President Erdogan releases from prison Greek soldiers, Amnesty International official in bid to gain trust and stabilize economy
As Turkey retaliates against the United States in their ongoing dispute over the detention of an American pastor, Ankara is mending ties with the European Union in an attempt to limit the damage to its economy, analysts told The Media Line.
Turkey’s currency recovered slightly after the government of President Recep Tayyip Erdogan released various high-profile prisoners; this, after the lira plummeted to a new low last week when U.S. President Donald Trump increased tariffs on the import of Turkish aluminum and steel.
The head of Amnesty International’s Turkey branch, who was behind bars for over 14 months, was released on Wednesday. A day before, two Greek soldiers, who were detained in March after crossing into Turkish territory, were sent back to Greece.
Turkish officials say they want to engage the EU and Erdogan held a phone call with German Chancellor Angela Merkel this week and was to set to speak to French President Emmanuel Macron on Thursday.
“I think that Turkey is so integrated into the global economic system that it has realized it cannot afford to have bad ties with both the United States and Europe,” Soner Cagaptay, Director of the Turkish Research Program at The Washington Institute, explained to The Media Line.
Cagaptay, author of The New Sultan: Erdogan and the Crisis of Modern Turkey, said the release of the Greek soldiers was especially notable because Turkey, which has had rocky relations with Athens, would not have unilaterally made the one-sided move unless Erdogan felt it was crucial.
Indeed, the stakes are high for Turkey, as the country’s economic problems extend well beyond the current crisis with the U.S.
The lira had already plunged over 20 percent this year before Erdogan was re-elected in June. Last month, the central bank increased its 2018 estimated inflation rate from 8.4% to 13.4%.
The currency rebounded following the prisoners’ release, and following an announcement by Qatar, a strong Turkish ally, that it will invest $15 billion in Turkey’s economy.
The lira’s free-fall was likewise stemmed by the implementation by Turkey’s central bank of policies that make it more difficult to borrow money. Experts are concerned that the country’s economy is overheated and that businesses will have a harder time paying back massive debts.
The currency strengthened by over three percent against the dollar on Thursday before Turkey’s finance minister was set to hold a conference call with investors. However, it was still down 34 percent in 2018.
Turkey’s image abroad is especially crucial because much of its growth has been fueled by foreign credit. That makes its decreasing currency even more problematic because businesses will have to spend more in liras to pay back debts that were given in dollars or euros.
But while relations with the E.U. are improving, there are no signs so far that Turkey or the U.S. are willing to back down.
Despite the release of the Greek soldiers and the Amnesty International chair, a court ruled on Wednesday to extend U.S. pastor Andrew Brunson’s from house arrest.
On the same day, Turkey announced it would be increasing tariffs on some U.S. imports.
Erdogan has also called for a boycott of U.S. electronic products like iPhones.
The Turkish leader’s communications director, Fahrettin Altun, wrote on Twitter, “We are fending off this economic coup attempt with the wisdom of the Turkish nation and the leadership of our president.”
The White House has said there could be more economic measures against Turkey if Brunson is not released.
Brunson, who has lived in Turkey for over twenty years and led a small church in the southwestern coastal town of Izmir, was jailed for nearly two years following the failed 2016 coup. He is accused of having links to a group that Ankara says was behind the coup. The U.S. says the charges are without merit.
On Wednesday, U.S. Vice President Mike Pence tweeted, “Turkey would do well not to test [President Trump’s] resolve to see Americans who are wrongfully imprisoned in foreign lands returned home to the United States.”
Can Selcuki, an analyst with Istanbul Economics Research and former World Bank economist, believes that Erdogan could be forced to change course if the economic instability increases but, for now, has shown a clear unwillingness to make concessions to the U.S.
“Despite the lira depreciation, he’s not backing down,” Selcuki told The Media Line. “I don’t know what the breaking point is.”
Elmira Bayrasli, who teaches international affairs with a focus on Turkey at Bard College, said that Erdogan is improving relations with Europe to increase confidence in the Turkish market.
She explained to The Media Line that Turkey’s economic growth under Erdogan was partly predicated on the fact that investors viewed him as a stabilizing force.
“The more he can show that he’s very interested in having relationships and he is the leader who can restore that stability, the better it’s going to be,” she concluded,
By retaliating against the U.S., Bayrasli said that Turkey will give the perception that its cutting itself off from the largest economy in the world, which will be bad for Turkey’s financial markets and growing businesses.
However, it is not just Turkey that has something to lose in this crisis. The country is a vital NATO ally, bordering Syria and Iraq.
It makes Turkey both more susceptible to instability, as well as a geopolitically valuable.
The U.S. used a military base in southeastern Turkey to launch air strikes against ISIS.
“I think the United States has a vastly huge interest in the stability and prosperity of Turkey,” Bayrasli said.
“Both sides need to climb down from their blustery rhetoric.”