Turkey’s geo-strategic location in Europe gives it a unique bridging ability between Russia and the West. Turkey’s geo-political influence expands across continents, from states on its periphery, particularly the Caucasus and continues into the Central Asian states where a Turkic ethno-linguistic zone extends Eastwards right up to the Chinese border. Turkey’s influence stabilises the Black Sea region as it controls the Straits of Dardanelles and the Bosphorus connecting it to the Mediterranean. This makes Turkey vital to the interests of the West making it the South-Eastern anchor for NATO. Hence, it majorly influences the Middle-East and balances Russia in the entire South-Eastern zone, which includes the Caucasus.
Modern Turkey was founded by Mustafa Kemal Ataturk in 1923 from the remains of the Ottoman Empire. Since then, Turkey has followed a secular policy and aligned itself with the Western ideals by joining North Atlantic Treaty Organisation (NATO) and developing closer ties with the European Union (EU). The country has been surrounded by controversies ever since Recep Tayyip Erdogan rose to power. Today, it has come under tremendous stress. The subconscious desire feeds somewhere to be a regional and global power of significance, a revival of the Ottoman nostalgia. This has been capitalised upon by Erdogan by selling it as an achievable narrative in Turkey’s politics. The direction to the economy given by him was to achieve this nationalist goal. High growth, high domestic demand and high imports made the economy run at top speed which is now totally out of control.
Erdogan’s ambition has drawn the ire of Turkey’s neighbours and allies. Erdogan’s willingness to launch military interventions in Libya and Syria, press territorial claims in the Mediterranean and court China and Russia have isolated Turkey. The quest to recast Turkey into the role of an old “Modern Khalifate” drew it closer to Iran, Qatar, Pakistan and Malaysia to forge a strategic and economic understanding thus directly challenging Saudi hegemony in the Middle East. This has impacted Turkey’s clout in the Islamic world which has traditionally been led by Saudi Arabia and the United Arab Emirates (UAE). Erdogan’s politics did cast uncertainty on its future in the NATO and its prospects for joining the EU. The ongoing Russia-Ukraine war has sky-rocketed inflation to an all time high of 85 percent. Ankara is now struggling to weather a financial crisis and Erdogan is trying to repair broken relationships, including seeking rapprochement with major regional powers.
In the Middle East, Turkey is seen as a new threat to peace in the region. Turkey has gained considerable support from Iran, Qatar and Pakistan. In the emerging paradigm, Saudi Arabia, Israel, Greece, Egypt and the UAE have viewed Turkish expansionism under Recep Tayyip Erdogan as a new danger for the Middle East. Turkey is on the opposing side in the ongoing conflicts in Syria, Iraq, Sudan and Libya. Saudi Arabia views Turkey to be mirroring the Ottoman pan-Islamist policies in World War I.
“We will build the century of Turkey together, hopefully by overcoming the inflation issue,” said Erdogan in a televised address recently. The present economic crisis in Turkey has literally put Erdogan’s neo-Ottoman outlook in a deep stall. With election on the horizon, Erdogan has to salvage his dream and for that, he has started to target Kurds in Syria accusing them of being responsible for the recent bomb blast in Ankara.
The country has been surrounded by controversies ever since Recep Tayyip Erdogan rose to power…
Turkey’s Complex Geographical Position
Turkey’s geo-strategic location in Europe gives it a unique bridging ability between Russia and the West. Turkey’s geo-political influence extends across continents, from states on its periphery, particularly the Caucasus and continues into the Central Asian states where a Turkic ethno-linguistic zone extends Eastwards right up to the Chinese border. Turkey’s influence stabilises the Black Sea region as it controls the Straits of Dardanelles and the Bosphorus connecting it to the Mediterranean. This makes Turkey vital to the interests of the West making it the South-Eastern anchor for NATO. Hence, it majorly influences the Middle-East and balances Russia in the entire South-Eastern zone which includes the Caucasus.
Turkey had relied on trade and diplomacy as well as its key geographic location between Europe and the Middle East, to project power. But amid a decade of volatility brought on by the Arab Spring uprisings of 2011, Ankara has shifted to a hard power approach to secure itself from threats in and achieve its aspirations of becoming a regional power. A direct intervention in North Syria to Libya and military support to Azerbaijan during the conflict with Armenia are the manifestations of geo-political assertion.
Turkey’s complex geographic position – between Europe and Asia, the Black Sea and the Mediterranean – puts it at the centre of a geo-political environment tied to several different geographical, political and cultural landscapes. This complexity has a tremendous impact on the country’s internal, foreign and defence policies and makes Ankara sensitive to emerging security threats in its neighbourhood.
Russia – Ukraine War: The Fallout
This calculus has been disrupted by the pandemic followed by the war in Ukraine which could not have come at a worse time for the Turkish economy. The war in Ukraine has led to sharp hikes in prices of energy and other import-based commodities. The conflict in Ukraine affects not only imports but also export of goods and services. Ukraine’s main ports are blocked and air transportation has ground to a halt due to security concerns. Turkey’s exports to Ukraine totalled $2.9 billion in 2021, and are likely to fall drastically this year. In the year 2021, the 2.1 million tourists that visited from Ukraine, are now gone. The Russian invasion of Ukraine triggered the imposition of harsh sanctions on Moscow by the Western countries including EU and the United States. Turkey has managed to keep itself away from these sanctions so far. Nevertheless, the Montreux Convention is being duly implemented for the passage of Russian naval ships. The West has not pressured Turkey to impose financial sanctions, as the vulnerability of Turkey’s economy is apparent. Besides, much like Germany, Turkey needs Russia’s natural gas. Any harsh action against Turkey would go against the interests of the West. However, any attempt by Turkey to bypass the economic sanctions imposed by the West, will probably result in broad diplomatic consequences the country could ill afford now.
Erdogan’s politics did cast uncertainty on its future in the NATO and its prospects for joining the EU…
Turkey is nevertheless trying to turn its economy around during this conflict and the crisis in Europe owing to its unique position. Turkey appears to have had a few gains from the conflict in Ukraine and the Caucuses. Sale of arms and exploiting distress created by energy crisis in Europe has worked as a booster. While, Moscow’s revenues from fossil fuel exports fell in October 2022 to their lowest levels since the war in Ukraine. Turkey has become a new route for Russian oil supplies to the EU. Turkey buys Russian crude oil, refines and sells that to countries not directly buying from Russia.
Turkey’s defence and aerospace exports in the first half of 2022 reached a record high of almost $2 billion, up 48 percent from the same period in 2021. According to the Turkish Exporters’ Assembly (TIM), Turkish exports may come close to or exceed the $4 billion mark by the end of 2022, an annual all-time high. Turkey has supplied 96 drones to international clients, including Ukraine. Poland was the first European buyer of the famed TB-2, developed by Baykar Makina. Future potential buyers of Turkish-made drones include the United Kingdom, Hungary, Latvia, Lithuania, Saudi Arabia, Bosnia-Herzegovina, Serbia, Slovakia, Uruguay and Albania. Turkey’s defence and aerospace manufacturers, total business in 2021 reached $10.1 billion. Exports totalled to $3.2 billion, exceeding imports, at $2.6 billion, by 23 percent. Turkish companies won new orders worth $8.5 billion in the same year.
Fade or Sustain?
To understand Turkey’s situation better, we must consider the Indian perspective on the global economy. On this, India’s External Affairs Minister at a conclave held in New Delhi held the view that the world is going through turbulent times. Before it could emerge from the pandemic stress, the Ukraine war started. These turbulent times are likely to last another five years, given these circumstances. Now the larger question is, can Turkey sustain it, or, after the Ukraine war, does she fade into the shadows? Today, Turkey’s economy is in shambles; soaring inflation and a collapsing lira are pushing millions of Turks to the brink of financial ruin and slamming factories, farmers and retailers across the country and unemployment is at an alarmingly high level.
According to a survey by Yöneylem Social Research Centre, more than two-thirds of people in Turkey are struggling to pay for food and cover their rent, fuelling a surge in mental illness and debt. Turkey’s economy managed to wade through the COVID pandemic. The Turkish economy’s growth over the last two decades, averaging an annual GDP of 5.8 percent helped Turkey tide the pandemic wave. However, the Ukraine war has brought in uncertain times. In September 2021, $1 dollar was worth around eight Turkish Lira. Within one year – by October 2022, this has soared up to 19. The consequence of this devaluation is huge inflation.
The Turkish Statistical Institute reported in October this year that inflation had hit a 24-year high of 85.51 percent. With this, the production costs have spiked, wages depleted, skilled workers leaving the country leading to a devastating brain drain. Experts believe that losing such talent had “…the potential to damage Turkey’s economy long into the future, with the economy losing out on the jobs and businesses these individuals could have created.” During the decade 2001 to 2021, the Turkish economy grew rapidly at 5.8 percent. When economies grow rapidly, interest rate rises are often used by central banks to cool down the economy. They do this by increasing the cost of borrowing money, which reduces economic activity.
In Turkey, however, the opposite has happened. Interest rates have been kept very low by the Turkish Central Bank, leading the economy to spiral out of control. There is a complete lack of confidence in the economy. The foreign and local investors have pulled their money out of Turkey because of the Lira’s free-fall. Low interest rates are largely due to President Recep Tayyip Erdogan’s monetary policy. In the past, Erdogan won elections by flooding the economy with cheap money and now there is a payback.
Clearing the Hubris
The trajectory of the world over the past two decades has been disrupted by the pandemic. The era of revision is under major disruption. When the Indian Prime Minister Narendra Modi says the era of war is over, contrary to the Indian politics, he also implies that the era of the right is over. China miscalculated and tried to take advantage of the pandemic on India’s Northern borders. Not only did the revisionist move fail, it also strengthened Indian position on the ground, eliminating any room for a repeat. China has been forced to look inwards on the issue of Taiwan and the South China Sea.
In the Middle East, hard-line Islamic regimes such as the Saudis have been forced to moderate with the changing face of energy, business economy and international politics. Russia has created a global crisis in Ukraine. Their miscalculation has affected the reputation of the military and the state. How things will end could be anybody’s guess. Internal discontent in China and Iran is out in the open, Russia could follow soon. If the Chinese are out in protest against the regime’s high handedness in handling COVID, Iran is burning over women rights and freedom. The world has witnessed an economic meltdown in Sri Lanka, a crisis which is far from over.
Turkey is on the verge of economic distress which is manifesting on the streets. But Turkey being a democratic country and elections scheduled for next year, the resentment will surely get reflected through the ballot. Erdogan’s hubris stems from the revisionist dream of recreating the Ottoman empire. This revision needs to be cleared before it is too late. His way of politics and economics thereon run hand in hand. His philosophy of keeping low interest rates even while the inflation is high could be bad for the economy. However, this policy has been beneficial for construction and real estate businesses which have reaped more profit from cheaper loans. They are alleged to have funded Erdogan’s AKP party in return.
Also, Erdogan’s Islamic background has a role to play in this mess. His education from the religious school has brought in Islam’s aversion to lending money at interest, as sinful. Thus, at the end, it is a combination of all the factors from economic fundamentals to the pandemic and the ongoing Ukraine war. The Turkish population appears pretty upset as they see their living standards falling. Judgement day for Erdogan comes in 2023, when Turkey goes in for national elections. A lot would depend upon the outcome of these elections. Turkey would, however, continue to be geopolitically more relevant to the West and the NATO in the years ahead. To its advantage, the country has a strong agriculture and industrial base. This gives Turkey the inherent strength to rebound. Even if Erdogan manages to return to power, he will have to give up his neo-Ottoman aspirations and switch back to the orthodox ways in the economy practised during the first decade of AKP’s rule.
The initial symptoms of change are visible at least in foreign affairs as Erdogan tries to mend ties with Saudi Arabia and improves relations with Israel. Still too early to predict, it will all depend on how swiftly the country is able to deal with economic challenge amongst others. This will finally decide whether Turkey is able to sustain itself or after the Ukraine war, fades away in the shadows.