Turkey's Economic Troubles Give Putin Another Chance To Squeeze Erdogan
The wannabe Sultan of Turkey has told the Central Bank of the Republic to keep the value of the Turkish Lira below the 7 Lira per U.S. Dollar level.
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The central bank was also told to not raise its interest rate. The economy must keep growing!
That left only one thing that the bank could do. It had to spend its foreign currency reserves to buy up Lira in the open market to keep it from falling further.
Source: Can Oker - bigger
Unfortunately those reserves are limited:
The pace of the CBRT's reserve burn has accelerated in response to TRY weakness. Economists at TD Securities estimate that the CBRT will completely exhaust Net International Reserves this week.“Given the current trend, we estimate that total reserves will be depleted at the latest by the 3rd week of September, at the earliest by the 3rd week of July.”
“Before all buffers are depleted, we think the CBRT will hike rates dramatically and likely introduce tight capital controls. Turkey may also seek multilateral support if this scenario materializes.”
Under Erdogan's rule the Turkish industry has taken up a lot of debt that was denominated in U.S. dollar. It has to be paid back in a foreign currency. A sinking Lira will make foreign denominated loans much harder to pay back. Higher interest rates will make local consumer debt more expensive and will reduce local demand. The debt fueled boom Erdogan had engineered over the last years will now be followed by a severe crash.
That is likely to dampen Erdogan's appetite for further adventures in Syria and Libya. Qatar, his partner in those crimes, has its own trouble due to the deep drop in oil prices. The last time the Turkish Lira was under pressure Erdogan received a large loan from Qatar. But now Qatar itself has to borrow billions to stay afloat.
That leaves the International Monetary Fund as the only place where Erdogan can receive fresh money. IMF loans come with conditions over which the U.S. has a large say. We can be sure that the Trump administrations will have 'conditions' that Erdogan will not like - at all.
The situation creates another opening for Russia. Putin might offer Erdogan a helping hand, and a few billion dollars in loans from Russia's plentiful reserves, to finally bring him under control.
Altogether we are in for some interesting developments.
Posted by b on April 28, 2020 at 18:55 UTC | Permalink
thanks b... it is unfortunate getting loans denominated in us$.. that was a mistake.. again we see the interconnectedness of us$, imf, currency speculation and the wider ponzi scheme of present day finance in action.. the sharks are circling... too bad the world can't move up a step and get rid of the sharks.. regarding qatar and the link you shared - " The oil and gas sector contributed 83.3% of Qatar’s total revenue in 2018 and 34% of its total nominal GDP last year."" - all these tinpot dictatorships what are a okay with the west, look fragile at this point in time, particularly ksa.. whether russia or china can step in to offer something different remains to be seen.. the private banks are going to find a way to exploit the situation regardless.. imf is just a front for many of the same banks!
Posted by: james | Apr 28 2020 19:20 utc | 3
erdogan imo is still under the american wing, yes, he plays both sides, but for sometime now i've suspected that is part of the plan. erdogan is to play between putin & nato. his buying russian weapons was simply a way nato could examine them, & i also suspect putin suspected as much & has been very cautious or built in some method of countering this (as i imagine the russian military has with modi's purchases. if erdogan needs an imf loan, he'll get one. nato's plan in mean is dependant upon having erdogan as its counter. we shall o/c see, & putin may offer something more than ice cream bt russia is now battling covid---& from comments from the fm's office regarding bioweapons it's possible some believe russia may've been targeted. if possible it would mean russia will naturally reserve money, food for internal use.
Posted by: emersonreturn | Apr 28 2020 19:36 utc | 5
>it is unfortunate getting loans denominated in us$.. that was a mistake..
More likely, it was gangster-style extortion, Uncle Sam's favorite activity. I just finished a recent transcript from a Michael Hudson interview that discusses these very topics.
So the United States, through the World Bank, has become I think the most dangerous, right-wing, evil organization in modern history — more evil than the IMF. That’s why it’s almost always been run by a Secretary of Defense. It has always been explicitly military. It’s the hard fist of American imperialism.
Posted by: Trailer Trash | Apr 28 2020 19:40 utc | 6
@ 6 trailer trash.. yes - "The World Bank was created at the 1944 Bretton Woods Conference, along with the International Monetary Fund (IMF). The president of the World Bank is, traditionally, an American.[8] The World Bank and the IMF are both based in Washington, D.C., and work closely with each other." they work together closely and are an important arm of usa foreign policy at work...
Posted by: james | Apr 28 2020 20:02 utc | 7
that's from the wiki page on the world bank.. sorry i neglected to mention that!
Posted by: james | Apr 28 2020 20:02 utc | 8
I must agree with VK.
Russia is far from the capacity of the even struggling Empire.
Turkey will have to beg the US one way of another. Russia can not substitute even the crippling IMF.
But dont worry about Erdog.
He is a master at externalizing problems, just like the US.
He will even turn this in his favor i fear.
And the Turks will be even thankful.
That is the way those problems always ended up, despite our wishful thinking.
Posted by: DontBelieveEitherPr. | Apr 28 2020 20:08 utc | 9
Ignorance is not a defense here.
@VK and @DontBelieveEitherPr.
You both obviously don't know that Russia has 6 year's Reserve piled up. Over $500 Billion. It has massive gold horde, also.
It has no debts. It's flush. Better than every other developed nation of consequence by far.
It could easily loan billions to Turkey. It loaned half the cost of the S400 Missile Defense system to Turkey on a short term loan.
It usually loans to nations to get the Nuclear Power Plant contracts going. Probably did that with Turkey also. It's got that kind of deal with Egypt.
So, 'b' is totally correct in his assumption. And you two are obviously not aware of the facts.
Posted by: Red Ryder | Apr 28 2020 20:17 utc | 10
Bonjour, mes Ami's! Comment allez vous?
It's nice here in gay Paris, but I do miss seeing all though maillots jaune around the city. It's a good thing Macron cares enough about them and their grievances to keep them locked under house arrest so that they may live to protest another day.
Vive Le France!
Posted by: Pepe Le Few | Apr 28 2020 20:18 utc | 11
Russia is a relatively poor country with a size of an economy equivalent to NY State. Apart from the leftover Soviet military might and nuclear weapon arsenal, don't bet on Russia while it suffers from high unemployment and poverty itself. China could be a source with a huge economy and richness.
Posted by: Matthiew | Apr 28 2020 20:43 utc | 12
Russia is an enormously wealthy country with resources that allow it to prosper outside of the system of international trade. To compare it with New York state is ridiculous.
The problem that Russia has is that it supports-talking of New York state- a large number of thieving capitalists who were installed, in a moment of political weakness, to plunder its wealth by the United States and its allies.
In terms of over all wealth Russia is, with the possible exception of Canada, better off than any other.
Posted by: bevin | Apr 28 2020 20:51 utc | 13
Why is it that everyone continues to play the idiot game of exchange mediums which are insanely created as debt at usury? Can't anyone see how criminally insane are such phony mediums of exchange which eventually result in the debt owners owning everything?
Real money is simply a coupon CREATED BY NATIONAL GOVERNMENTS, WHO SET ITS VALUE AND SPEND IT INTO EXISTENCE AT THE PROPER RATIO TO EXCHANGES MADE (about 1:1plus) TO STAY IN CIRCULATION AT NO COST TO ANYONE. Such money is a guarantee of prosperity for all, creating a huge middle class with almost no super rich or paupers. It even reduces government taxation.
Sanity must be too easily understood so not possible for "economists" to grasp. Or is it just that economists are also speculators who would have to make an honest living if their nation used honest money instead of debt at usury, a speculator's wet dream.
Posted by: nobody | Apr 28 2020 21:17 utc | 14
I get the impression that Erdogan has more in common with US politicians than with the citizens of Turkey. He's in politics to line his own pockets and has chiselled so much wealth out of the Turkish (and Syrian) economy that his Family Fortune would probably cover most, if not all, of Turkey's debt problem.
Turks need a less corrupt President. If Putin can arrange for Erdo's corrupt cabal to be thrown in the slammer and asset-stripped then life in Turkey, Syria, Iran and Russia will become more peaceful and prosperous.
Posted by: Hoarsewhisperer | Apr 28 2020 21:23 utc | 15
My bet is Turkey will end up begging to the IMF - making it to be reabsorbed by the American sphere of influence.
Posted by: vk | Apr 28 2020 19:06 utc | 1
When did the U.S. military leave Incirlik air base? Last hour Turkey was still in NATO dominated by the U.S. You lost that bet.
Dec 11, 2019 Turkey warns it could kick out US from Incirlik nuclear base Link
=========
@ Matthiew | Apr 28 2020 20:43 utc | 12
Have you been in confinement without access to any media whatsoever?
Russia is a relatively poor country >>>>> upon which the Pentagon relies for Russia RD180 rocket engines to launch U.S. Communication satellite. In fact the Pentagon obtained a waiver from sanctions against Russia to enable continued purchase of these rockets so essential to military operations.
Take a read here .PDF document.
==========
Thanks Bevin, Red Ryder. I join b in asking; where are these commenters from?
Posted by: Likklemore | Apr 28 2020 21:32 utc | 16
As expected, Pasha Erdogan overplayed his hand as did Qatar. With whom does Pasha Erdogan hook up his wagon: the collapsed West/Nato or ascending Eurasia/China-Russia economic union. The United States and Israel appear prepared to attack Iran where the US will force the closure of the Hormuz Strait. This will be forced production cuts in oil in support of US shale producers.
Posted by: El Cid | Apr 28 2020 21:35 utc | 17
For purely sentimental reasons I believe that Turkey and Iran are natural allies. With Erdogan out of the picture they could formalise their ties and scare the be-Jesus out of the Judeo-Christians.
Posted by: Hoarsewhisperer | Apr 28 2020 21:37 utc | 18
@Matthiew 12
"Russia is a relatively poor country with a size of an economy equivalent to NY State."
and what does NY produce besides shuffling digits around?
pray tell...
Posted by: A.L. | Apr 28 2020 21:42 utc | 19
A most curious and workable assembly of facts, with the title
"America’s enemy is England, not Russia." found at The Saker site:
This is the first time I have seen an overall view of Anglo-American aristocracies that actually mentions the awesome Cassius Clay 's joint efforts with Lincoln and Tsar Alexander to resist imperial aristocracies.
Posted by: chu teh | Apr 28 2020 21:43 utc | 20
Turkey does have another source of hard currency, Libya.
Turkey's troops, equipment and especially her proxy terrorist forces don't come free, many $Bs are paid for them. As b points out, Turkey desperately needs that money.
This is of course a major reason for the large increases in Turkish troops in Idlib. The Turkish Army is being used as replacements for the terrorists they send to Libya, said terrorists would not go if they felt that they were needed to protect their families. So they pay Lira in Idlib and collect $ in Libya, a good deal.
Another beneficial byproduct to the Turks is that the increased numbers of Turkish troops in Idlib raises the risk of a direct Russia/Turkey confrontation, a risk that Erdogan seems to be successfully playing against the Russians hence the delay on anything happening re taking control of the M4. The longer the Turks get to dig in the harder it will be to get them out without a major escalation which will get the US panting to get in. Notice the US moves back towards Tabqa and large reinforcements into the Deir oil fields this week?
However the Turks are now running out of terrorist volunteers so out come the press gangs. Turkish special services demanded that two terrorist groups provide a list of 500 names of candidates for sending to Libya. Previously, such a request was voluntary.
Posted by: JohninMK | Apr 28 2020 21:44 utc | 21
don't bet on Russia while it suffers from high unemployment and poverty itself. China could be a source with a huge economy and richness. Matthiew | Apr 28 2020 20:43 utc
Russia is an enormously wealthy country with resources that allow it to prosper outside of the system of international trade. To compare it with New York state is ridiculous. bevin | Apr 28 2020 20:51 utc
Matthiew should show some sources for unemployment rate and poverty rate in Russia. Is 5.4% unemployment "high"? Bevin exaggerates in the opposite direction. Nevertheless, my favorite comparison is the status of transit systems in NYC and Moscow. American corruption and waste render large sectors very unproductive, Russia looks better. More value per USD, more stability for workers, infrastructure projects at reasonable completion time and cost, NYT does not compare very well.
That said, Putin is to a large extend paleo-con. He will not splurge for dramatic foreign projects, least of all, on Turkey. He can give some relaxation in terms for the nuclear projects etc. China will not splurge either. This is a stingy era. Six month from now, it can change to a degree, but with COVID-19, this is each of himself, only God for all (consolation, rewards in the next life, that kind of stuff).
Posted by: Piotr Berman | Apr 28 2020 21:45 utc | 22
Of Things Geopolitical: Enough is enough.
Fed Up With FONOPS: China ‘Expels’ US Warship From South China Sea, Urges Focus on COVID-19
LINK
Tables Turned
On Tuesday, the People’s Liberation Army Navy (PLAN) “expelled a US warship that trespassed into Chinese territorial waters off the Xisha Islands in the South China Sea as the US' move could have easily caused an accident,” as the Global Times put it.
"We urge the US side to focus on the epidemic prevention and control on its homeland, contribute more to the international fight against the pandemic and immediately stop military actions against regional security, peace and stability," Senior Colonel Li Huamin, a spokesperson of the PLA Southern Theater Command, told the Times.
============
Trump tells advisers U.S. should pull troops as Afghanistan COVID-19 outbreak looms
WASHINGTON — President Donald Trump has pushed his military and national security advisers in recent days to pull all U.S. troops out of Afghanistan amid concerns about a major coronavirus outbreak in the war-torn country, according to two current and one former senior U.S. officials.Trump complains almost daily that U.S. troops are still in Afghanistan and are now vulnerable to the pandemic, the officials said. His renewed push to withdraw all of them has been spurred by the convergence of his concern that coronavirus poses a force protection issue for thousands of U.S. troops in Afghanistan and his impatience with the halting progress of his peace deal with the Taliban, the officials said.
They said the president's military advisers have made the case to him that if the U.S. pulls troops out of Afghanistan because of the coronavirus, by that standard the Pentagon would also have to withdraw from places like Italy, which has been hit particularly hard by the pandemic, officials said.[.]
Pompeo and Esper speaking on behalf of M.I.C group vetoed these thoughts of the Commander-in-Chief.
Posted by: Likklemore | Apr 28 2020 21:46 utc | 23
Turks need a less corrupt President. If Putin can arrange for Erdo's corrupt cabal to be thrown in the slammer and asset-stripped then life in Turkey, Syria, Iran and Russia will become more peaceful and prosperous.
Posted by: Hoarsewhisperer | Apr 28 2020 21:23 utc | 15
Putin Ex Machina? Erdo may find his match eventually, although he has shown a lot of creativity in blaming foreign powers, improving methods of vote counting, muzzling media, but apparently some electoral mechanism still exist, and the party landscape got rearranged to make opposition more effective (i.e. a sizable party that can siphon votes of religious Sunni Turks). But the judiciary was purged twice and now it may pose a big anti-democratic barrier. All of that is a problem for Turks.
I recall only one instance of Putin getting favorable change of government with a nudge from Russian media and perhaps less visible efforts, but that was in Kyrgyzstan. I could miss many other examples, but I really do not see where else (but perhaps in Kyrgyzstan it happened more than once).
Posted by: Piotr Berman | Apr 28 2020 21:56 utc | 24
Anyone that thinks Russia is a relatively poor country has simply been drinking too much Western MSM kool-aid.
Enormous resources, talented work force, PPP(purchasing power parity) equal or surpassing Germany, huge Sovereign wealth fund, massive holdings of gold, almost no public debt, enough FX to cover all public/private external debt. Probably the most self-sufficient 1st world country able to provide food, energy, medical and defense mostly from is own people and business.
Russia is able to provide money to its citizens, SMEs and industry along with extended medical care from its Sovereign Wealth fund during the CV19 crisis. They have prepared adequately for the CV19 virus and while they have a large # infected, they have a very low death rate.
Given the upcoming global recession/depression and the lack of health care in my native USA, I'ld like to be living in Russia.
Posted by: lgfocus | Apr 28 2020 21:59 utc | 25
Posted by: chu teh | Apr 28 2020 21:43 utc | 20
Thank you very much for that Saker link and heads up. That is a good read, especially the comments.
Perfidious Albion indeed.
Posted by: JohninMK | Apr 28 2020 22:07 utc | 26
@Igfocus 25
indeed.
Russia may seem behind in many industries but really, those are superfluous to it's survival and prosperity. Where and in what matters, Russia has plenty of.
you can't eat apps, iPhones, or F35s for that matter.
Posted by: A.L. | Apr 28 2020 22:13 utc | 27
@ Igfocus 25; A.L 27
Indeed. a country with 10 time zones, with a debt to GDP the envy of the G7; was able to give a helpful plane load of COVID-19 essential supplies - PPE, Disnfectants, Ventilators - to the U.S.. (Trump asked) also Russia has been helping Italy:
"Thank You" after bashing.
Posted by: Likklemore | Apr 28 2020 22:46 utc | 28
The Turks are led and indoctrinated in manner very similar to the Outlaw US Empire, thus the difficulty for the Turks in gaining genuine independence. Much would need to occur to attain that goal--the media, political and financial classes must be purged of those inhibiting Turks from actions implementing genuine Turkish interests. Those interests have nothing to do with the EU, NATO or neo-Ottomanism; they do have everything to do with enhancing Turkey's geographically unique position between East and West as a main facilitator of the BRI project developing a united Eurasia. Turkey needs to act as a genuine partner with all its neighbors, particularly those of the Balkans since they're linked together in their development in a manner hidden by their poor historical relations and the very longstanding rift between Greek and Turk that's still exploited by other European nations.
In short, the Turks must become masters of their own destiny, much like the Russians, Iranians and Chinese, instead of continually being used as pawns. Doing so won't be at all easy since Turks need to break free of their previous indoctrination. The upshot is Turkey's likely to remain hamstrung, unable to heal itself, as Erdogan will continue to be an impediment since he seeks to empower himself at the expense of all Turks. In a very real sense, Turkey's as much of a Basket Case as the Outlaw US Empire, and for many of the same reasons.
Turkey should allow the lira to float, making Turkish products cheaper to make, while boosting exports in euros or other currencies.
Depleting forex reserves to prop a sliding currency is a loosing proposition under existing economic circumstances.
Russia tried to support the rubble in 2015 burning through 50-60 billion to no avail, they decided to float the rubble making their exports cheaper and overcoming the sanctions splendidly by having home grown industries flourish and making the country self sufficient.
Posted by: Garbis | Apr 28 2020 23:12 utc | 30
@ Posted by: Garbis | Apr 28 2020 23:12 utc | 30
Devaluing currency doesn't generate industrialization. Industrialization generates industrialization.
If you're already industrialized, then you can think of a currency devaluation policy to boost your already existing industry (e.g. Japan). But monetary policy doesn't make industry to pop up ex nihilo. If that was the case, Zimbabwe would be the industrial superpower by now.
The State supporting or not it currency doesn't change the system. The State is just another "player" in the international financial market: it buys and sells currencies. The only difference is quantitative: the State is a very big player.
Likklemore @ 16:
If you ever need a laugh, you ought to read this Space Daily article:
"US Rocketry Chief Offers Novel Explanation for Why America Continues to Buy Russia's RD-180 Engines"
Erm, what was it that a recent former US President once said about Russian manufacturing?
“They [Russia] are a smaller country, they are a weaker country, their economy doesn't produce anything that anybody wants to buy except oil and gas and arms. They don't innovate.”
Posted by: Jen | Apr 28 2020 23:45 utc | 32
@ 29 karlof1... in my first hand experience in turkey 2012 - it seems like a very strong country with a lot going for it and quite different then the usa in many respects.. i could be wrong.. average age is somewhere below 30 if i am not mistaken... they aren't overrun with large agribusiness corps as i understand it - like the usa) and produce their own food - food independence must count for something), and they make a lot of quality products - cymbals for drummers in particular, lol... at the same time they seem to suffer from an attachment to the 'strong man image' which is where erdogan seems to comes in... some of them seem to go for this return to the ottoman empire thinking, so maybe in that way they are a bit like the exceptional nation... i would be curious from any poster who is turkish, or maybe laguerre would like to chime in!
Posted by: james | Apr 28 2020 23:48 utc | 33
It'll be interesting to see what happens. Turkey won't be the only country facing a financial crisis, simply because of the reduction in world trade that's likely to follow from the virus.
Certainly Erdogan has managed to irritate everyone he has dealt with, but if he needs money and knows what is good for him there are things the country can still offer (rent out ports to China etc). He might try to extort the EU some more with refugees, but this time it probably won't work. He might also try to remind everyone interested that they still need him to block block various pipeline routes to the EU. That's probably a more reliable strategy.
Posted by: ptb | Apr 29 2020 0:09 utc | 34
A most curious and workable assembly of facts, with the title "America’s enemy is England, not Russia." found at The Saker site:
https://thesaker.is/ Anglo-American aristocracies v. Cassius Clay 's joint efforts with Lincoln and Tsar Alexander to resist imperial aristocracies. by: chu teh 20 <= 100% agree, the Czar was under attack since 1897.. he just did not know it.. the Russia Sino War in 1904 was wealthy man Schiff funded .. ...mainly to weaken the Czar 's influence with the Russia people.. also in 1904 the Young Turks failed at Salonika to overthrow the Ottoman, both events enabled massive anti Czar propaganda from Trojans in Russia. Since 1876- Britain, France, and Italy, failed to contain Germany, but were after the oil under the Ottoman empire, colonialism was strong, and Germany was outperforming the stagnant European economies including those of BFI.. British used Wilson to bring the USA into WWI, but before that could have meaning, in 1913, a central bank (federal reserve) was formed, collateral to guarantee loans needed to be made to failing European States was created , who would participate in the war against Germany. The incomes of the American people provided that capital (federal reserve act of 1913, the income tax act of 1913, the 16th amendment ratified on February 3, 1913.. Its the same today.. as it was pre WWI.
Industrialization generates industrialization. Vk @ 31,,<== suggest to disagree, <=technology generates industrialization..<= copyrights and patents replace convert technology into monopolism. patents and copyrights dampen progress everywhere.
Posted by: snake | Apr 29 2020 0:10 utc | 35
Jen 32
I read sometime back that US had not mastered the metallurgy required for those engines as the reason they kept buying them.
US had considered closed cycle engines impossible to make until they found some in a warehouse after the collapse of the soviet Union.
Posted by: Peter AU1 | Apr 29 2020 0:17 utc | 36
Zut alors! I would love to discuss issues such as this, however as we say in my native France, j'ai d'autre chats a fouetter.
My curiosity rests with the many inconsistent numbres uses to project the morts from le coronavirus. Comment dit, we have been lied to and are currently being robbed, en anglais?
Posted by: Pepe Le Few | Apr 29 2020 1:26 utc | 37
@Matthiew 12
Russia is a relatively poor country with a size of an economy equivalent to NY State. Apart from the leftover Soviet military might and nuclear weapon arsenal, don't bet on Russia while it suffers from high unemployment and poverty itself.
Remind me again how wonderful the Russian economy was doing under American “tutelage” in the 1990s. Oh right....
You’re getting your information about the Russian economy from the same outlets that claim the (pre-plague) US economy was “booming” and unemployment was at “an all time low” while they conveniently neglect to mention that a person making $7.50/hr, working 4 hours/week is counted as “employed.”
Remember, something like 60% of Americans don’t even have $400 in the bank in case of an emergency.
You also seem to be forgetting that the neoliberal FIRE (Finance Insurance Real Estate) economy championed by Wall Street and the City are hollowed out shells that enrich a handful of bankers, CEOs and mega wealthy stockholders at the expense of the real economy and the majority of the population. Russia, like all countries in the global economy, is ensnared in this mess but it has been making efforts to become independent and beef up its real economy.
That said, with the massive economic fallout from the corona shutdown coming down the pike I don’t think any country is going to be lending out piles of cash anytime soon.
The IMF, that wonderful tool of western imperialism, might still be lending out money but then again it’s a scam that destroys the economies of the countries it lends to. If Erdogan goes down that road again the people of Turkey aren’t going to be very happy at all.
At any rate, the global economy as it was pre-COVID-19 is dead and what comes next remains to be seen. If you think that after the dust settles people in the US and its vassals are going to be better off economically than their counterparts in Russia and China, you might be in for a big surprise.
Posted by: Daniel | Apr 29 2020 1:37 utc | 40
TT @ 6; Thanks for the Hudson link. Makes the U$A's world games with economic leverage much more clear.
BUT, "the more things change, the more they stay the same". Thought I might see some real change with the economic growth in China and Russia, but I have my doubts, as confrontation
with the empire seems out of reach because of it's economic choke hold around the globe.
Posted by: ben | Apr 29 2020 1:41 utc | 41
Turkey is not a small country, not an unimportant place in world geopolitics, not a new born one - it hasdozens of centuries.
One cannot get into his head how a turkish head of state can prove so stupid.
At first there was method in that erdoganic stupidity.Not any longer.
Let his beloved jihadis give him a hand.The US did not push their 'war on terror' to Ankara at the time because it was pretty much US prey, hostage and ally in the ME.
And when bad old USofA attempted a military coup in Incirlik, it was Putin the one who saved his life. Life and throne for that matter.
No doubt that Putin is too conservative, too cautious ,to much a chess player to fit my taste.
@Jen | Apr 28 2020 23:45 utc | 32
If you ever need a laugh, you ought to read this Space Daily article:
"US Rocketry Chief Offers Novel Explanation for Why America Continues to Buy Russia's RD-180 Engines"
Ha ha, you're right, that was a good laugh. From the article,
The United States is buying Russian rocket engines not because of any problems with its domestic engine engineering programmes, but to subsidize Russian rocket scientists and to prevent them from seeking employment in Iran or North Korea, United Launch Alliance CEO Tory Bruno has intimated.
The design and testing of the RD-180 is finished; simply buying them won't keep the Russian engineers busy.
The US is buying the engines for exactly the reason the above quote is dismissing, namely that in rocket engine science the U.S. is behind the Russians. RD-180s are far better than anything the U.S. can do, even with samples of the Russian engine to attempt to copy. The attempt failed, of course, which is why the U.S. is still buying them and suffering acute embarrassment.
Posted by: Cyril | Apr 29 2020 3:16 utc | 43
@6 trailer trash.. thanks also for the link to hudsons interview.. i enjoyed it and it was worth the read..
Posted by: james | Apr 29 2020 3:36 utc | 44
OT, but newsworthy;
Justin Amash has just announced he'll explore a run for POTUS in 2020, by forming an exploratory committee.
https://en.wikipedia.org/wiki/Justin_Amash
Interesting. And he could pull votes from whom? He's a Libertarian..
Posted by: ben | Apr 29 2020 3:46 utc | 45
@ Matthiew | Apr 28 2020 20:43 utc | 12
Who are you, Rip Van Winkle? It's not the 1990s, FFS!
Posted by: Herr Ringbone | Apr 29 2020 4:20 utc | 46
@Peter AU1 | Apr 29 2020 0:17 utc | 36
I read sometime back that US had not mastered the metallurgy required for those engines as the reason they kept buying them.
US had considered closed cycle engines impossible to make until they found some in a warehouse after the collapse of the soviet Union.
There is a interesting documentary about this titled
"The Engines That Came In From The Cold"
https://m.youtube.com/watch?v=AyBan_LTjvM
Posted by: Joost | Apr 29 2020 6:07 utc | 47
Vive Le France!
Posted by: Pepe Le Few | Apr 28 2020 20:18 utc | 11
Doesn't sound like this one has ever been closer to la belle France than Oregon, Etats Unis. Doesn't even know that the Gilets Jaunes movement died more than a year ago.
Posted by: Laguerre | Apr 29 2020 6:34 utc | 48
Erdogan is right ! He is smarter than most economists. In spite of contrary propaganda , I think that Erdogan is helping the US to get the hell out of the Middle East and I bet that he is getting good dollars for it. Please do not underestimate Erdogan.
My long view of geopolitics is that Turkey will leave NATO, join Russia, China.
Posted by: Friar Ockham | Apr 29 2020 6:55 utc | 49
The president of the Shanghai Gold Exchange (SGE) called for a new super-sovereign currency to offset the global dominance of the U.S. dollar, which he predicted would decline long term, while gold prices rally.
Posted by: Mao | Apr 29 2020 8:39 utc | 50
Salut Pepe Le Few!
Myself being an immigrant in France,your claim being a french native is just a little suspect to me.In 11# you exclaim Vive le France,which is very bizarre to a frenchman,and a very unusual typo.You say salut mes Ami's!;unless Ami's refers to the american readers of this blog ,a frenchman would not put an apostrophe in.No harm intended,I just find this odd.
Posted by: willie | Apr 29 2020 11:32 utc | 51
33#
Hello James!Yes! the Turks are the best in cymbal hammering,and I suppose you have some Zildjians on your kit.I forgot the name of another famous firm that makes them.
As to the turkish people,we should not forget that support for Erdogan is strong in the countryside.The Turkish workers that came to western europe at the end of the sixties came mainly from the poorer and less educated anatolian regions.The same is true for the large contingent of northafrican workers recruted in western european factories,they mostly were from the Rif-mountainous areas,where poor peasants's big families sent fathers or brothers to Germany,Belgium,France and the Netherlands.From the late seventies those workers were allowed to bring in their families to stay in Europe.Even now Erdogan has huge support from Turkish people in Western Europe,and the Tunesians in France voted overwhelmingly for islamic parties in the arab spring.So we should expect major changes to come from a more educated and less submitted-to-religion new generations in Turkey,which are mostly urban.
Posted by: willie | Apr 29 2020 11:51 utc | 52
Russia needs to hold on to its reserves to balance the budget while oil prices are this low. It won’t want to dip into them to prop up the Turkish economy for a leader who constantly goes back on his word. The Turks rarely stick to an agreement. Turkey will go running to Washington and they’ll have to give up the S400 for a loan
Posted by: DannyC | Apr 29 2020 12:13 utc | 53
About the russian economy, read the reports from AWARA, an accounting/consulting firm in Russia founded by Jon Hellevig, a Finn. You might know him from articles on The Saker Or RUssia Insider.
Essentially, beside resources, he says Russia has low debt, not as much financialization (FIRE), a big manufacturing industry(focused on internal market) and therefore relative little import.
Posted by: stefanD | Apr 29 2020 14:09 utc | 54
That leaves the International Monetary Fund as the only place where Erdogan can receive fresh money. IMF loans come with conditions over which the U.S. has a large say.
I suspect the IMF might well be experiencing a run on its capital after Covid. Aren't there quite a few western countries that are turning to the IMF already? If so, how much does the IMF have available, and where will it get its funds from?
Now, what if China took advantage of the opportunity to set up a nutritive alternative to the IMF? One which lends in Yuan on tough but constructive conditions, contingent on productive development of the economy and self-sufficiency instead of self-destruction and disruptive austerity. That would have a major psychological and political impact on the world, even if it was initially rather small and only assisted a small number of countries.
Posted by: BM | Apr 29 2020 15:02 utc | 55
@nobody #14
What you are complaining about is a feature, not a bug.
So-called "real" money is what led to the Great Depression (and all the panics before that): hard currency is inherently deflationary.
Hard currency is also enormously beneficial to the already existing wealthy - re-read the "Cross of Gold" speech to understand what life was like under $20 gold.
Money in general is always going to have its abusers - the closer to origin, the greater the ability to parasitize. The question is only if the benefits outweigh the negatives.
For "hard" money, the benefit of "no inflation" and "budget discipline" is offset by "no growth" due to "no major capital spending" and "rich people crush the poor by monopolizing credit".
It isn't just a Gresham's dynamic which dominates fiat money vs. hard currency.
Posted by: c1ue | Apr 29 2020 15:53 utc | 56
@ 52 willie... erdogan has been very politically savvy.. people can't take that away from him.. just how long he stays in power has been a long ongoing question!
Posted by: james | Apr 29 2020 16:01 utc | 57
people interested in united states and Canadian agreements google "northcom agreements" or check out this Canadian author https://www.globalpolicy.org/component/content/article/153/26353.html
Posted by: darkhorse 241 | Apr 29 2020 16:07 utc | 58
Loaning from IMF is political suicide in Turkey and it should be no surprise as this comes as a result of the traumatized experiences of the 2001 economic crisis. Polls show that the two foremost priority of voters in Turkey are the economy and the Syrian refugees. Fail in those and the voters will not hesitate to get rid of AKP. In the 2019 mayoral elections, AKP lost three biggest cities to CHP mainly due to these reasons. There are districts in Istanbul which were strongholds of AKP (such as Fatih) and one would have never thought a secularist party would win the majority in such districts. But it did because of disruptive policies followed in the integration of refugees into the society, which then caused economic tensions and all. This also explains the mindset of Turkey, which foreigners seems to having a hard time to grapple. They can stomach a certain degree of authoritarianism as long as the country gets wealthy and people enjoy a certain degree stability.
Posted by: Innocent Civilian | Apr 29 2020 16:45 utc | 59
If the Lira rises it makes it easier to pay off USD denominated debt. While the value of the Lira has cratered over the years, the price stuff manufactured in Turkey sells for over seas has not dropped along with it so the rise in the Lira probably won't hurt exports the way you would think. Any loan will definitely come from the US one way or the other as they are the only ones manufacturing money out of thin air as fast as they can. Borrowing from the US might not be a bad idea since if the value of the dollar collapses it will be cheaper to pay back in the future.
Posted by: BraveNewWorld | Apr 29 2020 17:16 utc | 60
Time for Sultan Erdogan to make a dash to "secure" those American nuclear weapons at Incirlik Air Force Base.
He could then auction off these nukes to the highest bidder on the world black market.
Those nukes would likely earn a pretty penny for the Sultan and certainly help out Turkey's financial woes.
$100 million/nuke would be a good initial bid price.
Posted by: ak74 | Apr 29 2020 18:04 utc | 61
ak74 | Apr 29 2020 18:04 utc | 61
Those nukes are now believed to be in Poland.
Posted by: JohninMK | Apr 29 2020 18:16 utc | 62
BM | Apr 29 2020 15:02 utc | 55
Now, what if China took advantage of the opportunity to set up a nutritive alternative to the IMF? One which lends in Yuan on tough but constructive conditions, contingent on productive development of the economy and self-sufficiency instead of self-destruction and disruptive austerity. That would have a major psychological and political impact on the world, even if it was initially rather small and only assisted a small number of countries.
Perhaps you are thinking of an expanded role for the existing Asian Infrastructure Investment Bank (AIIB)?
Posted by: JohninMK | Apr 29 2020 18:21 utc | 63
@ Posted by: BM | Apr 29 2020 15:02 utc | 55
The Chinese alternative to IMF/World Bank already exists: AIIB.
The problem here is that the AIIB is simply dwarfed be those aforementioned American financial institutions.
There's simply no other way. For the forseeable future, the USA will remain the financial superpower. Not only that, but, crisis after crisis, this role is enhanced: the USA is strengthening its specialization as the financial world's financial HQ, while its deindustrialization process continues to deepen.
vk, I cannot see how the US can continue to sanction, threaten and use the dollar as a weapon without blowback and consequences. It defies everything that leads to success in any venture.
Posted by: arby | Apr 29 2020 18:30 utc | 65
"that was a mistake.. again we see the interconnectedness of us$, imf, currency speculation and the wider ponzi scheme of present day finance in action." (@James)
It wasn't a mistake, it is an essential part of the very ponzy scheme you describe - template IMF / World Bank economic expansion - regional idiosyncrasies aside - and those under the wing of AKP have been amassing wealth at extraordinary levels and are also well placed to avoid any burn when the crash comes. Others who understand the ways of western economic expansion have sold up and left. HNWI have been selling up at mid-teen percentage points for years now. Simsek has been very busy with a capital-flight-facilitating bank in the UK, rumours abound of 'close to Erdogan' individuals trying to fly plane- loads of cash out of the country (we'll never know how many succeeded!) ... it all stacks up as expected!
The extent to which Turkey has been plundered under AKP is as yet unknown, but be sure that there is very little left ... The country will be paying for generations.
The point that is ignored in the above article is Erdogan's 2023 vision. It is of course the centenary of the republic. But it is also a date that Erdogan has for years been throwing around as a key turning point in Turkey's history. It is the reason that 'damat' Albayrak is in post as treasurer. It is the reason the IMF are being kept from the door. Erdogan will to the very best of his ability refuse to allow any significant economic failure to occur before then. Quite what 2023 holds for Turkey is debateable. But it could well be another significant constitutional upending! What is undeniable is Erdogan's determination and resilience.
In my honest opinion Erdogan isn't going anywhere yet, and his tactic of playing all sides will not change for now. Covid will cover him for whatever economic difficulties occur. Turkey's aggressive Sunni Islam will probably take a more prominent role to keep the faithful in line, and the police state already in place prior to Covid and now strengthened yet further as a result of it will become more intolerant of dissent. There is a long way to go before Erdogan gives up his vision.
Posted by: Egor68500 | Apr 29 2020 18:50 utc | 66
An aside.
I would like to mention a reprehensible abuse of religious influence that occurred a week ago at the beginning of Ramadan.
The head of religious affairs in Turkey - a government ministry which has a budget of $10bn / 70bn TL - gave a sermon at a VIP friday prayer to open Ramadan last week. (Mosques are closed. The 'people' are not allowed to attend Friday prayers, but for some reason they continue in Erdogan's Camilca vanity project mosque for a select group of worshippers!) Anyway the sermon was a reading from the Koran that states that homosexuals, unmarried couples and adulterers bring pestilence upon the earth! This at a time when Covid has meant that Ramadan is being celebrated in isolation - normally neighbourhood squares are full of tables and chairs and hundreds of locals share Iftar together; or people flock to restaurants every night with different groups of relatives / friends etc.
So, basically Turkey's religious leader has blamed CoronaVirus on Homos and adulterers. This is the same man that refused for 6 years to state that ISIS were terrorists! Not ONE news agency has stood up to protest. Turkish social media is full of people stating that 'it is written in the koran so it can't be hate speech'; even radical Turks or those based in the West are not condemning the speech. The point is not the source. The point is why that quote, why now? Anyone who thinks that the head of religious affairs did not choose the passage knowing it would cause division and offense is naïve! It is an act of Hate Speech. It is Turkish Sunnism.
By the way, it is the same ministry that signalled the 'kefir' status of New Year's Eve celebrations which led within days to an ISIS cell operative shooting at a NYE celebration in istanbul which was attended almost fully by foreigners!
Posted by: Egor68500 | Apr 29 2020 19:17 utc | 67
As for Russian intervention in the Turkish economy - Russia is an old dog! it knows these plays well.
a) To consider Turkey as 'pro-West' or 'pro-East' is to be blinded by propaganda. Turkey is neither. It seeks always its own interests. It will not stop doing so. Russia is not blind to this and has focused its influence/ weighted cooperation in the fields of energy and Syria, and lately Libya - unsurprisingly fields aligned with Russia's own interests! (shock horror!)
b) What Russia will not do is hand over cash to save an intentionally failed western economy!
c) What Russia may well do is facilitate Turkey's limited participation in the rebuilding of Syria and of Syria's economy. A boon for Turkey which will help keep Erdogan in power - better the devil you know and hold sway over where it counts!
d) China? There are many routes to Europe from China. Is that which passes over Turkey the optimum? Probably not.
Posted by: Egor68500 | Apr 29 2020 20:01 utc | 68
@ 66 / 67 / 68 Egor68500.. thanks for your comments! @ 67 in particular.. that is rather sad...
regarding my comment - that was a mistake... @ 6 trailer trash seemed to imply the same... so, let me clarify... it is not a mistake on the part of the west - world bank, and imf.. that is the agenda! it is a mistake on the part of any turkish corporation to take any loan denominated in us$!!! that is the mistake... same deal any country that puts itself at the mercy of exchange rates that can be gamed, which is the situation at present with turkey... thanks again for your comments.. it helps to have a turkish perspective! cheers..
Posted by: james | Apr 30 2020 2:15 utc | 69
@vk | Apr 29 2020 18:25 utc | 64
The Chinese alternative to IMF/World Bank already exists: AIIB.
The problem here is that the AIIB is simply dwarfed be those aforementioned American financial institutions.
The AIIB may be small compared to the IMF and World Bank, but China's lending is far bigger than both of them combined, if you believe The Economist:
[China] is the world’s largest official creditor, more than twice as big as the World Bank and IMF combined.
There is lots of the usual Economist propaganda in the article, of course, but that China's lending overshadows the World Bank and IMF combined, I have little doubt.
Posted by: Cyril | Apr 30 2020 5:21 utc | 70
The Kremlin could squeeze Erdogan any time it wants by doing ... nothing, that is, letting the SAA do its job liberating Idlib. Instead, any time this dossier threatens to make some progress, Russia swoops in with another "ceasefire" deal, knowing full well the Turks and their headchopping friends have no intention or track record of honoring those. The thought that someone like Yuri Peskov would ever want to squeeze his dear friends in Ankara--where is the evidence for that. While all this is ongoing, Russia is allowing Israel to mercilessly bomb its treaty ally of course.
My only conclusion can be that Russia wants its Syrian client to be weak and dependent. What actual Russian interest has been served by all this skullduggery remains an open question.
Posted by: Ma Laoshi | Apr 30 2020 5:29 utc | 71
- Even some of the UAEs had a housing bubble in the recent years.
- It shows that the Middle East can have a real estate bubble as well.
Posted by: Willy2 | Apr 30 2020 6:53 utc | 72
- Time for the US to stage a nice little coupe, right ?
- Or perhaps the US will wait a little more when Erdogan comes begging for money ?
- Will the US Empire be able to "keep all the balls in the air" ? And how the turkish propaganda machine reacts to this news ? Are Sultan Erdogan blaming (nefarious) "foreigners" for all the turkish problems ?
Posted by: Willy2 | Apr 30 2020 7:00 utc | 73
@james | 69
I understand where you are coming from, but the exchange rate game works two ways. Minimum / less than minimum wage production in TL sold at western dollar prices abroad is good reason to want the further erosion of the TL. Also, sector prices locally in TL are pretty much pinned to the dollar. Lastly, until 2018 most companies funds were held in dollar accounts in Turkish banks.
The real killer here are the IMF/World economic conditions enforced at Erdogan's agreement: In just over a decade workers have been impoverished and laden with crippling personal debt. Small businesses, the heartbeat of Turkish economic activity, are crippled in a similar fashion. We will probably see a massive centralisation of the means of production resulting in fatal unemployment in my opinion. Those who cheered Erdogan's economic policies are either blind, stulud or western. And here is the difference in Russia's approach - it seeks to promote long term mutually benefical activity always.
@Ma Laoshi | 71
There is very delicate balancing work going on. Regarding Israels attacks: my understanding is that Russia has insisted that it be given prior notice of any aggression and in turn notifies Syria which ensures that key assets and personell are removed from the targetted locations. It's not perfect but ..
Posted by: Egor68500 | Apr 30 2020 7:23 utc | 74
@ 74 ergor68500.. thanks.. i think you have a better understanding of it then me... i hope it works out for the turkish people and the country itself..
Posted by: james | Apr 30 2020 15:55 utc | 75
To summarize the discussion, there is an opportunity to purchase Turkish gratitude by few billion dollars of a stabilizing loan. Alas, the future market in Turkish gratitude (Erdogan basket) does not fare better than oil futures. Prices may hit negative territory...
Posted by: Piotr Berman | Apr 30 2020 18:01 utc | 76
I'm sure the Turk aren't too worried. 1 Turkish Lira = 1 Chinese Yuan. 1 TRY = 1 CNY. Isn't that what they'd be aiming for? Currency parity with their most important foreign investors the Chinese.
Posted by: Julian | May 2 2020 12:13 utc | 78
Well, only few days after this was published, Erdogan is begging the US to please lend them some money. It is humiliating and embarrassing to see the letter written by Erdogan to the US where they remind the US that recently they had some coronavirus masks to the US, so, please to keep that in mind when making decisions to help Erdogan’s bankruptcy. Every penny Turkey will receive will be distributed to the corrupt pro-Erdogan businessmen and Erdogan’s family.
Posted by: Mehmet Bayram | May 2 2020 18:26 utc | 79
@Mehmet Bayram | 79 - Precisely. AKP is indeed generous to its partners in money laundering and fraud. The latest two 'pandemic' hospitals which won't even be finished until the pandemic has passed are once again proof of this. What happened to the people's park?
@Julian | 78 - don't know what you're smoking, mate! But wrong on all accounts! )))))
Posted by: Egor68500 | May 4 2020 16:59 utc | 80
@DannyC
Erdogan will never give up the S-400 system - if he bought Patriot he knows it could not be used against US planes in any further US coup attempts.
Posted by: Jams O'Donnell | May 4 2020 17:32 utc | 81
Russia needs to hold on to its reserves to balance the budget while oil prices are this low. It won’t want to dip into them to prop up the Turkish economy for a leader who constantly goes back on his word.
8 ball pool
Posted by: Micheal Lowe | May 6 2020 3:55 utc | 82
Even if you hold on your reserves, how long it can hold up to? Its not about holding on in such a situation. We must act as an intermediatory between the nations.
The situationist app
Posted by: Walter Meeler | May 11 2020 12:05 utc | 83
The comments to this entry are closed.
Russia doesn't have such imperial capacity.
My bet is Turkey will end up begging to the IMF - making it to be reabsorbed by the American sphere of influence.
What's interesting is what will happen to Erdogan in the process. I'm over the fence on this one.
Posted by: vk | Apr 28 2020 19:06 utc | 1