Do Turkey a favour Mr. Trump – impose sanctions for S-400s now
U.S. President Donald Trump should do Turkey a favour and act quickly to punish the NATO ally for buying Russian S-400 missiles.
The argument may look counter-intuitive at first glance – Turkey’s frail economy is still absorbing the aftershocks of a currency crisis and a recent rally in the lira could easily reverse. In terms of disposable income, Turks are probably worse off than they have been since the aftermath of a financial crisis in 2001.
But administering the punishment now is in Turkey’s best interests.
During the currency crisis last August, when Trump imposed sanctions against Ankara for the detention of a U.S. pastor, there was a general sell-off in global markets as the Federal Reserve embarked on a cycle of monetary tightening. The punishment could not have come at a worse time. The lira hit an all-time low. A deep economic recession followed. There was talk of global contagion.
Not so today. The world’s markets are buoyant on expectation of Fed rate cuts.
Turkey took delivery of the first batch of parts for the Russian-made S-400 missile system on Friday. The move is likely to enrage both Pentagon officials and members of Congress, who see it as an affront to NATO and traditional U.S. interests in the region. Ankara is no longer a reliable ally under the Islamist, anti-Western and anti-Israeli President Recep Tayyip Erdoğan and needs to be brought into line, they will say.
Trump has a very different view of the political crisis, Erdoğan has said after meeting him early last month at the G-20 summit in Japan. In contrast to the virulently anti-Turkish Pentagon and Capitol Hill, Trump sympathises with Turkey’s defence predicaments and is a friend, Erdoğan says.
The most likely first move for the United States would be for Congress to impose sanctions under Countering America’s Enemies Through Sanctions (CAATSA), asserting rightly and legally, like it or not, that Turkey is buying weapons from sanctioned Russian entities.
Trump is then required to approve the measures, which could include barring Turkish defence firms and even banks from the U.S. financial system, stopping the country from issuing dollar debt or banning its officials from visiting the United States, including ultimately the Turkish president himself.
According to Erdoğan’s careful messaging, Trump will be very reluctant to do so. While Congress could overrule him if he fails to implement their recommendations, the White House can effectively mull over the draft measures for weeks or months before reaching a decision.
Global markets have rallied strongly in recent weeks, buoyed by the expectation that the Federal Reserve will lower interest rates later this month to support growth. Some emerging market bonds such as Poland’s are offering negative yields. U.S. stocks traded at record highs this week. In France, strong manufacturing data is helping its equities while the British economy is rebounding.
As a consequence, the Turkish lira has also rallied. It is well off a record low of 7.22 per dollar reached at the height of the currency crisis. Earlier this week, it was little moved by news that parts of the S-400 air defence missiles were arriving in the country. On Friday, it was down 0.7 percent at 5.71 per dollar, hardly a standout move for the often-volatile currency.
Last week, Turkey took advantage of the buoyant mood across the globe, selling 5-year dollar bonds at the lowest interest rates since the peak of its currency crisis last summer.
At the weekend, Erdoğan sacked the central bank governor in a decision that many economists said harboured the end of the institution’s independence. But after dropping more than 2 percent early on Monday, the currency rebounded.
For Erdoğan, sanctions would give him an excuse to distance Turkey further from the West. He may label Trump as a “double-talker” and follow through on promises of reprisals. He could even decide to send Turkish troops into Syria as he doubles down on his ambitions to make Turkey a regional power free of Western tutelage. Turkish commandos and equipment have already been sent to the border this week. Military leave has been cancelled, according to some local media reports.
Sanctions today would also dent Erdoğan’s attempts to stimulate economic growth. He has just lost control of Turkey’s biggest city of Istanbul and the capital Ankara in mayoral elections that ended last month. Opposition parties would continue to benefit from public disquiet and even anger at the state of the economy. A new party being established by pro-Western former economy tsar Ali Babacan could gain decent traction.
If U.S. and Western officials want to vent their anger on Erdoğan, imposing sanctions on Turkey now is the right move, for U.S. and NATO interests too. Erdoğan would suffer greatly, politically, from their slow-burning impact.
Sanctions further down the road, when global markets turn negative again, would likely bring mass bankruptcies, piles of unpaid debt and a further and perhaps fatal erosion of spending power in Turkey. Erdoğan may double-down on draconian measures that have hurt Turkey’s democracy greatly in recent years. His political rivals preparing for elections scheduled for 2023 could be among the first victims. Ekrem Imamoğlu, the new Istanbul mayor, could also be on Erdoğan’s hit-list.
Sanctions tomorrow might also prevent Erdoğan embarking on more ill-conceived and misguided measures for the economy. Inflation in Turkey is still almost 19 percent and interest rates are hovering above 20 percent despite recent declines and a flood of cheap lending from state-run banks. U.S. punishment could push Erdoğan into enlisting officials capable of getting Turkey out of its economic mess, or make him see sense in an IMF programme.
Some in the White House may argue for a delay in Turkey’s punishment, or a trickle of sanctions, starting with Turkey’s barring from the F-35 fighter jet programme. The logic would be that the United States needs to keep Turkey near the West, not allow it to slip further away and into Russia’s hands.
But that argument falls down when you consider Erdoğan’s actions and rhetoric against all things Western. He is virulent in his criticism of the West in public speeches, has cosied up to President Vladimir Putin, shows frequent hatred towards Israel and is confronting Greece and Cyprus over gas exploration in the eastern Mediterranean.
Under this Turkish president, mollycoddling, or a long, drawn-out process of punishment just will not work. He is already out of the room.
And for the U.S. reputation abroad, short, sharp reprisals now are the best way forward. They will set a strong example to other countries on the edge of the Western orbit who might be considering doing defence business with Russia, or moving closer to Moscow in strategic terms.
For the U.S. president, it is better to be cruel to be kind now when Turkey can take the pain, rather than just plain cruel later when it cannot.
© Ahval English
The views expressed in this column are the author’s and do not necessarily reflect those of Ahval.