Relations weakening between Ankara and its Nato allies

The overproduction crisis is taking its toll on the stability of Erdogan’s AKP government, moving it away from unquestioning support for imperialism.

Lalkar writers

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Lalkar writers

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Since 2002 the AKP (Justice and Development party) in Turkey has won every election it has contested. Whatever we as communists may think about President Recep Tayyip Erdogan and the AKP, that electoral success has to be acknowledged and understood.

Whilst President Erdogan and the AKP have instigated wide-ranging anti-worker policies, they have been perceived as successful managers of a growing Turkish economy. This economic growth has meant that plenty of money has gone to winning the acquiescence of large sections of Turkish society, despite wide-ranging attacks on Turkish secular life, the momentous Gezi park insurrection of 2013 and the attempted coup of 2016.

Despite all this, and the destructive involvement in destabilising Syria, Erdogan remains hugely popular in Turkey, though increasingly he is being seen by imperialism as a hindrance.

Erdogan and the AKP have sought to find a bigger role for Turkish diplomacy in the region and globally. The form this takes is encapsulated in the idea of the ‘New Ottoman Empire’, but this project has repeatedly brought the Turkish state into conflict with the interests of one or another imperialist power or stooge.

It is for this reason that some sections of the ruling class in Britain and the US are working tirelessly to undermine the Turkish economy, exacerbate the effects of the general global crisis of overproduction and work towards the removal of Erdogan and the AKP – not so as to usher in a new, socially liberal era in Turkish society, but to undermine Turkey’s ability to act independently of Nato and the European Union, and, crucially, to break up the development of closer relations between Turkey and Russia, China and Iran.

Overproduction crisis hits the Turkish economy

In 2018, US president Donald Trump announced that the US would double tariffs on steel and aluminium imported from Turkey.

This action was supposedly as punishment for the detention of a US pastor by the Turkish authorities, though it suited both the Trump administration’s domestic interests and the cause of undermining the Turkish economy with a view to exercising influence over Erdogan and the AKP.

The announcement caused the Turkish lira to drop 17 percent against the dollar, and an angry Erdogan called for the boycott of US goods, services and iPhones.

That currency crisis last year took about 30 percent off the value of the lira and, coupled with a 20 percent rate of inflation, has brought unexpected economic hardship to a country used to growth (5 percent growth annually in the years before the financial crisis took hold). GDP growth has slowed, ending near 1.6 percent last year, whilst unemployment rose to 12.3 percent – four million workers – by Christmas 2018.

The problem for the AKP and Erdogan is twofold. First, as a result of the general worldwide crisis of overproduction, Turkey is going to struggle to shift the goods it has manufactured and the food it has grown. Second, also because of that crisis, the United States (which is imposing tariffs left, right and centre) is also hitting the global vehicle manufacturing industry, in which Turkey is a major player. In 2018 the US imported $1.1bn worth of Turkish vehicles.

Turkey needs to shift its machinery and vehicles, the country’s two biggest exports, if it is to have a hope of paying off its debts. Huge construction projects in Turkey under the Erdogan and AKP reign have been funded by US dollars, which were effectively devalued by quantitative easing after the financial crisis of 2008.

Advising investors in a fund for emerging markets, the Meredith Foundation’s investment magazine Money attempted to explain the drop in value of that fund and the future of other ‘emerging market’ economies:

“In the wake of the financial crisis, the Federal Reserve laboured to help US businesses by flooding the global economy with dollars, making it easier for American businesses to borrow and invest. US businesses weren’t the only ones to take advantage of the Fed’s largess, however.

“The glut of US dollars also weakened the value of the US dollar relative to many foreign currencies, making it cheaper for developing nations to borrow dollars as well. These debts reached nearly $2.5tn during the first quarter, according to the Bank for International Settlements.

“The problem is, now the US economy is humming along and instead of loosening the supply of US dollars, the Fed is tightening. The dollar is now getting stronger against many foreign currencies, and emerging nations’ dollar-denominated debts are getting harder to pay back.

“In other words, some are concerned Turkey’s troubles are a sign of what’s to come in other markets, which has led to panic selling. That same ETF, Vanguard FTSE Emerging Market, has declined about 6 percent over the past week.

“Less than 1 percent of the assets of US banks are exposed to Turkish sovereign debt. Instead, European banks, particularly in Spain, provided the loans so Turkey could build its infrastructure projects, like a planned canal that would run through the entire country. Spanish banks have about $82bn in loans to Turkey. If Turkey defaults, it could send systemic waves throughout Europe.” (Turkey’s Economy Is In Crisis. Here’s How That Could Affect Your Investments, Money, 16 August 2018)

The deteriorating economic situation in Turkey is likely to bring about some movement in the established political order for the first time in many years. The Berlin-based ‘Social Europe’ thinktank commented before the 2019 Turkish council elections:

“A twin development which has characterised the Turkish economy under AKP rule has been, first, a steady rise in the real minimum wage and, second, a convergence of salaries towards the minimum wage, probably because of a decrease in the education premium.

“Opposition voters in Turkey tend to come from better-educated groups, so they may be right to complain that wages for skilled jobs in the modern sector are looking increasingly like the minimum and incomparably low next to what property speculation can generate.

“Between 2010 and 2017, according to official data, the bottom 40 percent or so of the population, in addition to a small group at the top, saw the highest proportional increases in their incomes. Those on upper-middle incomes also saw an increase, but much less.

“Surveys show that it is precisely this latter group which tends to vote for the secular opposition. In other words, government supporters, even if they are attracted by Erdogan’s charisma or his religious rhetoric, have also seen their economic aspirations relatively well-served during his terms. This has been a significant consideration behind their voting behaviour.”

Local election losses

Local elections held this March involved a registered electorate of 57 million and attracted a turnout of 85 percent. The electorate were turning out to vote for councillors and mayors across the vast territory of Turkey, which has a population of about 80 million, as well as, by the state’s reckoning, an additional four million Syrian refugees.

Though the AKP and Erdogan received the largest share of the vote, the party lost Istanbul and Ankara councils to the Republican party (CHP). When the results were announced at the end of the month, Erdogan and the AKP refused to accept them, launching appeals to the state regulator.

After 17 days, Erdogan, whilst reserving the right of the AKP to pursue its claim, effectively accepted the result. His speech was reported by Hurriyet on 18 April:

“President Recep Tayyip Erdogan has called on the entire nation to come together to resolve national issues and put aside political differences now that elections are over. He has vowed to stand tall against foreign assaults that aim to devastate the Turkish economy.

“‘It’s imperative that we must focus on our real agenda, particularly on economy and security by leaving political discussions over elections behind. It’s time to cool off the branding irons, to shake hands, to embrace and to strengthen our unity and togetherness,’ President Erdogan said.

“Turkey has upheld the requirements of a democracy by holding local elections and should now leave all political debates behind, he suggested in his first statement after main opposition candidate Ekrem İmamoğlu of the Republican People’s Party (CHP) was declared the winner of Istanbul polls.

“‘We have successfully completed a marathon of elections. Elections have been performed in the spirit of a festival in Turkey, as a state of democracy and rule of law. There were sure political discussions but it does not cast a shadow on the functioning of our democracy,’ he stated.

“Erdogan recounted that his Justice and Development party (AKP) issued appeals of the election results to the Supreme Election Board (YSK) in line with its right to do so. He called on everyone to respect the decisions made by the election watchdog.

“The AKP will continue to follow the course of its appeals until the end, Erdogan said.

“‘For us, elections will be over when the YSK will say the last word. Afterwards, we will continue our path. Politics require prioritising the interest of the people and not your own interest …

“‘Our objective in this four-and-a-half-year period is to achieve the goals set for 2023 by increasing the prosperity of our people and establishing the balance between freedoms and security.”

“‘One issue on the Turkish agenda is boosting the economy,’ Erdogan said. He criticised some western media outlets over their coverage of the state of the Turkish economy.

“‘There is a smear campaign against us. Some western media outlets are in efforts to describe our economy as collapsed, finished … Whatever you do, whichever headlines you put on your papers, Turkey will stand tall and continue its path. We are now used to this media, these rag papers,’ he said.

“The president singled out the Financial Times.

“‘The Financial Times wrote “this and that” … Whatever you write. The situation of my country is well obvious,’ he said. He noted that it’s not the first and won’t be the last time this sort of coverage is published by western media.” (Let’s unify to solve Turkey’s problems: Erdogan, Hurriyet Daily News, 18 April 2019)

Financial Times piles on the pressure

That Erdogan singled out the FT for such high-profile criticism is a sign of the pressure that Turkey is feeling. These words of the president were made in the same week that a high-profile team of Turkish diplomats visited the US to meet with Donald Trump and to reassure investors at an IMF-World Bank gathering in Washington.

Whilst the diplomats did their best to reassure the assembled lords of finance capital, the FT was carrying an expose of financial irregularities at the Turkish central bank:

“Investors said they were worried about the practice of using one-week currency swaps, in which liras are exchanged for US dollars with local banks with an agreement to later reverse the transaction. They believe this borrowing has flattered the central bank’s reserves data.

“Some investors argue that the borrowed money should be stripped out of net foreign reserve data, leaving a remaining sum that is well below $20bn. In its response to the FT, the central bank confirmed that dollars borrowed in the first part of these transactions are added to the balance sheet. The obligation to later repay the dollars is recorded as an ‘off balance sheet item’.”

The FT explained:

“Turkey’s central bank has bolstered its foreign currency reserves with billions of dollars of short-term borrowed money, raising fears among analysts and investors that the country is overstating its ability to defend itself in a fresh lira crisis.

“Reported net foreign reserves held by the central bank stood at $28.1bn in early April – a sum that investors already believed was inadequate because of Turkey’s heavy need for dollars to cover debt and foreign trade. But calculations by the Financial Times suggest that this total has been enhanced by an unusual surge in the use of short-term borrowing, or swaps, since 25 March. Stripping those swaps out, the total is less than $16bn …

“Market watchers were uncomfortable. ‘I don’t think these are conventional operations and they are somewhat less than transparent,’ said Julian Rimmer, an emerging-market equities trader at Investec Bank. He added: ‘A central bank cannot risk being seen as economical with the truth.’ …

“A former senior official at Turkey’s central bank, who did not wish to be named, said the extra dollars had been borrowed, not earned. ‘This is not an orthodox [approach to] central bank reserve build-up.’” (Turkey props up reserves with eye on shaky lira by Laura Pitel and Adam Samson, 18 April 2019)

Such unorthodox practices won’t shock the USA, that fine country of Fannie Mae and Freddie Mac, but they are clearly being used to heap pressure on Turkey to fall into line, and the pressure appears to be ramping up in the build-up to the anticipated delivery of the Russian S-400 missile system.

Russian S-400 missile system

Why is the purchase of the S-400 system such a big deal? US lawmakers and military officials have warned that Turkey’s deployment of the S-400 would give the Russian system the opportunity to learn how to track and spot the US’s F-35 fighter jet, quite an advantage.

What is more, closer economic relations and military cooperation between Russia and the emerging economic powers present a grave threat to imperialism, which seeks to subjugate the weak, isolate those nations that have the potential to resist US hegemony, and Balkanise those that refuse to submit.

In mid-April, Turkey’s ministers, including finance and treasury minister Berat Albayrak, defence minister Hulusi Akar and presidential spokesperson Ibrahim Kalin, paid a visit to Washington to attend a three-day event organised by the Foreign Economic Relations Board of Turkey, Turkey-US Business Council, and American-Turkish Council. Whilst there, Albayrak also met with President Donald Trump, and Hulusi Akar conducted unannounced talks with the Pentagon’s Patrick Shanahan.

This meeting between the Turkish diplomats and US leaders will have dealt extensively with Turkey’s planned purchase of the S-400 missile system, which Turkey has so publicly defended and vowed not to walk away from.

Foreign minister Mevlut Cavusoglu has already declared to the US that the $2.5bn agreement is a ‘done deal’. The US, which threatens to suspend the supply of F-35 fighter jets to Turkey, also says that it will impose additional sanctions on Turkey should it continue with the deal.

US vice-president Mike Pence threatened Turkey’s future role in the Nato alliance, warning it against “reckless decisions” like pressing ahead with the purchase of the Russian-made air defence system.

“Turkey must choose. Does it want to remain a critical partner in the most successful military alliance in history or does it want to risk the security of that partnership by making such reckless decisions that undermine our Nato alliance?” Pence tweeted, after making similar remarks at a Nato summit in Washington. (Turkey unlikely to be expelled from NATO over S-400 purchase, says Russian senator, Tass, 4 April 2019)

A report on RT in early April noted: “The Turkish said that operating the two weapons systems at once ‘will not be a threat’ to the F-35 or other Nato systems …

“Turkey is set to receive its first S-400 batteries this July. The US has thus far failed to lure its Nato ally away from the Russian system and to Raytheon’s more expensive Patriot missile system, despite offering it to Ankara at a knock-down rate earlier this year.

“Turkey has also been a vital partner in the F-35 programme, which is US’s most expensive military project to date. If both sides cannot reach a deal, the US will need to find new suppliers for parts of the fighter’s fuselage, landing gear, and cockpit displays.” (Turkey must choose between remaining Nato partner or buying Russian S-400 – Pence, Middle East Monitor, 3 April 2019)

A changing world

It is clear that the global crisis of overproduction continues to make itself felt with serious ramifications for workers in all parts of the world. The imposition of tariffs on a range of industrial products, and sanctions by the US upon those countries that refuse to submit to its diktat, are bringing about at an accelerated rate (in some parts) the realignment of international politics.

Such developments promise the future disintegration of the imperialist camp, and at the very least are deepening its disunity and weakening its cohesion.


Welcoming the small though significant electoral losses of the AKP, the CPGB-ML extends its congratulations to the Communist Party of Turkey and to Comrade Fatih Mehmet Maçoğlu, who has won the Dersim provincial municipality election, in which the communists polled over 130,000 votes. (Historic Win: Communist Candidate Wins Municipality in Turkey, Telesur, 31 March 2019)