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06/13/2023

Orthodox economics – muscular diplomacy

Orthodox economics – muscular diplomacy

By Yiğit Saner, reporting from Rome / Italy

After the May 28 elections, Western commentators are debating which direction the Turkish economy and foreign policy will take. Clues to Türkiye’s possible moves are being sought in two new ministers: Şimşek and Fidan.

In order to be able to continue its hyperactive foreign policies, which we discussed before the May 15 elections on United World International, Ankara will either adopt orthodox economic policies seeking an economic recovery in harmony with the West or it will exploit the new climate of multipolarity “navigating where the sun rises and not where it sets.”

Furthermore, as regards the future of foreign trade with countries such as Italy and Germany, the moves of the new government on the economy are anxiously awaited.

Journalist Marco Ansaldo speaks on purpose: “I believe that he (Erdoğan) will change gear, he won’t be able to make a total reversal, but he will certainly have to adapt his economic policy to more traditional canons. The Turkish economy will benefit from this, investments will restart. Türkiye is a country that has a strong trade with the whole world, with China and Russia in particular, but also with the United States and with Europe, especially with Italy, because Italy is the fifth country for trade, the second in Europe behind only Germany. So it is important that Türkiye has an adequate economy. I am sure that Erdoğan, who is anything but stupid, will intervene in a concrete way.” 

A “very well regarded” minister

The latest decisions and appointments of the Turkish president are making Western analysts hope that Türkiye could return to the more classic economic policies or to a system that does not create many problems for economic globalization.

According to this view, the Turkish economy, which aims to keep interest rates low in order to preserve economic growth in any way, even at the cost of greatly increasing prices, is becoming unsustainable: “Erdoğan’s approach is against raising interest rates. The Turkish leader wants to propose an economic model that contradicts capitalism, or rather lower rates to increase exports. However, this approach is creating strong economic distortions with the core inflation rate”

and for this reason Erdoğan, being “a pragmatic politician” has appointed Mehmet Şimşek as the Minister of Economy, “a very authoritative economist” and “judged as ‘very well regarded’ by the United States”: “And the Minister of the Economy can also be changed immediately. Just to reassure the markets or, perhaps, we add, more maliciously, to adapt to the ‘suggestions’ of Wall Street and the City. Şimşek is a personality who enjoys great prestige in international financial organizations, such as the Monetary Fund or other Central Banks. Formidable support for Erdoğan.”

The common concern of Western economists is whether Mehmet Şimşek can freely implement his policies without being influenced: “Of course, the question is how free he will be from other influences.”

Does Erdoğan’s move mean a return to orthodox economic policies or is it a step to buy time to attract international capital to the country? Here is the most frequently asked question in this context: “The real question concerns how much leeway the new Economy Minister will have, that is, whether he will actually make a concrete turnaround in economic policies or whether his appointment is only formal and aimed at reassuring financial investors.”

Western analysts argue that Erdoğan must do at least three things to regain the confidence of the markets: adopt an economic policy that calms the markets; leave the Central Bank free; improve the rule of law and human rights. Otherwise the journalist Mariano Giustino of Radio Radicale warns: “the markets will not calm down and investors will not invest in Türkiye. Without this, Erdoğan is increasingly forced to resort to cash arriving from Russia, the Gulf countries and other ones. Closer relations with Moscow, which is under Western sanctions, also carries a greater risk for Türkiye of itself being subjected to sanctions from Washington, for example, but also from the European Union. This is not only a domestic but an international risk.”

For these reasons, Erdoğan, according to widespread opinion, brings back to the Economy a Minister appreciated by Biden and Europe, but journalist Piero Orteca notices: “He will continue to implement his ‘two ovens’ policy between Washington and Moscow, and beyond. Examples come from the Persian Gulf, where Ankara carries out realpolitik without hesitation. He has mended relations with Saudi Arabia and also those with the Emirates.”

Alternatives

There are therefore those who question the fact that if Türkiye really needs the Western Bloc to improve its economy and to be able to carry on its foreign policy: “Indeed, Erdoğan seems to want to continue consolidating Türkiye’s role as a regional power. To put Türkiye at the center of the international scene, Erdoğan does not seem to need Europe. This is demonstrated by the increasingly close economic relations with Russia, which continues to ensure gas supplies to Ankara by deferring ‘payment of the bill’ and which supports the transition à la Turca towards a green economy through the construction of nuclear plants. China is also increasingly establishing itself as a partner in Turkish import/export and in support of the public debt through skilfully negotiated credit lines that triangulate with the trade agreements concluded with the powerful UAE and Qatari monarchies.”

Thus, writes the Faro di Roma: “Now Erdoğan has to find the money. Western Cassanders predict he will fail by going into debt and plunging the Turkish economy into a deep recession. Apart from the fact that at the moment Germany is in recession and other European countries will soon follow, Erdoğan will be able to exploit the new climate of multipolarity that is being created to break the suffocating yoke of the United States. Thanks to the policy of reconciliation between Arab countries promoted by China, Türkiye will be able to access loans from oil-rich Arab countries and attract investment funds from them. The huge profits Türkiye is making by selling Russian oil and gas to Europe (a business hidden from its public view by European governments) will help improve the economy in the short term.”

Perhaps little is said about it, however in Africa, Türkiye has increasingly effective and strong penetration at a diplomatic, commercial and even religious level where “the Turkish president is particularly appreciated” says Carlo Marsili, the former Italian ambassador to Türkiye. The economic benefit of investments in the continent for Türkiye is increasing year by year: “Ankara is proceeding on the African continent with small but constant steps. Military cooperation, training of leading cadres and soap operas are the spearheads of its offer to African countries. Among these stand out Libya, Niger, Sudan, Ethiopia and Somalia. Weak states, on the verge of bankruptcy, to which Türkiye extends a hand to allow them to get back on their feet. As he advances with his diplomatic strategy, he does excellent business. The volume of annual trade between Türkiye and Africa has increased from 5 billion euros in 2003 to 32 in 2021.”

A balance that works for everyone

Türkiye has been normalizing relations with Iran, Saudi Arabia, Egypt and Israel for some time; Gulf countries show willingness to improve cooperation with Ankara; Arab League wins back Bashar al-Assad; Ankara plans to send 1 million Syrian refugees home by building houses in northern Syria with funding to be provided by Qatar and, most importantly, as the effects of the Ukraine-Russia war continue to mount, the Turkish Foreign Ministry maintains a balance policy between NATO and Russia. According to Giuseppe Dentice, Head of CeSI’s Mena Desk, if Erdoğan had lost the elections, the maintenance of the current situation, which is of great importance for the countries of the region, would have been endangered: “Erdoğan’s victory is useful in the current regional context, which is very susceptible to alteration and a profound change in power in Türkiye could have triggered uncontrollable transformations. Erdoğan’s victory to date, and in the short term, is in some respects comfortable for the balance on the field, in continuity with the regional trend and fundamentally functional to the system.”

In this regard, the journalist Mariano Giustino reminds us “that what saved the Central Bank before the elections was the opening of swap lines with Qatar, the United Arab Emirates, South Korea, it was the deposits of Saudi Arabia from ‘Azerbaijan, from Libya, which amount to 36 billion dollars.”

For this very reason, it should come as no surprise that the countries of the region supported Erdoğan during the election period and will support him in the coming period: “from the Gulf to Egypt, up to Israel, where all the discussions on the normalization of relations are still in the pipeline, and without a real subject who could guide this progress, which essentially affects many of the regional dossiers, there was the risk of problems in carrying forward certain situations. There is a question of political pragmatism that leads the region to hope for the conservation of balances, and Erdoğan is a piece of this conservation of balances.”

Erdoğan’s hand on the international scene is strengthened by the fact that Ankara has made itself indispensable both for the countries of the region and for the United States with the role of bridge it has assumed in the Russia-Ukraine war. So much so that, according to journalist and academic Francesca Salvatori, the importance of the balance established through Erdoğan is evident from the small but significant race that Putin and Biden undertook immediately after the elections: “Both Putin and Biden gave their congratulations the day after the re-election: indeed, the two even competed for the primacy of greeting messages, snatched away by Putin for a few minutes. This represents a very important fact: that both of these two ‘worlds’ have given forfait, implicitly declaring that they need the Bosphorus to protect international balances.”

Pending files

Diplomatic sources claim that Erdoğan will not back down in framing certain relations in the context of friendly and tense relations that will remain so: “The role that Türkiye plays in Ukraine will also continue to regulate relations with the European Union and the United States. Both Brussels and Washington will need Erdoğan’s mediation on the Ukrainian dossier, but they will have to balance this need with the defense of their interests in the Mediterranean. Ankara has an open dispute with Greece regarding the sovereignty of some islands, the question of Cyprus – an island divided in two since 1974 – and that linked to the exploitation of energy resources in the Mediterranean are still on the table and Türkiye will not set aside its own national interests. Not to mention the migration issue, used as a weapon of blackmail against the EU and which will soon be discussed again. A similar discourse also applies to Libya, where Ankara is present in support of the Tripoli government with the ultimate goal of positioning itself in a strategic country in terms of trade and migration routes, as well as a useful starting point for expanding its penetration into Africa. In fact, Türkiye is investing more and more in strengthening relations with African countries, first of all exploiting the export of war material and in particular of drones.”

As for the United States, aside from the issue of the Ukraine-Russia war, Reuters reported that on May 29, before leaving the White House, Biden told reporters: “I spoke to Erdoğan. I congratulated Erdoğan. He still wants to work on something on the F-16s. I told him we wanted a deal with Sweden, so let’s get that done. And so we’ll be back in touch with one another.” 

Seeing Sweden join NATO by next July, the month in which the transatlantic alliance is expected to organize a summit of leaders in Lithuania, is among Washington’s top priorities. Jens Stoltenberg, who announced that talks would start soon. The trilateral of Sweden, Finland and Türkiye will therefore meet before the middle of the month as agreed between the number one of NATO and the Turkish President Erdoğan: “The decision was taken jointly by Stoltenberg and Erdoğan at the end of the meeting between the two in Ankara. In fact, during the conversation with the Turkish president, the NATO secretary invited Ankara to withdraw its opposition to Sweden’s application for membership of the Alliance, underlining how the country has responded positively to Türkiye’s security concerns.”

Many analysts argue that Türkiye’s decision will be decisive for future relations between Ankara and Washington: “The developments of relations with the United States also depend on Türkiye’s decision, where Congress has frozen the delivery of F16 warplanes to Ankara.”

A “muscular diplomacy”

And in this boiling context, the name of Hakan Fidan, former head of the MİT national intellegence service, fits in as the new Minister of Foreign Affairs: “The appointment of the head of intelligence, Hakan Fidan, at the helm of the Turkish Farnesina is no surprise, he is in fact the architect of the new intelligence (MİT), a protégé of the president who 13 years ago, in 2010, had entrusted him with the task of reorganizing it. Fidan, which the president describes as ‘my secret cube’, rewarded him for transforming MİT into an institution that has played and plays an active role in all regional processes, from Libya to Syria, from Ukraine to the Caucasus.”

The appointment of a “strong profile” like Fidan would suggest a “muscular diplomacy” and an even more hyperactive foreign policy in view of the new events in the region: “Fidan’s work at the Turkish Farnesina must be followed with extreme attention by the international community, especially from the Western Bloc. He represents continuity in foreign policy and a strengthening of its ‘strategic autonomy’ in the various dossiers. […] Fidan, on the other hand, has shown little presence in relations with Europe, this indicates what the priorities of his mandate will be: to continue to support a policy of ‘balance’ between Moscow and Kyiv in the Ukrainian scenario, reconciliation with Syria, Egypt and other Arab countries, assertive politics in the Mediterranean and in the Caucasus. All dossiers that the former head of the secret services has been managing for some time.”

Fidan’s role, therefore, will also be very relevant for how he will start his mandate and for what moves he will choose to make in the very short term. The new Foreign Minister must continue to keep under diplomatic control a vast area in which Ankara operates: Africa, the Eastern Mediterranean, the Middle East, the Caucasus and above all Russia. Among the many dossiers to deal with, the most urgent one seems to be Sweden’s accession to NATO. In these, Fidan reiterated: “Sweden must adopt concrete initiatives to be able to join NATO” during a telephone conversation with his Swedish counterpart Tobias Billstrom.

“The century of Türkiye”

Ankara finds itself at the center of an extremely complex international network and in this context it strives to bring its interests to the fore. However, every step it takes and will take is closely followed. While Erdoğan makes himself indispensable on geopolitical scenarios, his affirmation that “the century of Türkiye begins” seems to be shared not only by his supporters as can be read in Marco Ansaldo’s words:

“Erdoğan appeals to the empire. We could even define it as an imperial republic. Erdoğan’s foreign policy in recent years has demonstrated this very clearly. Voters also rewarded him for this. The Turks feel heirs to a great imperial past, they are proud people, the empire is in their DNA. Today Türkiye is no longer a secondary country, it is a primary country, it is a fundamental player, it has surpassed many Western and European countries, including Italy, in concrete foreign policy issues, such as the Libyan chessboard. And it will continue to behave in this way precisely because its geopolitical position allows it, even at sea. The theory of the blue homeland is an example for us, it is not only true in the territory of Türkiye, but in all the waters around it. And Türkiye is playing its game very well, let’s just think of the Black Sea, of the release of Ukrainian wheat which has arrived thanks to the agreements that were signed in Istanbul last year. We are dealing with a very different Türkiye, much stronger, very aggressive, very very protagonist.”

United World International

Independent analytical center where political scientists and experts in international relations from various countries exchange their opinions and views.

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