WASHINGTON DC – This is not the first time the US has threatened Turkey with serious economic consequences, and while not always able to scare Ankara, Washington has several levers that could ruin the Turkish economy.
Recently, US President Donald Trump has threatened to “completely destroy” Turkey’s economy if it does something that the US does not like in northern Syria.
The president reiterated that Ankara, along with other European countries, must control the combatants of ISIS and their families, adding that the US has done much more than anyone expected.
According to journalists at the Vesti Finance portal, the tools that could be used to hurt the Turkish economic sector are the lira (Turkish currency), public debt, sanctions, the steel market and military spending.
Foreign exchange market
The US may launch a media campaign against Turkey to get speculators to get rid of the Turkish lira, thus contributing to the collapse of its exchange rate against the dollar.
This tool can seriously influence the Turkish economy because today Ankara is an oil importer and needs dollars to buy it. The cheaper the lira, the more money Ankara will have to spend to buy crude oil and, consequently, the more its financial situation will deteriorate.
“The Turkish currency market is not that big. The US will not have much trouble bringing it down if the Turkish Central Bank does not take extraordinary measures,” write the authors of the article.
Speculators are capable of easily causing fluctuations in the securities market of any country when the world is going through a period of financial instability. These fluctuations can cause serious economic problems for a country with large public debt. The more bond yields grow, the more debt repayment costs increase.
“If the problem is coupled with a weakened currency, the situation could become a real nightmare for the Turkish authorities,” Russian journalists say.
The US can also use its new favorite weapon, sanctions, to deal a severe blow to Turkey’s economy. Washington has repeatedly used this method to subdue other countries.
US Senator Lindsey Graham has already threatened Ankara with sanctions, emphasizing that any Turkish incursions into northern Syria will be a nightmare for the region and for US national security interests.
Turkey is currently the largest exporter of steel to the European Union. The US can theoretically ban European bloc countries from doing business with Ankara in this sector.
If that happens, European companies may fear being affected by US sanctions and start looking for alternatives to Turkish steel.
After the telephone conversation between the Turkish and US presidents, the US virtually gave the green light for the Turkish operation in northeastern Syria and turned its back on the Syrian Democratic Forces (SDF), which had previously enjoyed US support. The step taken by Washington has shown that the country is not a reliable partner, although Trump has repeatedly changed its decisions.
“If the US decides to re-support the Kurdish militias, Ankara risks being bogged down in the Syrian conflict, which implies the need to spend huge financial resources. As a result, these measures will accelerate the growth of the Ottoman country’s budget deficit,” journalists conclude.
In early October, Erdogan reported that the US military is leaving the northern territories of Syria, where Turkey plans to launch a military operation against Kurdish forces that the Turks consider terrorists. The US declared that it would not participate in this operation and withdrew its troops from the region.