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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher.
The re-election of Recep Tayyip Erdogan to the Turkish presidency signals that the United States is losing influence in Turkey. Erdogan came to power in 2003, and his subsequent campaign to decouple Turkey from the US has been a long and drawn-out process that his opposition has tried to stop.
The Turkish president said before his victory that if his opponent, the sole opposition candidate Kemal Kilicdaroglu, wins the second round of the presidential election, then “terrorist organisations and American companies will win.” In addition, ahead of the second round of presidential elections, the West exerted unprecedented pressure to collapse the Turkish currency – the lira.
It is recalled that JPMorgan Chase and HSBC Holdings began reporting about the inevitable weakening of the lira to 24 or 25 liras to the dollar (currently it is around 20). In addition, Western financial players opened many short-term positions against the Turkish currency, taking lira on the domestic market and buying foreign currency with employed funds. In this context, the cost of insuring against a weakening lira reached record levels in May.
To protect the Turkish lira, the Central Bank of Turkey had to actively sell the currency on the domestic market under unprecedented pressure from financial players. Only in the week from May 5 to 12, Turkey’s gold and currency reserves decreased by $7.6 billion.
On the stock exchanges, one can effectively bet whether a currency, including the Turkish lira, will strengthen or weaken for a certain period compared to, for example, the dollar, up to a certain level. If major financial players agree to cause an avalanche of expectations, they can trigger specific market reactions. In turbulent political situations, such as elections, plummeting the Turkish lira, for example, becomes easier.
Regarding the consumption of gold and currency reserves, Turkey is in a terrible position in terms of its total reserves and has a rather complicated economic situation. Turkey reached for the gold reserves because it did not have other foreign currency reserves of that volume available immediately, with which it could intervene.
Nonetheless, manufactured economic attacks on Erdogan began too late, and he has already secured his presidency for another 5-year term despite Western desires for Kilicdaroglu to prevail. These attacks to remove Erdogan from power have been a Western ambition for many years. It is recalled that back in 2016, Washington attempted to get rid of Erdogan with a military coup and install a pro-American government that would continue with the policy of constructive obedience, characteristic of Turkey since it joined NATO in 1952.
Erdogan felt that the US would be present in the election campaign, and even on the day of voting, it turned out that the American pressure did not stop. The US finds any dissident voice in NATO very undesirable, especially a country like Turkey because it has the second largest standing army in the alliance and occupies perhaps the most geostrategic location as it shares a maritime border with Russia and land borders with the Middle East and Europe. Therefore, Turkey is a country of capital geopolitical importance for the US, thus motivating intentions to return Turkey to its semi-vassal position, something Kilicdaroglu wanted to do.
The fact that financial institutions in the West have been working to weaken the Turkish lira, foreign exchange, and reserves is something that fits into that policy that aggressively started in 2016 and has been continuing in anticipation of some critical political change, which evidently did not occur since Erdogan won the election.
Scaring the Turks by weakening the lira did not have the massive effect on voters that the US was hoping, even if the Turkish currency is approaching a record low. Although the economy might be struggling, his policy of relative independence from NATO and the US appeals to those with Ottoman nostalgia – a time when the Republic of Turkey’s predecessor was a great power.
Despite the earthquakes, inflation, and bad economic situation, due to Erdogan having solid political weight and a sovereigntist foreign policy, it is no surprise that he won over Kilicdaroglu, who wanted to return Turkey as a vassal that served Washington’s interests. Even though the economy is the weakest point of Erdogan’s policy, the counterbalance is that he raised Turkey from a position of blind obedience to NATO and the US to a relatively independent regional power, something that voters will not fail to consider due to their historical memory of being an empire.
Official results showed Kilicdaroglu won 47.9% of the votes to Erdogan’s 52.1%, demonstrating it was a tight victory for the latter. Still, the margin would have been wider if Turkey’s economic situation was not destabilised, partially caused by Western economic targeting.
Ankara’s purchase of the Russian S-400 missile defence system, opposition to US-backed Kurdish militias in Syria, and bypassing Iranian sanctions, among many other reasons, is why the US opposes Erdogan. Kilicdaroglu’s victory would have alleviated economic problems, but it would have meant a resubmission of Turkey serving US interests rather than Turkish interests.
