocratic purposes. 'Democracy' promotion at the barrel of a gun, or through 'color revolutions' is anything but democratic. It is a sham to install dictators loyal the 'Globalists'.

The U.S. is clearly not democratic now. It was until the election of Trump, a pure 'Globalist' dictatorship, as the U.K. continues to be. Trump's election, in spite of all of the forces aligned against him, brought an alternative elite to power, one who, contrary to the 'Globalists', at least pretends to have the interests of his country and it's population in mind. The 'Globalists' cannot accept the fact that they lost control of their 'rigged' election and thus have been doing everything possible since the day of the election to overturn the result. The European Union, as opposed to individual European countries, was never democratic.

Although never an exemplary democracy, the U.S. was once considerably more democratic than it is now. From the period after the Great Depression to sometime in the mid-sixties, the U.S. created systems and institutions to benefit its people. The period of the 1950's to mid-60's is now considered America's golden age.

However beginning in the mid-60s, perhaps with the assassination of President Kennedy, and definitely after the election of President Reagan, the elites began to claw back their power, with the result that today American democracy is nothing but a mirage, that covers the ugly truth of fascist dictatorship.

As I said in my earlier post, dictatorships are primitive systems, unable to handle the complex systems required by large modern societies. The result is that America's systems, institutions and its economy have been hollowed out over the past thirty plus years to the point of failure. This is why Trump wants to 'Make America Great Again' because it clearly no longer is. The same systemic failures are happening in the U.K. and across Europe due to the effects of 'Globalist' control.

The emergence of Russia and China as independent states opposed to the Globalists, and the populist revolts against 'Globalist' control within the U.S. and Europe are existential threats to the 'Globalists'. It it through the prism of this 3-sided confrontation that it is possible to make sense of today's geo-political events, including what is happening in Turkey.

Posted by: dh-mtl | Aug 12 2018 15:16 utc | 153

I agree with and have posited Chipnik's scenario before in other words about the "Interest Men" destroying America from within and disagree with the comments that posit Trump as having humanity's or American's best interest as his top priority.

It is fascinating to watch a new world order evolving and want to thank b for his great MoA bar hosting as well as the erudite commentary of my fellow barflies.


Posted by: psychohistorian | Aug 12 2018 15:58 utc | 154

from RT ( US can’t force trade rules on others, Germany must invest more in Iran – economy minister)

Washington cannot dictate trade rules to others, Germany’s economy minister said, adding that his country should be more assertive and defy American sanctions – particularly by investing more in Iran. “We don’t let Washington dictate [their will] on trade relations with other countries,” German Economy Minister Peter Altmaier told Bild newspaper on Saturday. He said the US sanctions on Iran are one instance in which America’s neglect of its partners are clearly shown.

Therefore, Germany and other European countries should feel free to pursue improved relations with Tehran. “German businesses can continue to invest as much as they want in Iran,” Altmaier said, adding, however, that “many companies depend on loans from banks, most of which refinance themselves in the US – and it creates problems.”

How the problems mentioned in the last sentence can be resolved/addressed remains to be seen ... so too, how long such brave resistance will last. Nor the significance/power of this particular German Economy Minister but its the first break in the wall of silence I've seen thus far.

Posted by: Susan Sunflower | Aug 12 2018 16:39 utc | 155

Great job b! I never heard of your website before, however this is better than most. Not raising interest rates is causing the Turkish currency to fall.

Every country should remember that if you are not doing something for Donald Trump TODAY, you are an enemy of the United States.

China and Russia have the means to bail Turkey out. These could be soft loans which will be exchanged for 99-year leases on military and commercial installations on their inevitable default. Turkey is a great way to move stuff between the West and Central Asia.

Posted by: John | Aug 12 2018 17:49 utc | 156

Ilargi has a good post up about Turkey's financial position and Erdogan's need to find a scapegoat for the coming economic misery.

I think that if Erdogan leaves NATO, Turkey's trade agreement with EU will be at risk.

The press has mostly focused on countries with largest EXPORTS TO Turkey because those countries could lose a large amount of their Turkish business and thus are exposed to investor unease (known as CONTAGION).

US trade is a small part of Turkish exports and yet we see how that has caused havoc to Turkey. The EU is Turkey's largest export market BY FAR.

Can Russia and China rescue the economies of BOTH Turkey and Iran? China is already in a trade war with USA and is beginning to have economic difficulties as a result.

Erdogan is playing with fire. The longer the crisis goes on, the more he pisses off the US/West. At some point, he will be FORCED to join with Russia and China.

He probably can't last without imposing capital controls, which could spark emerging market contagion that hurts other countries and Western investors. If he takes it that far, he'll be hated so much that he will probably turn to Russia and China.

Posted by: Jackrabbit | Aug 12 2018 17:51 utc | 157

sure wish i could buy some istanbul cymbals with the discounted lira right about now... it is almost worth a trip to istanbul even with the airfare thrown in!!

Posted by: james | Aug 12 2018 18:25 utc | 158


You forget that the EU is trying to save the Iran deal. Neither the EU, nor Russia, nor Iran, nor China are going to put any pressure on Erdogan.

ECB might even try to save the Lira out of self-interest (quite a few European banks are exposed)

Turkey's economy is doing alright. Just Erdogan did not follow conventional wisdom (hike the rates) on inflation. And appointed his son in law as finance minister.

Erdogan will not need Dollars to buy from Russia or Iran.

Posted by: somebody | Aug 12 2018 19:09 utc | 159


Oh yeah, Trump makes Nordstream into an issue for NATO but he would be OK with EU trading with Turkey after Turkey snubs USA and leaves NATO? Trump would ignore Turkstream?

I don't think so.

EU will bitch - but will not cross USA. And Erdogan knows it.

That's why I suspect this is all a show so that Erdogan has an excuse to part ways with Putin (while Erdogan lines his own pockets). No S-400. No Turkstream.

We shall see soon enough.

Posted by: Jackrabbit | Aug 12 2018 19:56 utc | 160

@160 jr... that is a tricky one... either way erdogan has his balls in a bit of a knot... the problem for erdogan is he is physically surrounded by turkey and iran... from a geographical point of view, he would be better to work with those close to him, then those farther away... i guess one of the 64,000$ questions is - how does europe want to play it's position with regard to usa imposing it's will on them? so far europe has shown a willingness to bend over for the usa... is it possible this could change? on balance, i don't think so - but it is possible.. i give it 60/40 odds europe stays in the usa sphere... as for erdogan - 50/50 and no sure thing... no matter which way he swings - he will blame someone else - that is his style, lol...

is there something that the usa could do to really change europes mind on the present set up towards russia or iran? the usa has been working on it and i think is on more shaky ground with regard to europe then ever before...

ultimately i think it comes down to finances though, which is why i think something major is going to have to happen for this equation to change or for europe to part ways with the usa, so i suppose you are probably correct - but it could change.. odds don't favour it at this time though..

Posted by: james | Aug 12 2018 20:13 utc | 161

@161 I think a lot of Europeans are still in shock at Trump becoming president. They are hoping it will just go away soon. Until then they will try to minimize the damage. I don't think Donald cares much what they do or think....with the possible exception of the UK. If it comes to a choice between Trump and Europe the Brits will go with USA.

Posted by: dh | Aug 12 2018 20:24 utc | 162

@162 dh.. i agree with you about uk-usa.. they are tied at the hip in many ways... in fact, i think the uk has also been used as a wedge against europe.. that has always been my impression..

Posted by: james | Aug 12 2018 20:34 utc | 163

@163 If you look at the history of Europe you see that Britain has always been fighting whichever was the dominant power....Spain, France, Germany. It's about maintaining a balance of power on the continent and the US is happy with the political infighting.

Posted by: dh | Aug 12 2018 20:43 utc | 164

I suspect the UK is fairly despised by "Europe" and EU for not only BREXIT but their insane "exceptionalist" inability/refusal to "meaningfully" negotiate an exit (even as increasing numbers of Brits would like to call the whole thing of) ... Trump has already called the EU a "foe" and Bannon is stirring up the worst elements ... The "catch" is upholding the "good progressive sovereignty / nationalism" and cutting the bad/xenophobic and racist sovereignty/nationalism -- they're not the same and the refusal to be controlled by Trump's whims and tantrums is the former (which unfortunately highlights how subservient the European have been for decades ... because it was "efficient" or spare them cost or bureaucracy/unpleasantness. Lots of folks still appalled about European complicity in "black sites" and other war on terror atrociities -- then and ongoing. The "leaders" (like American politicians) just mostly ignore the disgust of their citizenry. I think popular sentiment will be to defy the Orange One ... the theatrics will take time and be complicated with abundant misdirection .... and don't forget how often Trump has simply reversed course and essentially backed down/away or established absurd "exceptions" ... I hope they at least make Trump sweat, profusely, and back down.

Posted by: Susan Sunflower | Aug 12 2018 20:45 utc | 165

I'd add that the UK's racism and xenophobia and Islamophobia keeps being revealed to be unapologetic worse than advertised and increasingly public. I have wondered how westward-looking Ukraine supporters of EU membership (they hoped to be like Poland) are feeling now (if they're allowed to talk). Similarly the Turks and Erdogan have anticipated EU membership and admission to the Schengen, which now seems to be in danger of "modification" at best.

I was trying to find if Turkey was -- in fact -- the destination of rejected asylum seekers who still refused to their country of origin ... I think I recall that in a punitive move, Greece and Southern Italy were being developed to take over "first country" processing in exchange for infrastructure and money/jobs, but again, I've been unable to tell if this has been "realized"... Blech, gotta wade into the refugee relief files ... and then there's UNWRA and the Palestinians.

Posted by: Susan Sunflower | Aug 12 2018 20:53 utc | 166

Turkey can exercise strategic autonomy ONLY because of the rising power of China and a Russian resurgence.

Posted by: Nick | Aug 13 2018 4:52 utc | 167

In an informal conversation exactly 2 years ago, following CIA's unsuccessful coup attempt, a well-read and connected Turk expressed his fears of a future partitioning of Turkey into (at least) 3 different states. It follows Oded Yinon's "Eretz Isra(h)ell Plan" to a T, which made him very nervous and frightened. USA's (and Israhell's) subsequent alliance with the Kurds only confirms the plan is slowly beeing executed. Now, an alliance with Russia and China is the only way for Turkey to prevent a potential breaking up, though a bloody civil war can yet not be excluded.

I don't like Erdogan because he is a stupid opportunist who's proven on multiple occasions that he is ready to cut his nose to spite his face. But Turkey, as a long-term Empire keychain, has always been in a position between a rock and a hard place. In the beginning (2012-15) Erdogan might had fallen for Uncle Scam's sugary promises for a new pie to split up. Dumb and greedy as he is, he never foresaw that:

1) USA was never going to back him up militarily (less so economically) and
2) as soon as (((they've))) done the job in Syria, Iraq and Iran, Turkey will be next on the menu.

Many years of ZATO/USA dependence has made Turkey oblivious to the facts on the ground: Turkey's future lies with the EEA and SCO; now that even Turkey's leadership has understood this, hopefully the Turkish people won't have to pay a Syrian price to achieve this reposturing.

Posted by: LXV | Aug 13 2018 7:29 utc | 168

Russia China and Iran need to be very careful here with turkey, a recent vassal of the CIA. Mr er-dog-an is a Muslim brotherhood terrorist and a convicted father of ISIS. He had this reckoning coming to him being in bed with the CIA for so long. 20,000 Iranian and allied shia militiamen are dead because of er-dog-an's shenanigans in the SyRaq, not to mention the stunts he's performed on behalf of the CIA in china's Xinjiang province, causing china all kinds of headaches. He is also a killer of Russian servicemen. He's prostrating in front of China now to get an IMF bailout....... I'd be damned if the troika actually bail him out after what he's done. In all honesty he should be hanged, just like Saddam.

Posted by: Nick | Aug 13 2018 7:43 utc | 169

"Turkey can exercise strategic autonomy ONLY because of the rising power of China and a Russian resurgence."

Right. Just as the US can exercise its hegemony thanks to its client States. for long time relationship between Turkey and the US was/is so-called strategic one. One of interest, not out of love and anything like that. It is a cold and distant relationship and each side has taken what suit them and pursuit own interest. How long can it last? Difficult question, I guess until 'music is dancing" in this case until there is common enemy. Now it is gone, and now there is no military in the Turkish society that is power-broker and praetorian guard in same time. Inherently it is fragile relationship and if one side hold itself in high esteem and the other ignore it even more so.

I was curious about Turkey-GDP-to-Debt-Ratio metric and Structure of it debt. For some reason it is difficult to come by official data. But wherever I go and see it it is low, VERY LOW. This is the most recent one that I found.

EU-defined general government debt stock was over $232 billion (877.9 billion liras), or 28.3 percent of GDP, at the end of December.

The European Commission projected, in its Autumn 2017 Economic Forecast report, that Turkey's general government gross debt would rise from 25.1 percent of GDP in 2016 to 28.2 percent in 2017.

which is in accordance with

that analysts are confused themselves it shows this article

in the end all I can say that this is fabricated crisis and attack on the Turkish currency and state. If we compare Turkish data with EU (Italy, Greece) we can see their economy is pretty well managed. Obviously, there are not fools, they do not rely too much on anybody and their books are well balanced. If one expect the Turks will behave like the Greeks dream on.
"Few phobias run deeper in Europe than the fear and hatred of Turks. For at least six hundred years, Europe was locked in innumerable wars with first Seljuk, then Ottoman Turks.

Posted by: partizan | Aug 13 2018 7:50 utc | 170

when i read the western media about this, i just can not read the causes of this problem, if big if there is one. No explanation give and all you see is the chart how the lira is taking dive.

Out of blue I'll just mention two: they do not like new presidential system, a prerogatives that the president have and the fast growth, the highest of G20 countries which is about 7%.

Probably "they" do not like new airport.

Posted by: partizan | Aug 13 2018 8:17 utc | 171

oh, the turks gravest sin is the IMF. they do not do business with the IMF. sick. typical line of thought(?) if this is a thought at all. this guy probably has a MBA from prestigious US university.

“The decline in the lira is multifaceted, caused not only by a weak external position in terms of current account deficit and inadequate currency reserves, but also the challenging political environment which exacerbates the vulnerabilities in the lira,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

Posted by: partizan | Aug 13 2018 8:24 utc | 172

All it took was new sanctions and a defiant speech.

It says it all. ALL.

Posted by: partizan | Aug 13 2018 8:53 utc | 173

Posted by: partizan | Aug 13, 2018 4:24:42 AM | 172

Can you get it into your brain that Turkey's Lira was not targeted by the US, but the devaluation was the result of US rates hikes which hit all the "emerging markets" depending on cheap capital.

You can go back as far as February when analysts predicted that the Turkish economy will not be able to maintain growth plus Erdogan rushing elections for certainty that the Turkish economy will run into problems.

Trump did a huge favor to Erdogan announcing sanctions that hit a minuscule part of Turkish exports. Inflation rate was already bad in June. Now the economic problems are a national issue of defense and no longer Erdogan's responsibility.

Turkish inflation rate of some 16 percent will mean continuous demand of Euros and Dollars as people try to protect any savings they may have. The only counter-inflationary measure would be to get rid of cheap Lira - ie rate hikes - which Erdogan refuses against conventional wisdom.

The cheap Lira will be good for exports and the tourist industry. It will be a drain on people's wages.

As Turkey has an unemployment rate of 10 percent, Erdogan may be right as far as political economics are concerned. People will get jobs but won't earn much.

Posted by: somebody | Aug 13 2018 9:12 utc | 174

add to 174

Anybody with debt in Lira will profit. And this, presumably, is Erdogan's core base.

Posted by: somebody | Aug 13 2018 9:37 utc | 175

Can you get it into your brain that Turkey's Lira was not targeted by the US, but the devaluation was the result of US rates hikes which hit all the "emerging markets" depending on cheap capital.

Yes and No. It depend on context.

But somehow I do not believe this is an accident nor result of "market forces". there is long list of an issues with two countries. From procurement of s-400 than f-35, Kurds, ISIS, Iran, hostages, Gulen. the latest one in use of financial press to attack and undermine Turkey. too many and too long list that to be considered as a minor issues. as least to my taste. someone is going to make money in FX and betting on this type of market.

"Dollarization" of one economy is pretty much the worst thing that may happen to sovereign state. In ideal world citizen do not need foreign currency, assuming that purchasing power is sufficient enough and the system is stable. That's all I can say.

Posted by: partizan | Aug 13 2018 9:44 utc | 176

"Dollarization" of economy plays straight into hand of global financial mafia. export all costs economic policy undermine political stability. regimes have to develop domestic market and self-sufficiency and what's left for export than export it to everything to be immune to

Posted by: partizan | Aug 13 2018 10:01 utc | 177

"All it took was new sanctions and a defiant speech."

Posted by: partizan | Aug 13 2018 10:27 utc | 178

FX traders and speculators love this speeches and "jawboning".

Posted by: partizan | Aug 13 2018 10:35 utc | 179




He, he, he...I can not but laugh.

Far...very, very far that he is my favorite person but, I can not but laugh.

Posted by: partizan | Aug 13 2018 10:50 utc | 180

"In mid 2016 the CIA arranged for a hard coup against Erdogan but Russian intelligence warned Erdogan and the coup failed."

Do you have any sources whatsoever for this very conspiratorial claim?

Posted by: JT | Aug 13 2018 12:16 utc | 181

It's hard to see how Russia and Iran are in a position to finance the assistance Turkey needs to immediately get itself out of the crisis. What could Russia and Iran do in the immediate 12 months that would be of any significant assistance in Turkey's financial crisis? I think there are no alternative options for Turkey, they have to cave in to the US.

Posted by: quote | Aug 13 2018 13:23 utc | 182

@JT - Hours Before Military Coup Attempt, Turkey Warned by Russia – Reports

Last week, the Russian army intercepted Turkish military communications that indicated a coup was being organized against the government of Turkish President Recep Tayyip Erdogan, according to Fars News. This information was then passed on to Turkey’s National Intelligence Organization (MIT), diplomatic sources told the news agency.
While neither government has issued a statement on the claims, an official statement released by the Turkish army on Tuesday did indicate that some kind of warning was received by MIT.

Posted by: b | Aug 13 2018 17:51 utc | 183

There was a court in Turkey where an army officer stated that he was at MIT's center in Ankara at that day at about 3 o'clock and warned there would be a coup trial that day. Without knowing you has tried to orchestrate that coup some circles in Turkey believe that the coup trial was tolerated intentionally to get the tools for fixing exclusive power of Erdogan. Makes sense, in a way. A "referendum" and an "election" under exceptional status, without free media, while putting the opposition to jail, was ambitious. No risk, no gain.

Posted by: Hausmeister | Aug 13 2018 18:18 utc | 184

- Erdogan wanted to buy russian and chinese weapons. That is an additional reason to stage a coup against Erdogan. Turkey buys natural gas from Iran. Also a thing the US (Israel & Saudi Arabia) "doesn't/don't like".
- Although I am convinced that in the current situation Erdogan has a much better chance of surviving such a coup.

Posted by: Willy2 | Aug 13 2018 18:30 utc | 185

from the guardian: Sound familiar, the "deal" that Trump thought he had made was not the same "deal" that erdogan agreed to.

My colleague Martin Chulov has discovered that the lira crisis has been fuelled by a misunderstanding between the leaders of the US and Turkey.

He writes:

The currency plunge imperilling Turkey’s economy has been fuelled by a standoff between Donald Trump and Recep Tayyip Erdoğan over the fate of a Turkish woman detained in Israel whose freedom the US president brokered, and an American pastor held in Turkey whose release he demands in return, officials in Ankara claim.

Those officials say that Trump may have ‘misinterpreted’ a discussion with Erdoğan over the pair - Turkish woman Ebru Özkan, jailed for alleged links to Hamas (but released last month), and Andrew Brunson, a preacher from North Carolina.

It appears that Trump thought he had reached a deal for Brunson’s release, while Erdoğan believed he’d agreed to transfer the pastor to house arrest (as happened in July).

Martin explains:

“It took place on the margins of the Nato summit,” the source told the Guardian.

“Erdoğan asked Trump for help with the lady in prison in Israel. There was only the two of them and a translator. Trump said: ‘I need some traction on the pastor first’. When Erdoğan said OK he meant that we are working on it. Then [US vice-president Mike] Pence, due to midterm election considerations, messed things up. Trump confused a process for an agreement.”

That might explains why the White House has taken such a tough line on Turkey this week, imposing new sanction and starting the process to double tariffs on steel and aluminium.

Yes, the Turkish woman held by Israel was released in July. Endless "misunderstandings" leading to false claims of noncompliance wrt Korean "agreement" make my eyes roll.

Posted by: Susan Sunflower | Aug 13 2018 19:40 utc | 186

Susan Sunflower | Aug 13, 2018 3:40:10 PM | 186

Nevertheless the guy is in jail since 2 years. Time enough to open a real court case and show in public the material collected against him. If Turkey does not do it it means they take a person to improve their bargaining power. That's all. And that is not acceptable. If they do not want to show their proof as it might complicate their own work then they have to set him free. Otherwise they are part of a barbarian environment, against which any dirty trick is allowed.

Posted by: Hausmeister | Aug 14 2018 6:00 utc | 187

Posted by: quote | Aug 13, 2018 9:23:52 AM | 182

Lira is safe. Europe cannot allow Turkey to be destabilized.

Just up 5 percent. Low enough for people with Lira debt to enjoy. Low enough to ensure Turkey is competitive in international markets including Tourism.

Posted by: somebody | Aug 14 2018 8:50 utc | 188

Posted by: Susan Sunflower | Aug 13, 2018 3:40:10 PM | 186

Let's face it, Erdogan needed Trump to explain the coming economic crisis - which had to come, go back to February's analyses.

In a populism contest Erdogan is a safe bet as the winner.

Posted by: somebody | Aug 14 2018 11:03 utc | 189

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Posted by: قطعه سازی | Aug 14 2018 12:01 utc | 190

@ quote | Aug 13, 2018 9:23:52 AM | 182

It's hard to see how Russia and Iran are in a position to finance the assistance Turkey needs to immediately get itself out of the crisis. What could Russia and Iran do in the immediate 12 months that would be of any significant assistance in Turkey's financial crisis? I think there are no alternative options for Turkey, they have to cave in to the US.

China is richer than US and its cronies combined. Turkey can also make a killing for gas/oil transit from Russia/Iran.

I doubt that Erdogan is seriously considering jumping NATO ship to BRICS and SCO, but if he did - initially transition would be painful, but later on it would be better for everyone, as it would be de facto end of US multipolar World.

Posted by: Harry | Aug 14 2018 14:30 utc | 191

@ 187 Hausmeister.. thanks... that is how i see it as well...

@ 191 harry... i think this is likely to happen.. i know it sounds less likely, but i think erdogan will do this.. we'll see.

Posted by: james | Aug 14 2018 15:08 utc | 192

@ somebody | Aug 14, 2018 7:03:40 AM | 189
You hit the nail! One thing is missing: he acts now under the tutelage of the military aka the deep state. Look at the way the military demotivated Abdullah Guel to be candidate. Against whome he would not have had any chance to win. The majority of the society is fed up with this artificial polarization and hates constant borrowing from its own future.
The amount of supporters does not exceed 35-40%. But these are the new great touristic attraction. Put together some clients, favoured are students of political science, hire a translator, go with them into the remote place of interior Anatolia and there let people just speak in their own language. Film it. Nobody would believe it otherwise.
Campaigning for election the AKP people sold the message: if he does not win USA and Europe will immediately start a war to steal land from Turkey. After he "won" they feel able to sell this new narrative. If you question it in the public you might go to jail.
So the country is the worlds best exhibit for neoliberal right-wing populism with the abscence of any media who do more than selling the narratives of those in power. The dumb part of the populace is then entertained by psy ops a la QAnon or "Jews and Freemasons fight against our country".
This new world is yet a bit more multipolar, brave, but not pretty.

Posted by: Hausmeister | Aug 15 2018 5:01 utc | 193

@ Susan Sunflower | Aug 13, 2018 3:40:10 PM | 186
Most likely this "misunderstanding" trial is part of the new way to repair the narrative as it may create new space for manoeuvering. This is necessary. If the problem can be solved only in a way that makes Erdogan loose his face within Turkey the stability of Turkey would be endangered. Who wants that?

Posted by: Hausmeister | Aug 15 2018 5:14 utc | 194

@ Hausmeister and somebody with the perspective on our " a bit more multipolar, brave, but not pretty" world.

One goes through social evolution with the populace you have, not the one you hope comes out of the potential growth borrow from war criminal Rumsfield

I guess we are back to the Hopi precept #4 about letting go of the outcome. If we show up, be present and tell the truth, nothing more can be expected of us.

Thanks for your comments.

Posted by: psychohistorian | Aug 15 2018 5:27 utc | 195

Here are the contents of this link about Russia and Turkey

ANKARA, Aug. 14 (Xinhua) -- Turkey and Russia will take steps to "enhance strategic partnership," Russian Foreign Minister Sergey Lavrov said here on Tuesday.

"We are at a turning point in the world. We are at a time of transition from bipolar order to multi-polarization," he said at a press conference with his Turkish counterpart Mevlut Cavusoglu in Ankara.

Russia hopes that a reasonable approach will prevail in international relations and countries will return to a depoliticized dialogue, Lavrov said.

He also noted that Moscow appreciates Turkey's rejection to join the anti-Russia sanctions by the West, saying the U.S. "unlawful and illegitimate" sanctions policy cannot last for long.

U.S. sanctions, including the latest round targeting Turkey, undermine all principles of global trade and in time this move will undermine the role of U.S. dollar as a settlement currency, he said.

Lavrov said Russia and Turkey would continue talks for the full implementation of Astana deal which envisages de-escalation zones in Syria, including in Idlib.

The Turkish minister, for his part, stressed that "it will be a massacre to bomb all Idlib civilians, on the reason of there are terrorists."

Cavusoglu recalled Turkey's long-standing demand for lifting visa requirements for Turkish citizens travelling to Russia.

Posted by: psychohistorian | Aug 15 2018 6:59 utc | 196

@ psychohistorian | Aug 15, 2018 1:27:38 AM | 195

"One goes through social evolution with the populace you have, not the one you hope."
Of course this has a reason. The Anatolian people survived the strong repression of the Kemalist period being stubborn, conservative. Ca. 1980 the deep state created a new formula: Turco-Islam synthesis. It failed, but when Erdogan had to separate from his gangster friend Guelen the deep state was able to force the Islamist Muslim Brotherhood wing of the AKP to adapt it. From then on he got accepted into this deep state. He can rule, as long as he is sufficiently nationalistic. That tries to grasp a powerful regional role of Turkey but is must not include NATO as long as NATO does not support this acclaimed role.
25% of the electorate is bound to religious sects. With these one can deal with ease. 10% more are in chains as they believe any filter bubble nonsense. 10% more voters support him as long as they profit. The rest up to 51% one gets by cheating. If media act as a watchdog they are forbidden or bought out. Now the struggle is to control the social media. They invest a lot of money into it:
Paid AKP-trolls are abundant.
The majority tries to rescue the future of its children. There is considerable aversion against Syrian refugees but it cannot be expressed in the public.

Posted by: Hausmeister | Aug 15 2018 7:25 utc | 197

- A falling currency (=lira) is already a mechanism to reduce consumption in a country (in this case Turkey). And that in turn will reduce the Current Account/Trade Deficit.

Posted by: Willy2 | Aug 15 2018 7:34 utc | 198

Soon, their beaches and other vacation spots will be packed with Chinese tourists.

It's not all bad. New, from the East, will help convert the Turkish economy with yuans and RMB loans, and Sino foreign direct investments.

Red Ryder | Aug 11, 2018 3:43:13 PM | 96
If Tukey and Turki continue to support/facilitate Uighur separasts/jihadists and act on Pan-Turkism manner towards Xinjiang (China), then it gets what it sows:

- The Chinese Uyghur Jihadist Army Sent to Syria via Turkey:

Pres. Erdogan used his own mercenary Army of Chinese citizens: the Uygurs. He had allowed them Turkish passports, which they used to pass legally through Central Asia to arrive in Turkey. The immigration officials at the airport in Turkey recognized these special passports, and would confiscate them, but allow the Chinese to pass through legally and enter Turkey. Pres. Erdogan had arranged for them to be transported from the airport in Turkey into Syria through the large and porous border area North of Idlib, which was once a mid-size town in North West Syria. In the Zeytinburnu distict of Istanbul, Nurali T., a Uyghur Turk working to transport terrorists into Syria, with implicit allowance of the Turkish government, and especially the Turkish Intelligence Services, provides militants with passports worldwide. According to Nurali T.'s office manager, "More than 50,000 Uyghur Turks came to Turkey with these fake passports from China via Thailand and Malaysia and entered Syria after staying a day in Istanbul".

- When China tries to stop Uighur from becoming jihadists to go fight in Syria UN was “concerned“, Turki were angery and protesting against China.

- for

- Uyghur militant filmed in Turkish uniform to suport rebels near Afrin

- Use fake news to atack Chinese tourists and Chinese resturant ran by Uighur (!) in Turkey ">">

Posted by: Mali | Aug 15 2018 11:39 utc | 199

Sorry for the missing link;

- T
Use fake news to attack Chinese tourists and Chinese resturant in Turkey>

Posted by: mali | Aug 15 2018 12:13 utc | 200

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