China’s $3.6 bn Bailout Insulates Turkey from US
Despite the US threat to “obliterate and destroy” Turkey’s economy, the Turkish lira and Turkish interest rates barely have budged in the past week (Turkish stocks, especially banks, are down sharply, in part due to the US criminal charges against Halkbank for aiding Iran sanctions violations). That is remarkable given the fragility of Turkey’s currency earlier in 2019. Between February and May, the Turkish lira fell from 5.2 to the US dollar to 6.2 in response to US sanctions, before recovering to 5.88 to the dollar today. The Turkish central bank leaned on Turkish banks to refrain from offering liquidity to short-sellers, but Turkish money markets remained orderly.
What changed is China. Turkish President Erdogan’s insolence in the face of American threats brings to mind B’rer Rabbit’s imprecation to B’rer Fox: “Please don’t throw me in the briar patch.” The relevant foliage in this case is bamboo.
Bloomberg News reported Aug. 9, “China’s central bank transferred $1 billion worth of funds to Turkey in June, Beijing’s biggest support package ever for President Recep Tayyip Erdogan delivered at a critical time in an election month. The inflow marks the first time Turkey received such a substantial amount under the lira-yuan swap agreement with Beijing that dates back to 2012, according to a person with direct knowledge of the matter who asked not to be named because the information isn’t public.”
China’s direct investment in Turkey also has surged this year, as Nikkei reported Aug. 22:
China is coming to Turkey’s aid during its economic crisis with $3.6 billion in funding for infrastructure projects, leveraging Ankara’s conflict with Washington to expand its Belt and Road Initiative in the key country that links Asia with Europe.
Turkish President Recep Tayyip Erdogan said Aug. 11 that his country was preparing to trade through national currencies with partners like China, bypassing the US dollar. The US placed additional tariffs on Turkey the next day as a feud simmered over the imprisonment of a US pastor accused of being involved in the 2016 coup attempt against the Turkish leader.
The lira then hit about 7 per dollar, a drop of more than 40% since the beginning of the year. Spurned by one of the world’s economic giants, Erdogan naturally turned to another, China, for much-needed financial backup.
American policymakers should have their eyes checked for cataracts; they appear unable to keep the whole of the world map in view. This was eminently predictable. In August 2018 I warned in Asia Times that “China will buy Turkey on the cheap.”
China has had its issues with Turkey’s volatile and ambitious leader, to be sure. Turkey in the past styled itself the protector of China’s Uyghur minority, some 15 million Muslims who speak a dialect of Turkish and live mainly in China’s Xinjiang Province. China reportedly has incarcerated between 1 and 2 million Uyghurs in “re-education camps” where they are forced to learn Chinese culture to the detriment of their Islamic identity. Erdogan in the past had accused China of “genocide” against the Uyghurs. After the Chinese bailout, however, Erdogan declared that the Uyghurs are “living happily” in China.
Turkey has changed from Ataturk to Rent-A-Turk. China likes to keep its friends close and its enemies closer. China built the Great Wall to repel Turkic invasions, among others, and warred with nomadic peoples on its borders for centuries. Now Beijing believes that its $2 trillion Belt and Road Initiative will assimilate the Turkic peoples of Central Asia into its sphere of economic influence. The Turkic countries seem eager to sign up.
The Azerbaijan news site Trend reported Oct. 15:
The Cooperation Council of Turkic Speaking States (CCTS-Turkic Council) will strengthen in the coming period and will become an important center of power in the world, Professor Naciye Selin Senocak, the head of the cultural diplomacy department at the Institute for European Studies in Brussels and head of the center for Diplomatic and Strategic Studies (CEDS) in Paris, told Trend.
Senocak said that the 7th CCTS Summit in Baku is a significant event and undoubtedly will go down in history. The Turkish professor noted that the Turkic World covers a vast territory, from the Adriatic Sea to China, where about 300 million Turks live. Senocak said that the decision made by Uzbekistan to join the CCTS, as well as opening a representative office of the Council in the center of Europe-Hungary, indicate the importance and the growing role of this structure.
“In the new world order, where the control axis is shifting to Asia, CCTS will play an important role,” the Turkish professor noted. The representative of the Institute for European Studies added that CCTS will continue to develop and strengthen economically, politically and socially with the help of the One Belt One Road initiative, which will include other Eurasian countries.
Erdogan’s long-term problem is that there aren’t enough Turks in Turkey. Turkey’s Kurdish citizens continue to have three or four children while ethnic Turks have fewer than two. By the early 2040s, most of Turkey’s young people will come from Kurdish-speaking homes. The Kurdish-majority Southeast threatens to break away.
In 2016, I reviewed Turkey’s 2015 census data in Asia Times. It shows that the demographic scissors between Kurds and Turks continue to widen. Despite Erdogan’s exhortations on behalf of Turkish fertility, the baby bust in Turkish-majority provinces continues while Kurds sustain one of the world’s highest birth rates. Even worse, the marriage rate outside of the Kurdish Southeast of the country has collapsed, portending even lower fertility in the future.
According to Turkstat, the official statistics agencies, the Turkish provinces with the lowest fertility rates all cluster in the north and northwest of the country, where women on average have only 1.5 children. The southeastern provinces show fertility rates ranging between 3.2 and 4.2 children per female.
Even more alarming are Turkey’s marriage statistics as reported by Turkstat. Between 2001 and 2015, the number of marriages in Istanbul, the country’s largest city, fell by more than 30%, and by more than 40% in the capital Ankara. Most of the northern and northwestern provinces report a decline of more than half in the number of marriages. Not only are Turkish women refusing to have children; they are refusing to get married. The plunge in the marriage rate among ethnic Turks makes a further sharp decline in fertility inevitable.
Erdogan fears the Kurdish role in Turkey’s Northeast as a magnet for Turkey’s own restive Kurds, and wants to pre-empt the expansion of Turkish self-rule from its base in neighboring Iraq. That is the object of his ethnic cleansing campaign against Syria’s Kurds. In the long run, Erdogan hopes to lead a coalition of Turkic countries within the greater Chinese sphere of influence.
That doesn’t mean that Erdogan is a strong horse. He’s a draught horse, hitched to a Chinese wagon.
Source: Asia Times