With Donald Trump doubling existing steel and aluminium tariffs against Turkey while decrying the present state of relations between Washington and Ankara, it is clear that Washington’s economic war against Turkey which had raged prior to the 10th of August is now official and being conducted openly. While global markets have reacted negatively to Trump’s declaration, Ankara has already begun looking for new partnerships as sanctions against Turkish officials and now a doubling of tariffs would have been anticipated and among the most astute Turkish policy makers almost certainly were foreseen long ago.
In many respects, it is Turkey’s fiercely independent economic and defence policies under President Erdogan that convinced the US to pull the trigger in the economic war. That being said, Turkey’s clear future lies not with a reactionary protectionist US market but with Ankara’s willing, ready and able economic partners throughout the multipolar world.
As part of a wider drive to diversify trading partnerships with members of the wider “global east”, Turkey and Russia continue to cultivate ever expanding ties in areas which include not only trade but cooperation on energy megaprojects, scientific research and development, military and security agreements including the acquisition of defensive weapons and ever expanding avenues of cultural exchange. Now a greater impetus than ever exists to make rapid progress on existing pledges with Asian trading partners to begin transacting bilateral trade in national currencies rather than US Dollars.
Recent figures have seen Turkey become one of Russia’s top trading partners. According to the statistics, Turkey is now the fifth largest trading partner of Russia behind China, Germany, the Netherlands and Belarus (which forms a Union State with Russia). This is demonstrative not only of Turkey’s prioritisation of new eastern looking trade partnerships but it is likewise symptomatic of the incredibly positive trajectory of Russo-Turkish relations in 2018.
This is a substantial accomplishment for both nations not least because of a centuries long period of confrontation but more immediately, because of the dismal state of Russo-Turkish relations which began in December of 2015 when a suspected FETO loyalist within the Turkish military shot down a Russian Su-24 near the Syria/Turkey border. This resulted in the death of a Russian pilot and a Russian marine partaking in the rescue operation.
Since then, Russia and Turkey have not only re-established healthy ties but have embarked on a uniquely meaningful partnership given the long history of hostility between the two nations which dates back to before the founding of the USA. This has been the case in spite of the brutal assassination of Russia’s Ambassador to Turkey Andrey Karlov by a FETO agent in late 2016.
Today, Russia is a major supplier of energy to Turkey while both countries work on the Turk Stream pipeline which will bring Russian gas into southern Europe. Likewise, Russia has begun construction on Turkey’s first ever nuclear power plant which will be on line in approximately two years.
In Syria, Turkey and Russia along with Iran work in the Astana format to bring a negotiated settlement to the conflict while both countries have resolved many of their initial differences over each side’s penultimate aim in the conflict. With Turkey insistent that it will complete its purchase of the Russian made S-400 missile defence system in spite of the threat of US sanctions as a consequence, officials in Ankara have suggested that if this means the US will renege on the deal to physically deliver F-35 fighter jets to Turkey, Russia’s Su-57 fifth generation fighters could be an attractive alternative.
As the US continues to needlessly antagonise Turkey on multiple fronts, Russia’s already healthy partnership with Turkey is set only to expand as Erdogan and Putin have developed a relationship based on trust, transparency and pragmatism which is more than can be said of Ankara’s current state of relations with Washington. To this end, Donald Trump’s recent announcement that he will double the rate of current steel and aluminium tariffs on Turkey makes it abundantly clear that the only special treatment that Turkey is receiving from Turkey at this point in time is especially negative treatment in the wake of multiple disagreements ranging from America’s relationship with FETO, its alliance in Syria with the YPG/PKK, the Andrew Brunson affair and continued western speculation against the Lira.
From the perspective of geopolitical relations in 2015 when Russia downgraded diplomatic relations with Ankara and severely restricted trade, it is from a distance, remarkable that less than three years later full diplomatic, security and trading relations have not only been restored but are flourishing across multiple sectors. At present, not only is Turkey one of Russia’s top five trading partners but Russia is now Turkey’s third most monetarily valued trading partner behind China and Germany. As China continues to invest heavily in the Turkish market and with Turkey now prioritising Chinese lines of credit and direct investment over those from Europe and North America, an important partnership within the frame work of the wider One Belt—One Road initiative is emerging – one which includes not only China, Russia and Turkey, but also Iran.
When one further considers the self-evidently warming ties between Iran and Pakistan which began even prior to the election of the geopolitically multipolar minded PTI party of Imran Khan, the formation of a wider geographically unbroken trading link between China and Turkey is now a very real possibility. As Turkey has reiterated its pledge to continue buying Iranian energy in spite of the threat of US second-party sanctions against any nation that transacts with Iran following the re-imposition of pre-JCPOA (Iran nuclear deal sanctions), it is all the more apparent that Turkey remains committed to a multipolar reality that consistently rebuffs threats of sanctions from Ankara’s traditional US partner.
In respect of China, President Erdogan was among the earliest and most enthusiastic backers of the Chinese One Belt–One Road initiative which was originally introduced in 2013. Since then, the China-Pakistan Economic Corridor (CPEC) has flourished as a modern superhighway which seamlessly links China’s Pacific coast with the Afro-Bengali Ocean region via the Arabian Sea port of Gwadar. At the same time, China and Russia are working on new corridors of trade between the neighbouring superpowers, while the prospect of a peaceful Korean peninsula opens the possibility of another north-east Asia trading route into central and western Eurasia. As Turkey is the country in western Eurasia that lies at the boundary of north-western and south-western Eurasia, Ankara has a clear role to play on the win-win model in terms of being a global junction where Chinese goods and those from other eastern One Belt–One Road participants can meet with incoming goods from the wider Mediterranean region headed towards south Asia and east Asia.
Turkey’s rapidly growing economy is likewise a substantial point of interest for Chinese investors looking for growing, young and dynamic markets in western Eurasia. A recent report from Turkey’s Daily Sabah details how over 1,000 Chinese firms are now active in Turkey across a variety of sectors. According to the report,
“Chinese firms that have been operating in Turkey’s logistics, electronics, energy, tourism, finance and real estate sectors are expanding their businesses in the country. With the entry of Bank of China and Industrial Commercial Bank of China (ICBC), the flow of Chinese companies into Turkey has accelerated and also expanded into the e-commerce sector in the recent period.
The world’s second largest trader, China invests $120 billion annually in various countries across the world and Turkey has been enjoying China’s overseas investments in the recent decade.
Accordingly, the number of Chinese firms operating in Turkey had neared 1,000 by April, according to the data of Economy Ministry.
Drawing attention to the significance of Turkey within the “Belt and Road Initiative” (BRI), an infrastructure development project designed and launched by Chinese President Xi Jinping in 2013 and spanning over 65 countries, Foreign Economic Relations Board (DEİK) Turkey-China Business Council Chairman Murat Kolbaşı stressed that the entry of two Chinese banks to the Turkish financial sector and the acquisition of a port by Chinese investors indicate the country will expand its investments and business operations in Turkey in other sectors, as well, including in energy, logistics, tourism, transportation, infrastructure and e-commerce.
Turkey’s unique position in the BRI makes the country a gate to Europe and Africa for China’s trade operations on the project’s route. Therefore, Kolbaşı highlighted that Turkey will naturally become a logistics hub for trade on the three continents.
With the aim of expanding Turkish-Chinese cooperation in the logistics sector, Turkey’s national flag carrier Turkish Airlines (THY) announced that it will form a logistics company in Hong Kong in partnership with China’s ZTO Express and Hong Kong’s PAL Air.
The partners aim to make the new joint venture one of the world’s largest integrator, and generate revenue of $2 billion within the first five years of its operation. They expect growth performance in proportion to the rising demand in the e-commerce sector.
The new joint venture and Istanbul as a mega transport hub is expected to enable THY to deliver to its customers around the world with excellent service quality“.
The report goes on to detail further Chinese investment in Turkey’s shipping and rail sectors while China and Turkey are also cooperating in the energy sector.
The following major Chinese projects in Turkey look to help elevate both Turkey’s internal economic connectivity and energy independence while readying the west Eurasian power to play a vital role as a key hub in One Belt–One Road:
–A high-speed Ankara to Istanbul railway
–A third nuclear power station to compliment those presently being constructed by Turkey’s Russian partner
–The modernisation of Turkey’s Kumport container port which is now operated by the Chinese company Cosco Pacific
–Working cooperatively to expand Turkish eCommerce platform Trendyo which just received an investment from Chinese global eCommerce leader Alibaba.
Additionally, China and Turkey plan to conduct bilateral trade in a combination of Lira and Yuan in a move that will ultimately make the growing trade between the two nations Dollar free and thus sanctions proof. In 2017, China sold $23 billion worth of goods to Turkey while China imported $3 billion worth of goods from Turkey. Officials in both countries have expressed their desire to rapidly increase these numbers, while President Erdogan recently announced plans to establish new credit lines with Chinese lenders. These credit lines will soon prove to be an invaluable way to resuscitate the Lira which has been the victim of deeply negative speculation against the US Dollar. Finally, as President Erdogan recently announced the first ever Turkish bonds denominated in Chinese Yuan Renminbi it is clear that even prior to Trump’s now infamous Tweet, Turkey was taking measures to secure the increased inflow of the world’s future reserve currency at the expense of the USD. Taken in totality, the now ‘official’ US economic war against Turkey ought to make both the political and business communities throughout Turkey embrace Chinese led investment initiatives to broaden and diversify the scope of the still growing Turkish economy.
Just as Turkey’s trade with China and Russia increases, its partnership with Pakistan looks set to expand and while Ankara’s economic and security ties with Iran look set to defy the threat of US sanctions, it is no possible to dismiss the deeply negative trends in America’s relations with its fellow NATO member Turkey that existed even before Trump’s doubling of tariffs on Turkish steel and aluminium. Recently, Turkish lawyer filed lawsuits against Americans stationed at the country’s Incirlik Air Base due to suspected ties to FETO. This combined with the US sanctioning of two Turkish ministers of state after Turkey refused hand a suspected FETO and PKK collaborator to Washington – the US national Andrew Brunson have made it clear that Ankara believes that not only is the US dismissive of the dangers posed by FETO but that the country has dangerous links to the terror group which go far beyond the already worrying fact that FETO’s leader Fethullah Gulen currently lives on US soil as a free man.
As a proponent of global multipolarity, Turkey seeks positive relations with both its Asian and western partners. However, while the doors to Iran, Russia, China, south and central Asia remain open and inviting for Turkey, the US continues to exercise policies which undermine Turkey’s internal security situation and seek to box Turkey into a single alliance. The result of such a phenomenon is that Turkey is doing what any nation in a similar position would do – going where it is wanted rather than where it is treated with undue suspicion, counter-productive hostility and overt economic bellicosity.
In summary, Turkey has already set up the following mechanisms or made the following pledges to help defeat Washington’s economic war:
–Turkey’s bonds denominated in the Chinese Yuan
–Working to secure win-win credit lines with China
–More Chinese investment than at any time in Turkish history
–Growing trade with Russia
–Growing security partnerships with Russia
–Growing trade with China
–Intensified positive partnerships with Pakistan
–New partnerships throughout Africa which will ready Turkey to enter the world’s newest energing markets
–New outreach to ASEAN to help Turkey diversify its geo-economic portfolio
–A pledge to continue economic transactions with Iran – likely in a combination of national currencies
Acting on these proposals, Turkey can now intensify its trading and financial partnerships with the wider global ‘east and south’ in order to create a long term sustainable future where the US Dollar is no longer central to Turkey’s future economic fortunes.