Internationally isolated and with a collapsing economy Turkey

Internationally isolated and with a collapsing economy Turkey

By Yannis Brachos*

First fiction: Internationally isolated Turkey.

In the summer of 2020, on the occasion of the systematic questioning of Greece’s sovereign rights by Turkey, the argument of Turkey’s international isolation was presented. The government benefited communicatively at home as a responsible moderate policy, while Turkey, in violation of international law, de facto exercised its “rights” under the Turkish-Libyan Pact in the “disputed areas” according to the international actor.

Since then, Turkey has implemented the Turkish-Libyan Pact, intervened diplomatically and militarily in Libya, Iraq, Nagorno-Karabakh, consulted with the US, Russia, the United Arab Emirates, Pakistan and the Taliban in Afghanistan, while in Israel the economic lobby is being strengthened to support the upgrading of relations between the two countries.

These developments show a country with depth and consistency in foreign policy objectives. Turkey is consistent between words and deeds on the international stage and in the Eastern Mediterranean region defending its interests de facto. Turkey may not achieve the maximum result in terms of its objectives, but it is consolidating its role as a regional power in Eurasia and the Eastern Mediterranean.

Through its intervention in Nagorno-Karabakh, Turkey has strengthened its role in the energy corridors of Eurasia, extending its influence in the region from which the US is withdrawing. With its tactics it is achieving, in addition to significant control over resources, the reaffirmation of its geopolitical importance. The neighbouring country is re-entering the Balkans through the strengthening of relations with Albania, the military agreement with North Macedonia, and the strengthening of relations with Bulgaria.

Second fiction: The collapse of the Turkish economy.

On the occasion of the deterioration of the economic situation in 2020 and the slide of the lira, speculations of a collapse of the Turkish economy have been made, implying that Turkey will be forced to fold its international role due to an economic crisis.

Since the summer of 2020 to date, Turkey has avoided recourse to the IMF, has emerged as a regionally powerful player in the Eastern Mediterranean, with interventions in Syria, Libya, Iraq, Ukraine and the South Caucasus, and is developing initiatives in Afghanistan, building on its relations with Pakistan.

The Turkish economy has been stabilised by the support of its foreign exchange reserves from Qatar, indirect support from Germany and the EU, and by tourist flows from countries with which it had geopolitical cooperation. Ukraine is a prime example. In April 2021 Ukraine was at the height of a health crisis, with 60,000 cases per day, and Turkey welcomed 236,000 Ukrainian tourists (three times the number of the next tourist source country) without a certificate, risking an acceleration of the disease in the region and in the EU.

It is noted that an important factor in the stabilisation of the Turkish economy is the informal economy. When the country is facing economic deterioration as a result of over-indebtedness, the money flows from the parallel economy stabilise the economy and this trickles down to Turkish society through the informal economy. The shadow economy also receives a large part of the migration flows, providing cheap labour, while the lucrative human trafficking circuit is developing.

Third fiction: The problem will be solved by others.

In contrast to Turkey’s foreign policy, Greece is unable to implement a coherent foreign policy as a result of a combination of political and economic reasons.

Our country’s passive foreign policy, with its emphasis on international law and the mechanisms of NATO and the EU, considers the international actor as the capable condition for dealing with crises in the region. The history teaches us that it is a capable but not a necessary condition.

Minor party calculations, as in the Prespa agreement, limit the country’s intervention in the Balkans, while the possible refugee flows from Afghanistan are approached from the same perspective. Instead of examining the quality of the construction of the fence on the Evros River, political leaders could elaborate a proposal to NATO and the EU to undertake humanitarian action for the safe transport and distribution of refugees from Afghanistan.

The lack of extroversion of the Greek economy as an open economy oriented towards investment and exports is a factor in the perpetuation of debts and the resulting geopolitical dependence. The Greek economy is increasingly dependent on EU and state budget funds, creating new debt and continuing the vicious cycle of dependency.

Both in the geopolitical and economic field, Greece can seek solutions through its transformation into a modern regional power in the Balkans, reversing the “normalcy” of public and private debt. This option presupposes a coherent foreign and economic policy aimed at enhancing the country’s prestige, which is not subject to the domestic political situation and the client state./ibna

* Yannis Brachos is an Economist – former Secretary General for International Economic Relations at the Ministry of Foreign Affairs.

Photo: Meg Jerrard