Finance - Turkish Lira Plunges In US Spat
Turkey's Lira hit a record low against the US Dollar on Friday after Donald Trump doubled metals tariffs on Turkey. It's part of an international dispute over Turkey's jailing of a US pastor.
"Turkey won't surrender to economic hitmen," Turkish President Recep Tayyip Erdogan said in a speech. "We are facing economic attacks today, and we need to defend our country," adding, "The economic attack against us now is the same as the coup attempt against us. I'm urging our country to increase outputs, to increase exports."
The Turkish Lira is now the world's worst performing currency for the year. It had already lost 20 percent of its value for the day before Trump announced the double tariff, forcing it down yet another 15 percent.
The White House said Trump "has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey. Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter."
Investors hoping for sound economic theory from Erdogan instead got desperation. He literally asked the Turkish people to start searching the sofa cushions for any US or other foreign currency.
"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. This is a domestic and national struggle," Erdogan said. That's lousy advice even in the good times, and extra-bad as your country's currency and corporate stocks are tanking.
The widening rift is the result of two men with autocratic dreams and national governments ill-equipped to hold them back. Under pressure from US evangelicals, Trump demanded that Turkey release US pastor Andrew Brunson from jail. Turkey charged Brunson with supporting a group blamed in the attempted coup in 2016.
Talks between the two countries have gone really, really poorly. Turkey responded to the US demands by filing criminal charges against several US officers at the NATO facility at Incirlik Air Base, outrageously accusing them of ties to terrorist groups. The Turks want to suspend all flights leaving the base in order to execute a search warrant. Clearly Erdogan has not gotten over the lack of support from his NATO allies during the failed coup in 2016.
Nor is the West enamored with Erdogan's behavior. The European Union has pretty much ruled out Turkish membership over Erdogan's crackdowns on the media and free speech. NATO is exasperated over Erdogan's planned purchase of Russian S-400 missiles, which the alliance says are incompatible with its defense systems. The US diplomatic corps and Congress are unhappy with Erdogan's support of Russia's involvement in the Syrian Civil War, and Erdogan's crackdown on the Kurds who have proven to be an effective fighting force in Syri and overall in the war on terrorism.
All this illustrates exactly what the West has to lose in this unnecessary stand-off between two men who take things personally and don't like to be seen as the loser. A worst-case scenario might have Erdogan pulling Turkey from NATO, denying NATO access to a key air base used in Middle East operations, and cutting the alliance off from the Bosporus Strait into the Black Sea.
Turkey has nothing to lose but its economy - which could lead to social upheaval at a time when the reasonable democratic opposition has been weakened by years of Erdogan's putsches and prosecutions; but with an empowered rural Islamist wave that has no use for a return to the 20th Century secular republic of Attaturk.
Or maybe the diplomats will sort it all out.