Opinion: Turkey will survive its economic crisis but the repercussions will be profound

Written By: Wajahat Qazi
Delhi, India Published: Aug 16, 2018, 10:50 AM(IST)

File photo of Turkish President Recep Tayyip Erdogan. Photograph:( Reuters )

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While the crisis might pass, but repercussions will be felt across some emerging markets, trade patterns but above all in geopolitics and international relations, to state the obvious.
 

The spat between Turkey and the United States which led the former to doubled tariffs on Turkey’s aluminium and steel, that, in turn, led to a fall of the Turkish lira, is ostensibly over the incarceration of an American pastor. But, probe deeper, the imprisonment of the pastor and the now failed  behind the scene parleys to release him appears to merely a catalyst or merely the ostensible reason for drift of relations between the two countries.  
 
The real reasons appear to pertain to geopolitics with the pastor’s case serving as the “causus belli”.  Having said this, there appear to be domestic reasons too. With Mike Pence, the Vice President of the United States leading the “crusade” against the imprisonment of the pastor and clamouring for his release, the Trump administration is pandering to its Christian conservative base. But, the predominant reason appears to be geopolitical. It is obvious that Turkey has been gradually drifting into Russia’s orbit, despite being  a NATO member. And, Turkey does not see eye to eye with the United States over Syria, in terms of regional security and its “Kurdish question”. These issues have now come to head and there is now a confrontation between Turkey and the United States.
 
While speculation abounds over the reason and nature of the doubling of tariffs on Turkey, and it is believed by some that there is a deep sinister plot against the country to bring it to its knees, so to speak, it would appear that the real reasons appear to be a combination of market sentiment , technical reasons , the vulnerabilities generated thereof , complemented by what amounts to a squeeze by the United States to create pain for Turkey’s economy and thereby its people.
 
The Turkish economy  and the approach adopted by the country’s economic managers, criticised by many as unsustainable was premised upon an abundant flow of credit, an interest rate regime that was, to an extent , at odds with the global interest rate patterns which led to inflation , among other things. While capital flowed to the country, now there appears to be a reversal with investors panicking.  While the crisis might pass, but repercussions will be felt across some emerging markets, trade patterns but above all in geopolitics and international relations, to state the obvious.
 
As the United States increasingly takes recourse to blunt instruments of power, the state and economics, to squeeze and punish its perceived and real opponents, and as the world becomes tripolar, the consequences of these actions would be for victims of the country’s ire to drift into the orbits of the countries rather natural enemies: China and Russia. Both the countries, might see eye on eye on various issues and might even bind these into a common bond against the United States.
 
The China Russia “duopoly”  will then constitute a “pole” with which to bandwagon against the United States. The world then will be divided into blocs, of the political, economic and security variety.  The overall consequences of this might be felt in the domain of globalisation which will not come to a halt, but will assume a wobbled form.  The “North South” dichotomy, which some held was dissipating will also be affected and trade, capital and other flows will be hampered.  While the world and most of its constituent states have moved beyond autarky, but flows will gyrate to a different causal loop, with manufacturing , global value and supply chains’ operating to a somewhat different dynamic.
 
In the final analysis, the world will become more zero sum and nationalism will become more pronounced with states’ foreign , security, defence and economic policies operating from the premises of nationalism. The concomitant of all these developments is likely to be the return of many sovereign functions of states. The casualty will be the “open world” formulation and , as a whole, people will bear the brunt of these insalubrious trends either by way of poverty and freedom(s) of movement and so on. The question that the confluence of these trends that is raised is: will these be temporary and transient or permanent?
 
Nothing , at this stage, can be stated with certainty. Globalisation has suffered from massive hits and reversals but this large macro phenomenon has bounced back. When and how globalisation will  bounce back from its truncated form remains in the  domain of the “unknown unknown”.  It will be contingent on policy responses and the drift of politics, both international and domestic, among other things. But, the lessons that policy makers must draw from the drift of conditions that obtain contemporarily, in the domains of economic, politics, political economy and international relations is that public policy must be crafted in ways that redound to public welfare and good, not merely the privileged elite. In the meantime, Turkey and its politics will not crumble the country will survive the latest assault on it. But, the configurations, political , economic and security , that will emerge from the detritus of the crisis will be novel and different.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Wajahat Qazi

Wajahat Qazi is particularly interested in politics, global security and political economy. He is a wanderer and fancies himself to be a wannabe writer.
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