By Conor Gallagher
While the war in Ukraine continues to hammer European economies and harm others via sanctions-induced high energy and commodity prices, one potential winner from the conflict is emerging: Turkey.
Positioned at the crossroads of Europe and Asia and linking the Black Sea to the Mediterranean, Turkey is one of the most important pieces of real estate in the current conflict between the US and the EU on one side and Russia (and potentially China if the US has its way) on the other.
After years of poking allies, enemies, and neighbors in the eye, Turkey Prime Minister Recep Tayyip Erdogan seems to finally be realizing the most productive path forward is to leverage the country’s strategic position to his advantage.
Russia’s Lone Remaining Bridge to the West
Turkey is the only NATO member that hasn’t closed its airspace to Russia or enacted economic sanctions on the country. Consequently trade with Russia is booming – and there might be a lot more money to be made.
Turkey is now setting itself up to facilitate trade that bypasses sanctions the EU imposed on Russia:
Cetin Tecdelioglu, head of the Istanbul Ferrous and Non-Ferrous Metals Exporters’ Association, said Russian demand had increased for Turkish products it could no longer source from European companies and Turkish companies had received enquiries from European businesses about supplying Russia via Turkey.
“What they (Russia) cannot buy from Germany, Italy and France, they are buying from us. Separately, a lot of EU companies are planning to sell their products to Russia via Turkey.”
The Turkish business daily Dunya reports that goods are already coming in from the EU and sent onto Russia:
Mehmet Serkan Erdem, Turkey General Manager of Rif Line, noted the packed warehouses due to the cargo transit to Russia via Turkey. He said in a statement to DÜNYA, “I was in Mersin last week. Due to the loads coming from all over the world and to be transferred to Russia, the warehouses in Mersin are full to the brim.
Tecdelioglu said the same could potentially happen with China – that is if the US continues to beat the war drums in Taiwan and drags their EU junior partners into the fray. Turkey continues to position itself nicely to fill that role as it has recently stopped criticizing China’s Uighur policies and even cracked down on Uighur protesters in Turkey at China’s request.
A Difficult Balancing Act
At the same time Ankara embraces Moscow, it continues to sell military hardware to Ukraine, including drones and mine-resistant vehicles to Ukraine. It also has the second largest army in NATO, and hosts two US military bases, one with nuclear weapons.
Russia can hit Turkey in a range of ways because Ankara and Moscow are involved in many conflicts that are not covered by NATO security commitments: Syria, Libya and Nagorno-Karabakh.
Economically, Turkey receives from Russia nearly a quarter of its tourism, more than one-third of its gas needs, and 80 percent of its grain from Russia and Ukraine.
Despite this dependence, Turkey has always sought alliances with western powers to counter Russia. Since the end of World War II that has been primarily the US, but the relationship has been on the rocks for a while now.
Did US/NATO Missteps Help Bring Russia and Turkey Closer together?
Turkey began looking to purchase a missile defense system during the Gulf War in the early 1990s. Ankara asked NATO multiple times to deploy early warning systems and Patriot missiles to Turkey, but it never came to pass.
US security experts Jim Townsend and Rachel Ellehus explained it like this:
Long suspicious that NATO did not appreciate Turkey’s vulnerability in such a dangerous neighborhood, Ankara came to view its missile defense requests as a litmus test for how much NATO really cared about Turkey.
Ankara didn’t like the answer to that litmus test. Despite being the most important country in NATO by virtue of its geography, Turkey felt ignored by its western partners. Its EU membership was all but dead, and it wasn’t getting the military hardware it requested.
In 2017 Turkey turned to Russia. It purchased Russian S-400 missile defense systems, which are arguably superior to anything the West has – something the Russians are demonstrating in Ukraine. In response the US expelled Turkey from its F-35 program and sanctioned the country’s defense industry organization and its leaders.
It was a new low point in US-Turkey relations that came on the heels of disagreements over US cooperation with the Kurdish militia YPG in Syria and the 2016 coup attempt in Turkey. The undertaking was so dimwitted it led to suspicion that Erdogan orchestrated it himself. Erdogan, though, blamed dissident cleric Fethullah Gülen and the US for harboring him.
Since the coup attempt about 80,000 people have been jailed, and anti-US sentiment in Turkey has since reached record highs.
Washington, possibly wary of driving historical rivals together (as it did with China and Russia), might finally be realizing that a stick alone won’t work with Ankara.
The commotion over Finland and Sweden is a prime example. NATO appeared caught off guard when Erdogan voiced opposition to the new members, which would be a deal killer since each of the 30 NATO member states must approve.
Turkey wants concessions for its vote, including extradition from Finland and Sweden of individuals it labels terrorists and adjusting laws in Helsinki and Stockholm to allow arms sales to Turkey.
Sweden and Finland are already beginning to extradite the individuals accused by Turkey of having ties to Kurdish or Fetullahist organizations. They include a 26-year-old Kurdish activist who arrived in Sweden when he was 18 and now fears he will be imprisoned and tortured upon his return to Turkey because of his homosexuality and Kurdish ties.
In addition, it appears Washington is now prepared to sell F-16s to Ankara. Both US and Turkish officials said there was no quid pro quo regarding the F-16 announcement, but the timing certainly didn’t negatively affect Turkey’s agreement to allow the NATO invitations to Sweden and Finland.
But will it be too little too late?
Ankara and Moscow continue to form stronger ties, and it might not be temporary:
No longer do construction, tourism, textiles, and fruit or vegetables define Turkish-Russian economic ties. Instead, cooperation has shifted to strategic industries that create long-lasting mutual dependencies.
A Lifeline for Turkey’s Economic Freefall
Turkey’s status as a key swing player in the “East-West” conflict couldn’t come at a better time for Erdogan who is facing the biggest challenge to his two decades of rule due to an economy in shambles.
Inflation is running at an annual rate of around 80 percent, but Erdogan is intent on maintaining economic growth by focusing on exports and employment. It’s not working. Its foreign trade deficit is up to a monthly average of $8 billion this year.
The Middle East Institute explains further:
A considerable amount of short-term external debt is also looming on the horizon. A total of $182.4 billion of debt in hard currencies must be paid back or rolled over in the next year. The Turkish economy needs at least $220 billion in the coming 12 months. There is another factor adversely affecting Turkey’s external balance as well, which is the appreciation of the dollar against the euro. While 58.4% of external debt and 71.2 % of imports are in dollars, Turkey’s revenues from exports and tourism are mainly in euros. As a result, all else being equal, the external deficit is rising once again.
Details are still trickling out about the Turkey-Russia summit in early August, but it looks as though the deals will be mutually beneficial by supplying a safe harbor for sanctions-hit Russian capital and providing an economic lifeline for Erdogan.
While Turkey continues to adopt the Russian payment system Mir, which is a relief for Russian tourists after Visa and Mastercard halted their services, Moscow is injecting money into Turkish coffers.
Ugur Gurses, a former Turkish central banker, believes the Russians are using a nuclear power plant they’re constructing in Turkey to transfer funds by purchasing Turkish bonds instead of direct bank transfers.
Gurses told Al Monitor this would help explain Turkey’s recent increase in foreign and gold reserves — from $98.9 billion on July 26 to $108.1 billion on Aug. 4.
In return, Turkey — by not heeding the embargoes — is helping the movement of capital, offering an important function as a bridge for goods to flow to Russia.
And Aydin Sezer, a former trade attache at Turkey’s embassy in Moscow, doesn’t believe the cooperation will end there:
Putin might make other gestures such as agreeing to defer gas payments or accepting payments in bonds to help Erdogan win in 2023.
No doubt, the US and NATO will take an interest in next year’s election as well.
Turkey Abandons Western Ship in Syria
In early August Turkey’s foreign minister Mevlut Cavusoglu disclosed that he spoke with his Syrian counterpart, Faisal Mekdad, last October.
It was a stunning statement as this would represent the first high-level meeting between Turkish and Syrian government officials since 2011.
The meeting was likely laying the groundwork for higher level meetings between the two countries – potentially even Erdogan and Syrian President Bashar al-Assad.
Al-Monitor reports that Ankara is working to engage Damascus with the Kremlin’s support.
Putin wants now “to move relations to a political level” in order “to coordinate against the United States and its Syrian Kurdish allies” who control the northeast of the country and the bulk of its oil and water resources. This was one of the top agenda items during Erdogan’s Aug. 5 summit in the Black Sea resort of Sochi with Vladimir Putin.
Despite Turkey spending the past 11 years trying to overthrow Assad, rapprochement could now benefit Erdogan domestically. With Turkey’s economic woes, it is untenable to continue to spend billions annually occupying parts of Syria and on the millions of Syrian refugees inside Turkey.
By making peace with Assad, Erdogan could focus solely on preventing a Kurdish state in northeast Syria – something Damascus is also opposed to.
It would also curry favor with Moscow – and draw the ire of Washington.
A Familiar Role
Western leaders can stamp their feet all they want over Turkey playing both sides, but the truth is there just isn’t much they can do via their preferred method of punitive measures.
Brussels has littler leverage, and Turkey can always counter any punitive measure by turning back on the spigot of migrants into Europe.
Washington sometimes hints at Western companies withdrawing or decreasing their economic ties with Ankara or even cutting it off from the dollar via secondary sanctions, but such moves would almost certainly drive Turkey permanently into the Eastern bloc.
The West seems to be recognizing slowly (e.g., the Finland and Sweden extraditions, potential F-16 sales) that more carrot and less stick is what Erdogan is seeking.
One needs look no further than World War II when Turkey was courted by all sides. Turkish cartoonist Ramiz Gökçe depicted Turkey at the time as ‘The Comrade of Germany; The Sweetheart of America; The Ally of Britain; The Neighbour of Russia; The Protector of Peace; The Friend of the World’.
In 1941, Turkey and Germany signed a nonaggression pact, and Ankara raked in economic and military aid from both Axis and Allies trying to woo Turkey to their side.
As the tide changed in WWII, however, Turkey wisely bet on the eventual victors, moving increasingly to the Allied side. In 1944 Turkey stopped exporting chromite to Germany, a key ingredient in the manufacture of stainless steel, and later that year severed diplomatic relations with Germany. In 1945 Turkey declared war on Germany – two months before its defeat.