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    World

    Turkish president Erdogan takes diplomatic turn to mend relations with West and address economic crisis

    Turkish president Erdogan takes diplomatic turn to mend relations with West and address economic crisis

    In a significant political pivot, President Recep Tayyip Erdogan of Turkey has taken steps to warm relations with Western countries. This move comes as he seeks solutions to the country's long-standing and worsening economic crisis, BBC reports.

    Recep Tayyip Erdogan, left, shakes hands with Ulf Kristersson in Vilnius, Lithuania
    Source: Bloomberg

    Erdogan surprised NATO allies by dropping his objection to Sweden's request to join the military alliance, marking a sudden change in his stance towards Stockholm. The shift in policy underscores his determination to mend diplomatic ties with the West and reassure foreign investors who have retreated from Turkey due to its economic challenges.

    Erdogan's change of heart has resulted in commitments from Sweden, the United States, NATO, and the European Union in exchange for his reversal. Consequently, Turkey is now poised to receive a long-awaited delivery of F-16 fighter jets from the US. Erdogan has also expressed optimism about Brussels' positive response to reviving Turkey's long-stalled bid to join the EU and advancing visa liberalization. The swift shift in Erdogan's approach indicates his willingness to adopt a more constructive stance with the US and European allies who have expressed concerns over democratic backsliding in Turkey.

    The Turkish leader (L) met US President Joe Biden separately at the Nato summit in Vilnius, Lithuania
    Source: NYT

    During the NATO summit, Erdogan engaged in numerous photo opportunities with leaders such as France's Emmanuel Macron, UK Prime Minister Rishi Sunak, and German Chancellor Olaf Scholz. US President Joe Biden emphasized his bilateral meeting with Erdogan, signaling a shift from previous efforts to keep the Turkish president at arm's length. Political analyst Batu Coskun suggests that Erdogan's post-election confidence, coupled with his desire to foster relations with both Russia and the West, has fueled this shift in strategy.

    While Erdogan gains confidence abroad, there is a sense of urgency domestically to revive Turkey's struggling economy. The economy was a key issue in Erdogan's hard-fought election victory in May. However, local small businesses continue to face challenges. Inflation remains high, hovering just under 40%, and the Turkish lira has reached record lows against the USD.

    High inflation versus low interest rates in Turkey
    Source: BBC

    While central banks worldwide have raised interest rates to combat rising prices, Erdogan has resisted this approach, arguing that higher rates would further increase prices. This stance has put pressure on the Turkish central bank to keep borrowing costs low.

    To address the economic burdens faced by businesses like Morkoc's bakery, Turkish Finance Minister Mehmet Simsek, a Wall Street veteran, has pledged to restore a "rational economic policy." Under Simsek's guidance, the central bank recently raised interest rates for the first time in 27 months. However, there are doubts about whether the politicians fully comprehend the urgency of the situation for businesses on the ground.

    Erdogan's focus, as he returns from the NATO summit, remains on his promise to restore economic prosperity and bring inflation down to single digits. Nevertheless, economists caution that repairing Turkey's struggling $900bn economy will require time, patience, and prioritizing key issues. Turkey also needs to regain the confidence of foreign investors, as its current account deficit has reached a record level of $37.7bn in the first five months of this year.

    President Erdogan continuously argued against raising interest rates as a means of tackling high inflation
    Source: BBC

    Erdogan's efforts to bridge the gap extend beyond the West. He has planned visits to Saudi Arabia, Qatar, and the United Arab Emirates. While Erdogan aims to reestablish ties with the West, he is also mindful of maintaining a relationship with Russia. The delicate balance includes hosting Russian President Vladimir Putin in August and seeking Russian assistance to extend a Black Sea grain export deal with Ukraine that is set to expire soon.

    For Erdogan, the challenge lies in maintaining a balancing act, as the relationship with Russia cannot be easily replaced by purportedly improving relations with the West.

     

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    17.07.2023, 01:57   Comments (0)   954
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