As soon as the news from Washington became known in Turkey, there panic broke: the Turkish currency Lira lost within hours to 23 percent against the dollar in value, the Turkish president fled into helpless appeals, the citizens should give their savings for support purchases of the lira, the currency crisis plunged the country into recession, analysts warned of the possibility of a state bankruptcy.
That was in August 2018 when the US government had just imposed punitive measures to secure the release of a US pastor from Turkish custody. Turkish government officials were sanctioned at the time and Turkish steel exports to the US were punished by fines of 50 percent.
As I have read, I am very happy to be back, if I do not like it, I want to learn more about it. , They must, with Europe and others, watch over ...- Donald J. Trump (@realDonaldTrump) October 7, 2019
A few days ago, US President Donald Trump announced in a shrill tone to repeat this maneuver, because of the Turkish invasion of northern Syria - for the Trump had previously cleared the way.
Earlier this week, the US has again sanctioned several high-ranking Turkish government members and imports of steel from Turkey with punitive tariffs of 50 percent.
However, the effect is very different than in the summer of 2018. The Turkish Lira wobbled a bit, but on Tuesday but even increased in value against the dollar.
There are several reasons for this:
The situation of the Turkish economy can no longer be compared with that of a year ago. The country had already slipped into a profound crisis even before the US imposed sanctions: in order to win elections, the Turkish leadership had wanted to achieve high growth rates at all costs. The result was an overheating of the economy and a dramatic crash. This was aggravated by Recep Tayyip Erdogan's constant attacks on its own central bank. The frightened investors, the Lira has come under pressure since the beginning of the year. The US sanctions were then the proverbial drop that overflowed the barrel.
Read more about the Lira Crash 2018 here: Who is responsible for the Turkey crisis
Since then, however, the Turkish economy has stabilized to an amazing extent. The 2018 galloping inflation has dropped from around 25 percent to 12 percent recently, the economy is growing again. The loss in value of the lira has even helped a bit: Turkish goods have become cheaper in international comparison. Exports have even risen so much that the country has recently exported more than imported - for the first time in 17 years, as the Financial Times recently reported.
By contrast, steel sales to the United States have declined significantly. Although Turkey is one of the global heavyweights in steel production, it is number eight among the largest steel exporters. And steel exports have also profited enormously from the fall in value of the lira. Steel exports to Belgium increased by more than 200 per cent within one year.
But it looks quite different in trade with the US. The steel tariffs introduced in 2018 have led to a decline in imports of Turkish steel to the US of more than 80 percent. Therefore, the sanctions now imposed - although technically almost identical to those of 2018 - de facto much milder.
Although Washington lowered the tariffs imposed last year to 25 percent in May, steel trade between the two countries has not recovered. According to the news agency "Bloomberg", in August Turkish producers shipped just 12,000 tons of steel to the USA. Other customers are now significantly more important to the steel mills in Turkey, especially Israel, Spain and Italy. Overall, the country delivers to about 200 nations.
Perhaps the most important factor, however, Donald Trump plays himself: The US sanctions of 2018 also devastated because the actors on the financial markets had to assume that they may just marked the beginning of a US policy of the clear edge against Erdogans.
In the meantime, analysts and investors are smarter: In recent months, they have been able to get an idea of the egg dance that President Trump is doing in relations with Turkey. Even if Erdogan upset political Washington over party boundaries, Trump lets him get away with it irritatingly.
When it became known, for example, that the NATO partner Turkey wanted to buy modern S-400 anti-aircraft missiles in Russia, the White House remained peculiarly passive. Hopes that Trump will be able to talk Erdogan out of plans at the G20 summit in Japan were disappointed. Instead, the Turkish head of state said that he understood Trump to have no objections to the deal. The White House then said that it was "frustrated" because of the lack of options for responding to Turkey's behavior. Sanctions were considered because of the rocket deal. But they were never implemented.
Instead, the United States has recently even signaled a deal to Turkey: Trump-friendly Senator Lindsey Graham campaigned at the end of September to reinstate Ankara in the armament program for the new F-35 fighter jet. Out of that, the Turks were thrown out for Russian missiles, partly because of concerns that Russia could use the S-400's radar units to spy on over-flying F-35s.
In fact, not only does Turkey face a difficult strategic dilemma for Trump. How should NATO and the EU react appropriately to Erdogan? Too harsh measures could push the allies Turkey even further into the arms of Russia.
When US slapped arms embargo against Turkey after Cyprus was in 1975, Ankara tried hard to come back under America's security umbrella against its historic nemesis, Russia. Today, Moscow has been heavily courting Turkey- Soner Cagaptay (@ SonerCagaptay) October 13, 2019
However: why Trump manages Washington - as in the case of the US withdrawal from Syria - with full steam in dead ends, from which he finds no way out then, that does not explain.