An Erdogan-Trump summit only solution to the US-Turkey crisis
The Turkish government is facing an unprecedented crisis of its own making. It is facing a currency meltdown that risks causing long-term damage to its private sector while simultaneously it is engaged in a war of words with its most important ally, the United States.
This is an economic as much as it is a political crisis that defies easy solutions. Yet a solution is what is needed because a complete meltdown of the Turkish economy, which is among the globe’s 20 largest is in no one’s interest. This solution will have to include economic and political properties, but most importantly it will require a meeting a la the summit with Kim Jung-un of North Korea between Presidents Donald Trump and Recep Tayyip Erdoğan in an effort to reconcile. Theatrics will be as important if not more so than content.
The Turkish lira was under severe pressure for some time primarily because investors had lost confidence in Erdoğan’s management of the economy. His new presidential system concentrates all powers in his office and does away with the separation of powers, Erdoğan has surrounded himself with a group of sycophants and untested advisors to help him steer the ship of state. Most important among them is new Treasury and Finance Minister Berat Albayrak, whose primary qualification appears to be that he is the president’s son-in-law. Erdoğan, who advocates controversial ideas such as that higher interest rates are the primary cause of inflation, has also put the independence of the central bank in question. Much of the pressure on the lira came from an expanding current account deficit, galloping inflation rate and a loss of confidence in the judicial system that acts as the palace’s enforcer.
The currency crisis was aggravated by a spat with the U.S. administration (and one must also include the Congress as well) frustrated by the lack of movement on an American evangelical pastor, Andrew Brunson, imprisoned for almost two years on trumped up charges as well as three Turkish U.S. Embassy employees also subject to outlandish charges designed to cripple the embassy’s ability to conduct its business in Turkey.
Criticised for being too lackadaisical about the jailing of its citizens and employees in what increasingly appeared to be an attempt by the Turkish government to use them as hostages, the U.S. administration’s patience finally ran out. Trump, also under pressure from his evangelical base, finally concluded a deal for Brunson’s release only to find out that the Turkish government at the last minute transferred the pastor to house arrest. Feeling betrayed, Trump, who tends to personalise issues, reacted with punitive tariffs on Turkish steel and aluminium exports.
Erdoğan is not unlike Trump; he too tends to personalise issues and look at the world through the prism of conspiracies. He is unlikely to give in on Brunson and the others. His response has so far consisted of a war of words; but this is no ordinary war. It is also being amplified by a subservient Turkish press now engaged in a venomous orgy of anti-Americanism that is bound to poison relations with the United States from the working level up. The stakes are high; beyond the deteriorating relations there is also going to be reverberations throughout emerging markets and the United States has an interest in containing the adverse and potentially destructive consequences.
What can be done? The Turkish economy is in trouble but it also has certain attributes that can help it weather the storm until things calm down. For one, it has a low government debt to GDP ratio that means it can socialise a significant amount of the corporate debt.
However, the gravity of the crisis and the need to provide Turks with the time to calm markets and put their house in order requires some big symbolic signalling. This can only be achieved by a face-to-face meeting between Trump and Erdoğan that will facilitate the release of Brunson and the others. Although it would be far more satisfying if the U.S. government raised the larger issue of human rights violations, imprisoned journalists and NGO leaders such as Osman Kavala, the fact of the matter is that the Trump administration has shown no interest in such issues in Turkey or elsewhere.
Trump relishes crisis diplomacy and such encounters because it shows him to be in control, managing problems on his own without the help of his bureaucracy and diverting attention from his daily domestic problems. He has even suggested that he would be willing to meet Iranian President Hassan Rouhani on the margins of the UN General assembly after imposing draconian sanctions on Iran. For
Erdoğan, who is in a tight spot, such a high-level encounter would provide him with the cover to release the prisoners.
Such a meeting should be limited to creating a new atmosphere including an immediate halt to the anti-American rhetoric. It may be tempting to resolve all outstanding issues between the two countries such as Turkey’s pending purchase of Russian S-400 missile system or the disagreement over northeastern Syria and U.S. support for the Kurds there. That would be a mistake as it would distract from the main reason and possibly undermine the summit. A limited, rapid summit will clear the air and allow for diplomacy to handle the other issues in time.