NEO-OTTOMAN AMBITIONS
Concern over the risk of Turkey leaving
NATO is growing, after the country
purchased Russian S-400 anti-aircraft
missiles, which are not inter-operable with
2018 will mark a century since the
NATO’s air-defense system. Sanctions could
Ottoman Empire lost control of the areas
now known as Syria and Iraq - and Turkey is
pursuing an increasingly nationalistic and
be imposed by the US: Russian arms
companies involved in the deal have
assertive foreign policy that's being recently been blacklisted by the State
called ‘Neo-Ottomanism’. Department, over Russia's alleged 2016
election meddling.
GRI analyst Ben Abbs believes that political
instability, foreign interference and the
Kurdish independence movement in Syria and
Iraq present challenges and opportunities that
are likely to drive Turkey to weaponize water
to extend its political influence. Discover where
that ambition might lead on the GRI site.
US aid to Syrian Kurdish militias which
Turkey considers to be affiliates of the PKK
terrorist group, and Washington’s refusal to
extradite Fethullah Gülen (who Erdogan
believes is behind the 2016 failed coup) are
sticking-points that are unlikely to change in
2018.
Despite these issues, and tensions with the EU over the detention of European human rights activists in
Turkey, a complete breakdown of Turkey’s relations with Western allies is unlikely. This would compromise
vitally important policies and strategic interests on both sides. These include the EU-Turkey migrant deal,
the presence of the US-led coalition forces at Incirlik air base, and the fight against terrorism in the Middle
East.
Economic outlook
Since the coup attempt in July 2016 and the proclamation of martial law, the business environment has
been unpredictable: the government has seized more than 800 companies worth 40.3 billion lira ($11.32
billion). Turkey’s economy has held up relatively well, mainly thanks to the country’s diversified private
business sector, its robust public finances, and its well-regulated banking sector.
However, it is still threatened by rising inflation and high interest rates. In November 2017, the Turkish
Central Bank announced it would start auctioning foreign exchange hedging instruments that would allow
companies with foreign currency liabilities to protect themselves against any drops in the lira. The Central
Bank is likely to maintain a restrictive monetary policy to address the acceleration of inflation and to
prevent another decline of the lira’s value.
A weaker lira would make Turkish goods and services relatively cheaper, which might boost the country’s
exports of goods and services. Moreover, the lifting in 2017 of Russian sanctions that had been imposed
on Turkey after the fighter jet incident, will boost the tourism industry.
Read the full story on the GRI site
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