Category: Turkey

Counting the Cost of Potential U.S. Action Against Turkey
Highlights

In response to any Turkish attack on the Syrian Kurds, the United States has the power to indirectly sway investor confidence in Turkey largely because of the lira’s inherent volatility and the structural weaknesses of its economy.

Turkey can’t do as much economic damage to the United States, but it can create problems for Washington in the Middle East.

Ultimately, the United States will limit the economic and diplomatic damage it can inflict on Turkey, in part because both wish to maintain the security and economic benefits their relationship provides.

U.S.-Turkey relations have rarely been anything but combustible. In the middle of January, however, U.S. President Donald Trump poured fuel on the fire when he took to Twitter to vow that his country would “devastate Turkey economically” if it attacked the Syrian Kurds after the United States withdraws from northern Syria. Trump’s threat prompted harsh but measured responses from Ankara; President Recep Tayyip Erdogan expressed sadness at the comment. The next day his sentiment switched to encouragement after a phone call between the leaders. The back-and-forth was nothing new, reflecting instead the two countries’ volatile but multilayered relationship. The pair might frequently frustrate each other, yet both value and need the other to pursue their respective goals at home and in the wider Middle East.

The Big Picture

Turkey endured a difficult year economically in 2018, as the lira fell precipitously against the U.S. dollar — in part because of the White House’s tariffs against Ankara. Washington’s actions demonstrated that it could hurt Turkey economically merely by influencing investor and consumer sentiment in the country. And it might consider doing it again if Ankara follows through on its threats to attack the Syrian Kurds after the United States withdraws from northern Syria.

At the heart of the current tug of war between the United States and Turkey is their conflicting, long-term plans to stabilize Syria and counter militancy in the country. As Washington’s withdrawal from Syria increasingly becomes a question of when and not if, the White House has pressed for a safe zone for its major ally on the ground, the Syrian Kurds. On a larger level, however, the United States wants its regional allies to shoulder more of the burden in stabilizing the Middle East’s conflict zones, and Turkey is a necessary ally in northern Syria — especially when Russia (a major U.S. competitor) and Iran (an outright U.S. enemy) are the other external powers lurking in the neighborhood.

Of course, the long-standing hurdle between Turkey and the United States in Syria is Washington’s choice of local affiliate in the battle against the Islamic State: the mostly Kurdish People’s Protection Units (YPG) — a group that Turkey claims is the same as the Kurdistan Workers’ Party (PKK) — within the larger Syrian Democratic Forces (SDF). Indeed, throughout Syria’s war, Ankara has made no secret of its desire to crush the YPG presence on its southern border — something the United States will be powerless to prevent militarily after its withdrawal. Nevertheless, the United States could still inflict serious economic damage on Turkey if it chose to. The question is, how much?

Lessons From a Plummeting Lira

The United States is in a position to hurt Turkey’s economy in part because of the latter’s economic fragility. Turkish corporations are saddled with a high amount of debt, totaling about $200 billion that they must pay back in 2019. What’s more, most of this debt is denominated in dollars and euros, meaning companies will struggle to pay it back if the lira remains weak. But debt isn’t the only specter haunting Turkey: The country is also suffering from high inflation, decreased consumption and a lack of investor confidence stemming in part from perceptions that the country lacks the rule of law.

It was these factors that came to a head last summer during the last diplomatic downturn between the United States and Turkey, in which Trump criticized the Turkish government and imposed limited tariffs and sanctions over its detention of American pastor Andrew Brunson, thereby accelerating the swift depreciation of the lira. In the end, the episode demonstrated that the United States’ ultimate economic weapon against Turkey is sentiment. Such a tool may be indirect, but Trump proved that caustic rhetoric and the imposition of even limited sanctions can depreciate the lira, rapidly damaging investor confidence and inciting consumer panic that the currency would tumble again, thereby compounding the existing consumption slowdown. Indeed, when the lira plunged last summer, Turks began to lose confidence in the economy, causing them to spend less and convert their liras into dollars or other currencies — in spite of official calls to the contrary — causing the lira to plummet even further.

The damage to the lira hurts Turkey’s efforts to bolster its financial sector during a critical time for the economy. Ratings institutions downgraded some of its major banks after the summer 2018 crisis, with Moody’s alone slashing its outlook for 18 lenders. Few Turkish banks operate branches in the United States, but most of the country’s lenders do facilitate dollar transactions, which would expose them to possible action in the unlikely event that the United States moved to sanction them. Moreover, Ankara is determined to protect the financial sector, which contributes significantly to the economy and has a value that totals 87 percent of the gross domestic product. In his efforts to protect the sector and reduce the country’s exposure to precipitous slides in the lira’s value against the U.S. dollar, Erdogan has repeatedly exhorted businesses to increase non-dollar transactions in Turkey. Turkey has indeed made some progress to this end, establishing currency swaps with the likes of Iran over the last year.

Turkey’s Weak Points

But Washington possesses other economic weapons that it could deploy against Ankara — albeit ones that could have negative repercussions for the United States as well. These tools include economic (including more punishing trade tariffs) and strategic measures (including pressure on Turkey over its ties with countries such as Russia, Venezuela, Iran and China).

The United States is Turkey’s fourth largest source of imports and fifth largest destination for exports. Turkey, however, does not even crack the top 20 in terms of U.S. import or export partners, highlighting just how unequal their economic relationship is. Turkish construction companies provide a major source of income for Turkey, but few are active in the United States, meaning Washington cannot use them as a tool against Ankara. But it’s a different story for airlines; the United States could cost Turkish Airlines 10.6 percent of its annual revenue if it barred the major carrier from flying to U.S. destinations.

In terms of trade barriers, the United States has proved its willingness to impose restrictions on Turkey, slapping steel and aluminum tariffs on Ankara in retaliation for the continued detention of Brunson. Although the United States did not damage Turkey economically with the tariffs (and indeed lifted them after Brunson’s release), the uncertainty hurt the lira’s value.

Rather than steel or aluminum, Turkey’s main defensive trade interest is agriculture, which accounts for only 6 percent of the country’s GDP but remains strategically important, because it employs 20 percent of its citizens. More than that, many of the main agricultural regions also happen to be the heartland for Erdogan’s party, the Justice and Development Party (AKP). Of particular concern for Turkey is its labor-intensive tobacco industry, which accounts for 8 percent of U.S. tobacco imports. On the flipside is cotton. Although Turkey is a major producer, it imports 25 percent of its requirements from the United States. Given this dependence, Trump could hurt Ankara by halting shipments, especially since he has previously demonstrated his willingness to hurt the U.S. agricultural sector in pursuit of other goals. Indeed, stanching a major source of Turkey’s cotton imports would hinder the country’s ability to produce manufactured textiles — one of Ankara’s biggest exports not just to Europe (its main export market) but also to the Middle East, Asia and Africa. Agriculture, accordingly, could come into play if the United States and Turkey’s relations deteriorated to the degree that Washington would consider any and all tools to alter Ankara’s behavior.

The ultimate U.S. economic weapon against Turkey is sentiment. Such a tool may be indirect, but Trump has proved that caustic rhetoric and the imposition of even limited sanctions can depreciate the lira.

A Fight Over Politics

And then there is the political dimension. Turkey is already skirting the boundaries on U.S. sanctions on Iran, and it risks running afoul of future sanctions related to Russia or Venezuela due to the depth of its economic and strategic ties to those countries. Nevertheless, any U.S. push on this front could backfire, because the move could simply convince Ankara to shift its orientation away from the West in favor of China and, especially, Russia.

The United States also doesn’t want Turkey to stir up issues in Washington’s other important Middle Eastern relationships, such as its close ties with Saudi Arabia, which remains a point of contention because Turkey holds leverage over Riyadh after its killing of Saudi journalist Jamal Khashoggi in the country’s Istanbul consulate.

At the same time, the United States recognizes the importance of Turkey’s economy to the region, emerging markets, Europe and others, meaning it has little interest in stoking an economic conflagration that would also burn other U.S. allies. Furthermore, Turkey is a major purchaser of U.S. arms, acquiring 28 percent of its foreign weaponry from the United States.

The threat of sanctions will be ever present during Washington and Ankara’s talks on northern Syria, although the United States will be keenly aware of the consequences of acting too forcefully against its longtime ally.

Beyond the current debate over Syria, the United States and Turkey cooperate on any number of issues, including military, intelligence and security coordination. At the same time, however, their difference of opinion on some of the Middle East’s most pertinent issues will ensure their relationship is always mercurial. Be that as it may, a complete rupture is never a likely possibility: Both countries simply need each other too much.
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February 6, 2019
Israel, Palestinian Territories: Are the Pieces Falling Into Place for a Big Blowup in Gaza?

The Big Picture

Israeli and Palestinian factions, long trapped in conflict, have routinely fallen into patterns of violence. A stalemated peace process, a fragmented Palestinian political system and an Israeli government often rewarded by voters for hard-edge approaches have kept these cycles going. But since 2014, Israel and its primary Palestinian antagonist, Hamas, have had a tentative understanding over Gaza. That understanding’s shelf life, however, may be expiring.

See Israel’s Survival Strategy

What Happened

Political developments within both Israel and the Palestinian Authority are exacerbating instability in the region and increasing the risk of violence between Israel and Hamas. In late December, a new party led by a former chief of the Israel Defense Forces joined the political fray in Israel, forcing Prime Minister Benjamin Netanyahu to find new ways to shore up his national security credentials and to defuse criticism calling his Gaza policy weak. And on Jan. 29, Prime Minister Rami Hamdallah of the Palestinian Authority resigned, marking the formal collapse of the long-moribund Hamas-Fatah unity government. The disintegration untethers Hamas from the Palestinian national government and formalizes Gaza’s de facto long-standing isolation.

Why It Matters

Two sets of forces are in play here. In Israel, various parties are jockeying for position ahead of elections in April. A new party led by retired Lt. Gen. Benny Gantz and called Israel Resilience is the most serious challenge to Netanyahu. Gantz had been sanguine about his policy positions until Jan. 29. In his first political address on that day, he revealed that his attacks on Netanyahu would focus on accusations of corruption and would allude to weaknesses on national security. Political attacks on these two topics are particularly significant because Israel faces exceptionally tense security situations in the north and the south.

In Gaza, the environment is moving increasingly away from compromise and conciliation, even though its Hamas rulers well understand how disastrous another war with Israel would be. The collapse of the Hamas-Fatah 2014 unity agreement came about largely because Hamas wasn’t willing to surrender control of key aspects of Gaza, especially security, to its Fatah rival — despite months of intense mediation by Egypt to bring about an accord. But the collapse also became fait accompli because the economic rewards of the unity deal never came through. Hamas has had to rely on trickles of aid from Qatar via Israel to maintain public services, and the U.S. aid cutoff has worsened the economy. The end of the unity agreement also blocks any future economic support from the Palestinian Authority, leaving Gazans with just the meager flow of Qatari aid. Ordinary Gazans are growing angrier at the situation, creating a boiling social cauldron pushing for more action to restore aid. But Hamas has few tools besides rockets and missiles to influence Israel and its allies — and as the streets in Gaza roil with anger, it will be increasingly disposed to use them.

Hamas has few tools besides rockets and missiles to influence Israel and its allies — and as the streets in Gaza roil with anger, it will be increasingly disposed to use them.

Further Background

Netanyahu’s ostensible right-wing allies dislike his approach to Gaza. A cease-fire in November quite nearly brought down his government after the nationalist Defense Minister Avigdor Lieberman bolted from Netanyahu’s coalition in protest. That move forced the prime minister to pump up his national security credentials to stem a potentially fatal leakage of security-minded voters from the Likud Party and his allies. He has publicized military strikes in Syria and may do the same with Gaza. But those strikes may not be enough. Netanyahu may be tempted to hit high-profile targets, and that action could kick off a cycle of retaliation and violence between Israel and Syria or Gaza. Or he could take the risk of going farther afield and striking the Iraqi militias that Iran is arming with ballistic missiles.

Moreover, an escalation by Hamas ahead of Israel’s elections could play into Netanyahu’s hands. The prime minister might be pushed toward a wide-ranging operation in Gaza to stave off criticism from his right-wing allies and from Gantz’s supporters. In addition, if facing imminent indictment for corruption, Netanyahu could find political value in such a distraction ahead of polling.

February 3, 2019
Ukraine’s struggle for “independent” church: is the deal really worth it?

The Ukrainian Orthodox Church continues a struggle for becoming fully self-governing, or autocephalous, and is seeking the support of the Ecumenical Patriarch of Constantinople.

Yet, Ecumenical Patriarch Dimitri Bartholomew said he was not happy with the failure of Ukraine President Pytro Poroshenko to invite 25 ruling bishops to join a new formation of the Orthodox Church in Ukraine. So far, there is only one Metropolitan Simeon (Shostatsky) of Vinnitsa and Bar who has joined the newly-formed Church structure. According to the Poroshenko’s proposal to Bartholomew, the new Church would unite 43 parishes including 33 parishes of Kiev Patriarchate, 9 parishes of Ukrainian Autocephalous Church and 1 parish of Moscow Patriarchate.

Earlier this year, Bartholomew requested $20 Million from Poroshenko to support his plan for an independent Church. Bartholomew also demanded that a new autocephalous church would operate in accordance with the Fener law that warrants absolute subjection to Constantinople Patriarchate.

Bartholomew also added that the Istanbul-based Patriarchate granted independence status to the Russian Church in the 16th century and then to the Orthodox churches of the Czech Republic and Slovakia in 1998, Istanbul-based Anadolu Agency reported.

However, the deal might not be as good as it seems for Ukraine: after gaining independence Greece will own all 6000 parishes of Kiev Patriarchate leaving Ukrainian Patriarch Filaret empty-handed and with no Russian Orthodox Church support.

December 12, 2018
As Turkey Enters 2019, Its Economic Woes Are Never Far Away STRATFOR
Highlights

Since many of Turkey’s woes are driven by external factors, the government will struggle to manage the country’s economic fragility in 2019.

Because of the economic headwinds, Turkey will seek to minimize some tensions with Western governments such as the United States and the European Union, but it won’t abandon its national security goals, including military activities in Iraq and Syria.

Because of the effect that the flagging economy could have in the lead-up to elections in March 2019, the ruling party will likely pursue more flexibility in its political alliances.
Editor’s Note: This assessment is part of a series of analyses supporting Stratfor’s upcoming 2019 Annual Forecast. These assessments are designed to provide more context and in-depth analysis on key developments in the coming year.

Turkey has endured more than its fair share of economic hardships in 2018, but its annus horribilis might portend even greater trials and tribulations in the year to come. Inflation reached record levels, going as high as 25 percent in September, a month after the value of its currency dropped to the unprecedented level of almost 7 liras to the dollar, striking investors with fear. Watching on wearily, consumers could only express their despair as the prices for staples soared. And far from shoring up confidence in the economy, the government and its plans to tackle the crisis simply invited derision.

The Big Picture

Turkey has one of the Middle East’s largest and most dynamic economies — which gives it considerable clout in terms of regional influence. But its growth in recent years has been built on debt, a sizable chunk of which is coming due in 2019. The fragility of the economy in the coming year could mean stagnation and recession, which will challenge the government’s ability to maintain its dominance at the local polls in the spring.

See Turkey’s Resurgence

But thanks to a raft of price and currency controls, as well as some judicious interest rate hikes from the central bank, Turkey emerged from its summer of crisis without suffering a total economic meltdown. The problem for its economy, however, is that all the ingredients that led to the summer of volatility are still present, meaning they could again combine — and grow much worse — in 2019. Mindful of everything that could go poorly in the economy, President Recep Tayyip Erdogan is considering how he might broaden his campaign strategy to maximize the gains of his ruling Justice and Development Party (AKP) in the March local elections and again come out on top.

The External Drivers Shaping Turkey’s Economy

Just as in 2018, the prospects for growth in 2019 appear poor due to a combination of problems, including a high level of corporate debt, a weak currency, a dearth of foreign investment, a widening current account deficit, sky-high inflation, a struggling export sector and diminishing consumer confidence. In fact, Fitch Ratings and Moody’s Corp. quickly downgraded their growth forecasts for Turkey after its summer of pain. Fitch had originally forecast a growth rate of 4.1 percent for 2019 but revised its expectations to 3.6 percent after the lira took a tumble. Analysts at Bloomberg, however, are even more pessimistic, predicting that growth will drop from 3.5 percent this year to 0.8 percent next year.

The AKP government has succeeded in taming government debt since it came to power in 2002, but Turkey’s corporate sector has acquired a remarkable amount of debt over the past 15 years. And all these debts are coming to a head; the country’s corporations will have to pay a bill estimated at $200 billion, or a quarter of Turkey’s gross domestic product, next year. Most of the bill is denominated in dollars, making it more and more difficult for companies to continue paying back their debt the more the lira drops. And although Turkey boasted a GDP growth rate of 7 percent as recently as 2017, debt propped up much of that expansion.

Some of the power to manage its stagnant economy, however, is out of the government’s hands, because external factors are behind many of the problems with debt, inflation and currency value. One external factor — which the government has had a hand in making — that has harmed the country in recent years is the precipitous drop in foreign direct investment (FDI). Some investors have steered clear of the country since the 2016 coup attempt, which led to the imposition of a harsh state of emergency. For example, FDI levels dropped from $18.7 billion in 2015 to $10.8 billion in 2017. Portfolio inflows (the amount of capital flowing into Turkey’s financial markets) might have improved in its financial markets in recent years, but that’s largely because the country epitomizes an emerging market, offering high risks and a weak currency — two things that make it a bargain.

Turkey’s current account deficit, which totals $46 billion, is also a major issue reflecting the vulnerability of the economy to currency fluctuations. In September, the lira depreciated so steeply that Turkey briefly enjoyed a current account surplus for the month, but only because imports temporarily became so expensive that Ankara couldn’t import what it needed.

But it is inflation — which has been spurred by the lira’s drop, as well as external factors that have sapped interest in emerging market currencies — that will be the biggest task on Ankara’s economic to-do list for 2019. Erdogan, however, has made no secret of his aversion to hiking interest rates and has frequently brought his weight to bear on economic officials, thereby casting doubt on the central bank’s independence. But the government will also have difficulty in pursuing other typical inflation management strategies, such as lowering fiscal spending and spurring competition, when negative consumer sentiment is clouding Turkish markets. Ultimately, the inflation rate, and its impact on purchasing power, will be foremost in consumers’ minds as they head to the polls in March 2019 to vote in municipal elections.

Another major external factor is the country’s exports to Western countries, which have frequently sparred with Turkey over human rights, creeping authoritarianism and its close ties with Russia in spite of Ankara’s membership in NATO, as well as its actions in the Middle East. Turkey and Western entities like the United States and the European Union have papered over the worst of their disagreements for now, but there is little guarantee that the rift won’t re-emerge in the near future, thereby complicating Ankara’s efforts to export to Europe and, more important in the near term, to court investment and better trade links. Likewise, the United States could one day reimpose some of the sanctions and tariffs that helped spur panic over the lira during the summer.

Political Tinkering

No matter how intense the economic headwinds become, Turkey’s government will refuse to budge on certain issues, which will detract from its ability to deftly manage the fragile economy. With Erdogan now wielding enormous control over all aspects of governance — including issues such as the economy that are not necessarily his area of expertise — the country’s economic management strategy has failed to inspire much confidence in external investors. Ankara has outlined a three-year, medium-term economic plan to trim spending, tackle inflation and shore up the lira and consumer sentiment, but its economic team has yet to delve into the onerous task of implementing the promised structural changes. What’s more, pledges to cut down on spending contradict Erdogan’s preferred strategy of spending to spur growth, to say nothing of the challenge the central bank faces in trying to combat inflation given his past interference. And the economic team is led by Erdogan’s son-in-law, the finance and economy minister, underlining the close and opaque ties that bind the president to his financial management squad.

But regardless of how fragile its economy becomes, Ankara will continue to pursue certain political aims. In pursuing its primary national security goal — namely, to prevent the development of a Kurdish state in the broader Middle East, since Turkey believes that would fuel demands for Kurdish autonomy at home and threaten the country’s territorial integrity — Turkey will retain its forces in northern Iraq and northwestern Syria, even if that is likely to tax the country’s coffers or irk its regional and Western allies.
Regardless of how fragile Turkey’s economy becomes, Ankara will continue to pursue certain political aims.
But because of its economic challenges, the Turkish government could make some shifts in the political sector ahead of the local elections, which will determine who wins the mayoral posts in 30 metropolitan areas, as well as thousands of other local positions. Although local polls don’t have the same effect on the country’s direction as general and presidential elections, they do offer a reliable gauge of popular sentiment toward political parties at the local level.

In recent elections, Erdogan has allied with the far-right Nationalist Movement Party (MHP), landing him a victory in a 2017 constitutional referendum that greatly enhanced his powers, as well as a win in this year’s general elections. Erdogan championed national security in his campaigns — a topic that appeals greatly to AKP and MHP voters alike — while effectively channeling anxiety over the country’s future into support for his message.

But one group — apart from the country’s Kurds — was not so convinced: urban Turks. A majority of voters in the country’s largest cities, Istanbul and Ankara, actually rejected the constitutional referendum in 2017, while the AKP margin of victory in major centers in 2018 was not as comfortable as in past elections. According to recent polls conducted by Mediar, 18 percent of AKP voters from previous elections have said they will not vote for the party in the upcoming local elections. On top of that, 78 percent of Turks believe the country is experiencing an economic crisis, and 58 percent believe the government is to blame for mismanaging the economy. For the AKP and Erdogan, who has previously painted himself as the man who led Turkey out of an economic crisis in the early 2000s, the polling results suggest that he could be losing some of his grip on national sentiment.

Ever the pragmatic politician, Erdogan is likely to follow a political strategy that goes beyond his usual political coalitions. The president could choose to reduce tensions with Kurds after three years of warfare, reorient himself somewhat toward the political center after years of courting the ultranationalist vote or go in another direction altogether. Without question, however, the AKP will again prove its historic nimbleness. Facing another alliance between the main opposition Republican People’s Party (CHP) and the Good Party, Erdogan no doubt knows he must be deft and flexible in managing whichever political current can provide him the support he needs. But even with more economic woes looming and opponents aligning in an effort to bring him down, few would bet against Erdogan’s winning once again.
December 6, 2018
Handling Turkey’s Fragile Economy AND The Syrian Cauldron
The Syrian Cauldron Could Spill Over

In the closing stages of the Syrian civil war, five key powers — Turkey, Russia, Iran, the United States and Israel — are competing for influence and control. Moscow and Tehran firmly back Syrian President Bashar al Assad but differ not only in the levels of support they provide but also in their overall objectives. Russia has used the Syrian conflict to expand its footprint in the Middle East and will be protective of its gains and materiel, though Moscow has little desire for open conflict with Turkey, the United States or Israel. Iran, on the other hand, will be more aggressive in its support for Damascus, especially in opposition to Ankara and Washington. Tehran will also continue to build up its forces inside Syria as a deterrent to Israel and as a means to supply Hezbollah, its powerful ally in nearby Lebanon. Israel will attempt to foil Iran’s plans but is intrinsically wary of sparking an unintended conflict with Russia.

Turkey and the United States remain opposed to Assad’s rule, but despite being NATO allies, they will pursue their own agendas in Syria. The United States is focused on eradicating remnants of the Islamic State in the country, though Washington more broadly seeks to remove Iranian influence from Syria as part of its anti-Iran strategy. Challenging Iran in Syria creates tension between the United States and Russia — Moscow cannot and will not force out Iran. Despite efforts to deconflict, the possibility of a military incident involving U.S. and Russian assets is not beyond the realm of possibility.
The possibility of a breakout conflict involving the major powers overseeing the Syrian conflict is conceivable in 2019.
Turkey, for its part, will maintain its focus on containing Kurdish forces in Syria. This is problematic for the United States, which uses the Kurdish People’s Protection Units (YPG), a group Ankara sees as a terrorist organization, as an ally against the Islamic State and as a proxy against Iran. In Syria’s northwest, Turkey’s pledge to protect Idlib province could stretch Ankara’s credibility as a local partner, especially given Damascus’ stated goal of total reconquest. Idlib could well become a flashpoint among Turkey, Iran, Syrian loyalist forces and, more remotely, Russia. Given the opposing interests in Syria, the potential for accidental escalation or even a state-to-state confrontation in 2019 is higher than ever, though every power will take steps to avoid this. Learn more about the possibilities for state-to-state confrontation and what 2019 will hold for the Syrian conflict.

Handling Turkey’s Fragile Economy

The biggest challenge facing Turkey in 2019 will be its distressed economy. As well as managing record inflation, President Recep Tayyip Erdogan will have to contend with a privately held corporate debt bill roughly equal to a quarter of the country’s gross domestic product — all while avoiding another lira crisis. Erdogan will be politically compelled to broaden his support base ahead of local elections in the spring, courting financially concerned Turks from across the electoral spectrum, some of whom have been turned off by the president’s nationalist policies. Turkey’s brittle economy also weakens Ankara’s position when it comes to dealing with key partners in the West. The U.S. relationship with Turkey is increasingly fractious thanks in part to Ankara’s growing ties with Russia and Washington’s support for the YPG in Syria.
President Recep Tayyip Erdogan will have his work cut out in 2019 to stabilize the Turkish economy.
Because of its vulnerability to U.S. economic pressure, Turkey will attempt to shore up foreign investment and maintain stable economic relations with Europe. However, Turkey’s historically complex relationship with the European Union will complicate that effort. Beyond stabilizing its economic situation, Ankara will continue to pursue other core imperatives in 2019, including the containment of autonomous Kurdish movements in Turkey’s former Ottoman domains. Ankara will exert whatever influence it can in northern Syria and continue military strikes against Kurdistan Workers’ Party positions in northern Iraq. Learn more about Turkey’s precarious economic position going into 2019.
December 6, 2018
Uzbekistan’s energy pathways: at a crossroads between East and West

The new Russia-Uzbekistan nuclear plant agreement on cooperation in the construction of generation nuclear power plant (NPP) VVER-1200 reactor of 3+ generation in Uzbekistan seems to pose far more opportunities than it might seem. With the Tashkent’s critical need of non-costly energy resources, the project aims not only to foster Uzbekistan’s self-sufficiency and persistence in the energy sector, but also to launch national production and export of its own energy resources. Despite the plant is claimed to be of the ex-soviet prototype, the new industry will be equipped with state-of-the-art technologies and facilities by State Atomic Energy Corporation ROSATOM, a global technological leader.

However, while Russia is likely to become a major energy partner for Uzbekistan, Tashkent will also continue developing energy construction projects along with the US and China. Earlier this year Uzbekistan’s President Shavkat Miromonovich Mirziyoyev visited the White House where President J. Trump proposed a plan for strategic partnership with Uzbekistan in various spheres. But while Uzbekistan-US cooperation in social, economic and educational development does not require industrial waste management and recycling, the cooperation in the nuclear and energy sector with the use of nuclear elements of the US origin and a lack of US recycling technologies may pose an ecological threat for the country.

China, for its part, willing to contribute to the modernization of the Uzbekistan’s energy sector bears more global motives rather than selling technologies to its geographical neighbors. Should Beijing become a nuclear partner of Tashkent it will obviously take over the control of the Uzbekistan’s energy infrastructure.

Certainly, the agreement between Uzbekistan and Russia is not going to meet the country’s entire demand for energy resources. However, with the current US-China trade confrontation and blur industrial management prospects both from Beijing and Washington, collaboration with Moscow seems to be a win-win opportunity for Uzbekistan at the moment.

November 21, 2018