Although Treasury’s recent heavy borrowing actions do not get the attention they should amidst the pre-election stress, public sector borrowing visible appears to rise higher while interest rates are pushing up to 20%.
The visible fact I mentioned above might be the result of the decision issued by the United States House of Representatives to the detriment of Turkey, which is bringing negative impact on exchange rates as well as interest rates. But the real reason lying behind the instability is Turkey’s economic fragility notably regarding current account deficit and external debt. Any other development outside this one should be deemed secondary reasons. The most interesting thing, however, is that it might not be possible to rehabilitate market mechanisms through economic actions only. Therefore, Government must take significant steps to improve the worldwide and global perception right before the elections.
On the other hand, it is obvious that tensions in US-Turkey relations will further escalate and Turkey will not be able to get F-35 jets unless the Government gives up S-400 deal. Altınbaş University President Prof. Dr. Çağrı Erhan, who is an expert on the Political Institutions of the United States, has informed me that a military sale of major defence equipment valued $50 million or more must be formally approved by the Congress before the Administration can take the final steps to conclude the deal. So, I can guess that only a conditionally approved F-35 delivery to Ankara may escalate the conflict further between the two countries.
“S-400 or F-35 ?…”
By the way, giving up the S-400 deal, for which Turkey has made a pre-payment, will negatively affect Turkey-Russia ties. I think it is quite interesting that Turkey has never thought before purchasing such advanced missile defence system. Most likely Turkey and Russia did try to hold the S-400 deal over NATO and the U.S. as a political trump card. At this stage, however, it seems like only Russia has been able to achieve its goals so far, further endangering the Turkey-U.S. strategic partnership, which is on the brink of collapse since 15 July, 2016.
Concerns about further US sanctions or similar actions against Turkey have become increasingly present, especially after the United States House of Representatives decision. Some international news channels have already begun making the following news: “Both domestic and foreign investors to withdraw their money from Turkish market”. I, personally, think that ulterior motives may be involved even if the news were only true to some degree. That’s why I’m looking forward to Election Day.
Sadly, however, our problems will not be gone even after the elections since we have plenty of foreign policy issues waiting to be solved.
