Turkey's self-isolating moves in the region elicits a containment policy - Aykan Erdemir / FDD

Turkish foreign policy, which has been increasingly shaped at the Turkish presidential palace rather than at the foreign ministry, continues to self-isolate the country as a host of countries feel increasingly threatened by Turkish President Recep Tayyip Erdoğan's belligerent policies, said Aykan Erdemir, senior director of the Turkey programme at the Foundation for Defense of Democracies, a Washington think tank.

Erdoğan's hawkish moves lead to a containment policy by Turkey's opponents, which is then perceived by Erdoğan loyalists as evidence of a grand conspiracy against their administration, resulting in further self-isolating moves and a recipe for disaster, Erdemir said during a podcast with Ahval's editor-in-chief Yavuz Baydar.

“This vicious circle ends up forcing Ankara to take even more radical steps to further the unprecedented isolation that the country currently goes through,” he said.

According to Erdemir, Erdoğan's iron-fist policy which is supported by Eurasianist factions within the military and the broader security apparatus, including the police and the recently-established night watchmen and brown shirt units can continue on the current trajectory, however, economically and financially this state of affairs is not sustainable.

Turkey still risks facing U.S. sanctions for its purchase of the S-400 air defence system from Russia and now it also has to deal with potential sanctions to be imposed by the EU over Turkey's actions in the eastern Mediterranean.

"Sanctions matter more by virtue of their signalling value for global investors. Turkey already has significant macro risk, as evidenced by Moody's latest rating sending it deeper into junk territory," he said.

Erdemir said, “Turkey is not only entering a very dangerous period in terms of foreign policy but also a key economic bottleneck.”

Turkey's foreign reserves excluding swap lines are already in the negative territory and the price of insuring against Turkey’s sovereign credit defaults is at an all-time high. Turkey had its debt rating cut deeper into junk by Moody's, which warned of a possible balance-of-payments crisis in assigning the lowest grade it has ever given to the country. The sovereign credit rating was cut to five levels below investment grade and on par with the troubled African country of Rwanda. Moody's said fiscal metrics could deteriorate faster than currently expected.

As Erdemir noted, one of the world’s largest benchmark index providers has warned in late July that Turkey could soon be removed from the MSCI Emerging Markets Index, a benchmark used by many global funds and exchange-traded funds, and reclassified as a frontier market, should it become increasingly difficult for foreign investors to access their respective equity markets.

"Such a Turkey cannot continue on the current foreign policy track given the dramatic mismatch between its economic means and diplomatic reality," he said.

"Erdoğan's belligerent and irredentist rhetoric and policies are not only undermining regional stability but also hurting Turkey's economic and political prospects, isolating the country at an unprecedented level, triggering alliances that would have been unthinkable a decade ago."

The analyst said that there are two distinct approaches to Turkey in the United States. One that continues to see Turkey in the traditional role it used to play in NATO’s south-eastern flank during the Cold War, as a key counterweight to Russian and Iranian threats. This line of thinking prefers to look the other way when it comes to Erdoğan's transgressions.

However, Erdemir added that this approach is becoming increasingly marginal among U.S. observers.

On the other hand, the second line of thought sees Turkey as part of the problem alongside the threats posed by Russia and Iran. This has become the bipartisan consensus on the matter in the U.S. Congress, he said.

Turkey’s support for Hamas and Erdoğan's hosting of two senior Hamas leaders designated by the United States takes matters to another level, Erdemir said.

Another example Turkey's problematic status is Ankara’s vocal opposition to U.S. President Donald Trump's legacy project, the Abraham Accords, which aims to achieve normalisation between the Arab states and Israel.

Turkey is now perceived as one of the main threats in the region, taking into account Ankara’s conflicts with the Arab League, seven Mediterranean members of the EU and the Eastern Mediterranean Gas Forum, he said.

Turkish government's relations with the United States has three different levels now, according to the analyst.

"At the interpersonal level of the relationship between Trump and Erdoğan, we see a relatively stable rapport, which often ends up helping Erdoğan through Trump’s shielding him from any sanctions or serious pushback," he said.

On the Congressional level, there is a bipartisan position, which increasingly sees Turkey in black and white terms, looking for opportunities to punish Erdoğan.

Washington earlier this month decided to lift the U.S. embargo on non-lethal defence articles against Cyprus amid escalating tensions between Turkey, Greece and Cyprus. The timing of the U.S. decision to end a 33-year embargo was seen by several Turkey observers as having a substantial diplomatic value at a time of fever-pitch tensions in the eastern Mediterranean.

"Finally, there is a third level, what we can call a fine-tuning relationship between institutions. This level actually offers us windows into understanding the tectonic shifts in Washington’s attitudes toward Ankara," Erdemir said.

The United States is making contingency plans in case the Incirlik base in Turkey will not be accessible anymore, he said. "We are seeing this gradual and slow change at the Pentagon and State Department levels."

These institutional moves are more subtle than either Trump's remarks or Congressional actions, he said.

"However, deep down, Erdoğan's policies took a major toll on U.S.- Turkish relations. We should remember that it takes a long time to change the course of bilateral relations, but once on that route of course correction, it is hard to return from that trajectory, just as the manoeuvres of a tanker ship."

To shield itself from tensions with the United States, Erdoğan has placed all of his eggs in Trump’s basket, so the upcoming U.S. elections have gained an existential dimension for him.

"And recently Erdogan’s officials have been attacking Democratic nominee Joe Biden with ad hominem attacks. It does not seem like a wise strategy considering the chances of Biden taking the oath in January," he said.

Turkey goes after short term tactical manoeuvres without any grand strategy, the analyst said.

"Erdogan is rolling dice in a chess game without thinking about the next set of moves. We have seen it during the downing Russian jet in 2015, in Syria policy, in the eastern Mediterranean or the weaponization of refugees against Greece and the European Union," he said.

But, Erdoğan thinks he has the flexibility to make U-turns when his policies fail since he controls the vast majority of Turkey's media and he is confident that he will get away with it.

Erdoğan, who is increasingly drifting out of the transatlantic alliance, is cutting Turkey off from the West while Turkey is still a member of numerous Western organisations including NATO and OECD.

But, Erdemir said Ankara's nominal membership is quite different from "bona fide membership" when you have a real sense of belonging and when your peers have accept and treat you as one.

"Turkey's sense of belonging is eroding and so its peers' sense of acceptance of Turkey. Turkey began calling this state of affairs 'precious loneliness'," he said.