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the 550s. Pakistan, the country nearest to overtaking Turkey, has a 5-year CDS level of around 360. The CDS figures indicate Turkey’s Don Quixotesque President Recep Tayyip Erdogan has managed to plonk himself at an alarming crossroads once more. Past experience suggests he will now prefer to fuel tensions in Turkey’s polarised society, with the Istanbul mayoral election revote ahead on June 23 presenting ample opportunity for distraction. After the re- voting is over, he might then employ another dazzling U-turn, once more becoming a ‘good kid’ for the markets.
So terribly weary. However, Turkish voters have grown so terribly weary of years and years of political tensions being switched on and off again, while there is a certain excitement in the air as regards the prospects of Erdogan’s nemesis Ekrem Imamoglu, the opposition candidate who scored a shock victory in the local elections at the end of March, winning the Istanbul mayorship to the humiliation of the president’s Justice and Development Party (AKP) and Erdogan himself, only to be stripped of the seals of office by electoral watchdog officials who, at the prompting of the AKP, claimed to have discovered substantial irregularities at polling stations and ordered an election rerun. The importance of Turkish foreign policy in determining how the chips will fall for Turkey and Erdogan in the months ahead cannot be underestimated, and some significant changes are afoot. Having cried foul at Washington’s demand that Turkey stop importing Iranian oil as part of the aggressive Trump strategy of attempting to drive Iran's shipments to zero, Ankara this week acted as if the angry rhetoric had never passed its lips as it became clear Turkish ports had indeed been closed to Iran’s crude shipments (whether there is anything afoot on the grey market is another matter, but this official blockade at least looks good for Donald). Then there is the intimacy between Erdogan’s son-in-law and Trump’s son-in-law Jared Kushner, who is expected to announce the Deal of the Century to magically resolve the Palestine question once and for all next month. Might Erdogan, despite plenty of obligatory fist-waving in the direction of Israel, be getting ready to go along with the dodgy Deal? Is he bracing himself to absorb a possible outcry on the Muslim street with a strong hue and cry? Erdogan could certainly do with some big help from the US in settling Turkey’s jittery, brittle markets. The Erdogan administration is, meanwhile, holding talks with the Syrian Kurds via Trump’s Syria envoy James Jeffrey. Another accommodation between Turkey and the US looks possible there. Right now, Erdogan’s only real misbehaviour where Washington is concerned is his insistence—repeated ad infinitum—that he is damn well going ahead with a purchase and deployment of Russia’s S-400 advanced missile defence system, due to arrive in July if not sooner. Then there is his stubbornness in not giving up on loose monetary and fiscal policies, which so rattle the markets. But Trump is not big on Nato, so might find a convenient arrangement with his Turkish counterpart when it comes to the Russian missiles, and, as for the global markets establishment fretting over Erdogan refusing to fall in line with orthodox neoliberal economics, Trump will go his own way, he won’t be at their beck and call telling the Turkey’s strongman to get his house in order. There’s again an excruciating need for a rate hike in Turkey, and there’s a question mark over whether Erdogan can delay it until after June 23, given his ongoing fiscal expansion to achieve a pre-poll stimulus. If he lives up to his word and really starts unpacking the S-400 in Turkey, the market angst won’t be for the faint- hearted. Some critics are speculating that Erdogan will actually use the S- 400 row to evade responsibility for what they believe will be an upcoming economic collapse. The fracas over the detained US pastor, Andrew Brunson, was exploited in just such a devious way during Turkey’s torrid economic summer last year. Rather than look at the relentless economic fundamentals, everyone was glued to developments in the Brunson story.
Although Turkey’s almightier-than-thou president has left the door open for some unidentified foreign plotters to perform their jealous attacks on Turkey’s economic glory via the CDS market, the fate and control of the lira are supposedly subject to finance minister Albayrak’s “iron fist”. The
56 TURKEY Country Report June 2019 www.intellinews.com