Turkey’s lira is undergoing an orchestrated crash.
The country’s currency is being subjected to a coordinated attack from abroad most visibly triggered by Trump’s steel and aluminum sanctions but also being due to systemic factors stemming from the government’s freewheeling economic policies over the years. The focus of this analysis is more about the political implications of this crisis than its technical origins, but those who are interested in the latter should reference Moon of Alabama’s article about “How Turkey’s Currency Crisis Came To Pass”, which does a spectacular job summarizing the complex confluence of factors that facilitated the US’ asymmetrical destabilization of its nominal NATO “ally”.
The lira was already in trouble even before Trump’s latest sanctions, but these restrictions sent it tumbling even further because of the fears that they provoked of an impending economic collapse and the resultant speculation associated with that scenario, which had the inherent effect of dooming confidence in this currency. Moreover, it’s obvious that the US has ulterior motives because it had only recently politicized the arrest of the so-called “pastor” who was detained nearly two years ago on charges of being an American spy who conspired with the Gulen movement and the PKK against the Turkish government.
Interestingly, former American Ambassador to Ukraine during EuroMaidan and the US’ current top diplomat in neighboring Greece Geoffrey Pyatt presciently predicted back in April that his and his host country’s ties with Turkey would experience what he described as “turbulence” ahead of what was originally supposed to be next year’s presidential elections, so it makes one wonder just how far in advance these sanctions were planned. Furthermore, it can’t be discounted that Turkey successfully offset what was supposed to have been an attempt to sway the vote by unexpectedly holding early elections and thwarting the US’ meddling attempt.
Bureaucracies such as the US’ are stereotypically inflexible and it’s difficult to abruptly adapt to new timelines after something of this nature has already been decided in advance, which might by why the sanctions weren’t hastily imposed right after the early election date was set because it would have revealed Washington’s intentions. Their contemporary significance is still to destabilize Turkey, though with the intention of pressuring President Erdogan to downgrade his close ties with Russia and Iran instead of directly trying to unseat him by “hacking” the elections. The US would prefer to overthrow him, but it’s more difficult to pull off now.
The worsening economic situation in the country, due to a combination of objectively preexisting structural factors and the timed weaponization of sanctions that triggered the lira’s latest slide, will predictably lead to protests that could easily turn violent and therefore produce political problems for Turkey as well, further compounding the challenges that it’s forced to confront. The government is unlikely to “compromise” with the US, however, because there’s no guarantee that doing so will truly result in sanctions relief, seeing as how the tensions between the two predate Pence’s ultimatum last month to release the so-called “pastor”.
It should therefore be expected that the US will only continue intensifying the pressure that it puts on Turkey concurrent with the exacerbation of its existing sanctions measures on neighboring Iran, essentially pairing the two Great Powers together to form a single Mideast battlefield on which the US’ economic warfare is fought. This will naturally bring the two countries together but could also see both of them limiting their international influence, with Turkey pulling back from Africa in parallel with Iran doing the same from the Mashriq, though nevertheless reorienting their engagement efforts towards the Golden Circle of multipolar Great Powers and inadvertently contributing to even more strategic blowback for the US.