Jun 13 2019

Turkish lira drops as Erdoğan says S-400 purchase already completed

Turkey’s lira fell against the dollar after President Recep Tayyip Erdoğan said the country’s purchase of S-400 missiles from Russia was complete and the subject closed.

The lira dropped to as low as 5.85 per dollar in Istanbul and was down 0.2 percent at 5.82 against the U.S. currency at 11:25 a.m. local time.

“I am not saying we will purchase the S-400 defence systems, I am saying we already have purchased the S-400 systems,” Erdoğan told members of his party in a speech late on Wednesday. "Deliveries will be made next month."

Erdoğan was responding to a letter sent by U.S. Acting Defence Secretary Patrick Shanahan last week, which laid out the repercussions Turkey would face should it go through with the S-400 deal. U.S. and NATO officials say the air defence system presents a security risk to the NATO alliance. Turkey faces exclusion from the U.S. F-35 fighter jet programme and economic sanctions as a result.

Earlier this week, Turkish Interior Minister Süleyman Soylu labelled the purchase of the S-400s a declaration of Turkey’s freedom and independence during a rally in Istanbul. Soylu has been meeting governing party officials in the city on a daily basis during a campaign for mayoral elections on June 23. The polls are being rerun after the election board upheld government objections to an opposition win in a first vote on March 31.

Erdoğan said a series of foreign policy disputes with Turkey’s Western allies had been concocted to remove his ruling Justice and Development Party (AKP) from power. The United States has turned down a Turkish proposal to set up a committee to negotiate the usage of the S-400s within NATO defence systems.

“That’s what they want, but they won’t get rid of us. They don’t have the power,” Erdoğan said. “We know all about the kind of tricks they use to create political instability, and we will never fall into the trap.”

Several ongoing disputes with Turkey’s Western allies have hurt the nation’s economy and piled political pressure on Erdoğan. They have included tensions over U.S. support for Kurdish fighters in Syria and a Turkish invasion of the Syrian region of Afrin early last year.

U.S. sanctions imposed over the detention of a U.S. pastor drove the lira to a record low of 7.2 against the dollar last August. The lira lost 28 percent of its value last year and is down almost 10 percent in 2019.

Turkey is buying the S-400s after the United States offered Patriot missiles as an alternative but declined to meet a Turkish demand to share the technology.

Erdoğan is seeking to make Turkey a regional and global power under his enhanced presidency. He has allied with Russia and Iran in peacekeeping initiatives for Syria, nurtured relations with the Muslim Brotherhood and sided with Hamas against Israel.