Turkey looks to ‘new alliances’ for way out of crisis

Time and again, Turkey’s president Recep Tayyip Erdogan has proved willing to back down in diplomatic disputes when the circumstances required it. As his row with Donald Trump ramped up in recent weeks, wreaking havoc on the Turkish lira, many analysts were convinced that economic necessity would once again force the Turkish president’s pragmatic streak to shine through, Financial Times reported.

But Erdogan’s continued defiance has triggered growing anxiety that this time could be different.

Even after a painful week that saw the currency lose a fifth of its value against the dollar, piling pressure on Turkish companies and banks, Erdogan remained unapologetic. Citing Turkey’s national poet, Nazim Hikmet, he told a meeting of ruling party officials in Trabzon on Sunday that “this country is ours” and vowed that the nation would not “bow down” before any foreign adversary.

Some observers maintain that because Turkey has to attract more than $200bn a year in foreign financing to keep its economy afloat, Erdogan will have no choice but to give in eventually, ceding to Trump’s demand to release a jailed American pastor and announcing a package of measures aimed at reassuring investors.

But the Turkish president could try to turn to Russia, Qatar or China for support, further loosening the already weakened ties between a strategically vital Nato member and the west.

Writing in the New York Times on Friday, Erdogan warned Washington that it had to cease viewing Turkey as a lesser partner or “come to terms with the fact that Turkey has alternatives”.

On Sunday, he said: “Our response to the person who wages a trade war against the whole world, including our country, is to head towards new markets, new co-operation and new alliances.”

Atilla Yesilada, an Istanbul-based consultant at GlobalSource Partners, said Erdogan’s bold language suggested he was exploring other options. “I think he talked to [Russian president Vladimir] Putin, who might have promised some loans. This is my speculation . . . He’s mad but he’s not crazy. So I would assume he has a reasonable expectation of getting some cash from somewhere.”

Tensions between Turkey and the west have escalated in recent years as Erdogan, whose ruling party swept to power in 2002, has faced accusations of increasing authoritarianism. As rows have erupted with EU countries and the US, Turkey has been drawn into closer co-operation with Russia. Ankara’s decision to buy an S-400 air defence system from Moscow has become a key source of anger towards Turkey in Washington.

On Monday, Russian foreign minister Sergei Lavrov will visit the Turkish capital for two days of meetings. Russia’s foreign ministry said the talks would focus on the conflict in Syria and regional instability, but added that they would include discussions on deepening the economic relationship between the two countries.

Turkey has also courted the support of China. Hours after Trump first unleashed the threat of “large sanctions” last month, Berat Albayrak, the finance minister and Erdogan’s son-in-law, announced that the Industrial and Commercial Bank of China would provide a $3.6bn loan package for the energy and transport sector.

Another option is Qatar. Turkey has become an increasingly important ally of the wealthy Gulf nation, where it has a military base and has strengthened economic ties since Saudi Arabia and three other Arab states imposed an embargo last year.

“Turkey is a close and trusted ally,” said Qatar’s government communications office on Sunday. “We have full confidence in the strength of the Turkish economy and our investments in Turkey will continue as normal. We have not received any requests for assistance by the Turkish government at this time.”

A Gulf-based banker said, “Qatar will likely be one of the first countries that Turkey looks to for support”.

But the embargo has burdened the peninsula with its own financial challenges. And siding with Turkey in a dispute with the US could be awkward for Qatar. It hosts the US’s biggest military base in the region and is seeking to win US backing in its dispute with Gulf rivals.

Tim Ash, an analyst at BlueBay Asset Management, was sceptical that Turkey could find the support it needed from non-western countries. “The Turks need tens of billions of dollars,” he said. “If it was an IMF programme, you’d probably be talking about $20bn-$40bn.”

Russia, he said, “has got its own problems” with US sanctions, while China would be wary of upsetting the Americans, and Qatar would not be able to provide enough support on its own.

That view was echoed by Behlul Ozkan, an associate professor of international relations at Istanbul’s Marmara University. “If you end the western alliance, we can’t get the [necessary] amount of capital from China, Russia or the Gulf,” he said.

But some observers fear that, even if Erdogan does back down, the row will have inflicted lasting damage on the west’s relationship with a nation that straddles Europe and the Middle East, is home to a major US air base and is hosting 3.5m Syrian refugees.

“Trump’s rugged diplomacy will push Turkey into the hands of the Russians,” said a senior western diplomat. “Erdogan will look for other allies. There will be geopolitical alliances that we won’t like.”