ANALYSIS
“The Rapprochement between Turkey and Egypt, Not So Fast” by Mustafa Enes Esen, InstituDE
President Sisi was scheduled to visit Turkey on July 27th, marking the beginning of a new era between Cairo and Ankara. However, at the eleventh hour, he chose to cancel his trip, opting instead to attend the Africa-Russia summit in St. Petersburg where he would meet with Russian President Putin. This abrupt cancellation was intriguing, and subsequently, the Egyptian media brought to light underlying issues that still plague bilateral relations.
According to an anonymous source who spoke to Arabi21, there were some issues that concerned Sisi and ultimately led to the cancellation of the visit. Firstly, Egypt was troubled by Erdogan's meeting with Palestinian President Mahmoud Abbas, alongside Ismail Haniyeh, the leader of Hamas, just one day before Sisi's scheduled visit. Egypt regards itself as the primary authority on Palestinian matters, particularly when it comes to conflicts among various Palestinian factions. The Egyptian government viewed this meeting as Turkish outsiders meddling in its own sphere of influence. Additionally, Cairo does not see eye to eye with Hamas due to the latter's close affiliation with the Brotherhood. Secondly, while Israel refuses to export more natural gas through Egypt, citing a lack of production capacity, it is simultaneously negotiating with Turkey to transfer its natural gas through Turkish territory to Europe. These concurrent negotiations undermine Egypt's aspirations to establish itself as a regional energy hub. Thirdly, Sisi insists that Erdoğan must take more significant actions against the Brotherhood's leadership, headquartered in Turkey.
Turkey and Egypt stand as two influential powerhouses in the Middle East. However, both nations have undergone a significant decline in the region over the last decade. Authoritarian policies and misguided economic decisions have undermined their ability to tackle the economic and political challenges they confront. Although achieving a relationship built on mutual trust remains uncertain, their dire need for normalization will eventually drive them to set aside their differences, at least for some time.
"Why did Turkey restrict gold imports as it rolled new economic measures?" by Mustafa Sonmez, Al-Monitor
The government moved this week to limit gold imports in a bid to curb Turkey's widening current account deficit, which reached nearly $38 billion for the first five months of the year. A presidential decree published on Tuesday introduced a 20% additional fee for some gold imports on top of existing duties. How efficient the planned measure will be is unclear, but jewelry sector representatives are worried about its possible ramifications, including a surge in gold smuggling.
According to Kerim Rota, a former senior banker now with the opposition Future Party, Turkey's financial markets remain far from appealing to foreign investors. "The foreign currency market remains under control. The swap market is closed to foreigners. The deposit and credit market is under heavy restrictions, and the sums coming on to the stock exchange are often very limited," he said.
On the currency front, the government has continued to intervene in the forex market via state banks to prop up the lira. The banks had halted their regular interventions after the appointment of the new economy team, but reportedly reentered the market in July. The lira has remained stable for the past three weeks after losing more than 20% of its value in the first month and a half after the May presidential elections.
With local polls looming in March, the government's economic decisions appear designed to do no harm to Erdogan's election strategy rather than restore market functionality. Such interventions and restrictions, however, threaten to exacerbate Turkey's economic fragilities.
"US officials challenge Turkey's claim to have killed Islamic State leader" by Amberin Zaman and Jared Szuba, Al-Monitor
The Islamic State confirmed the death of its most recent leader, Abu al-Hussein al-Husseini al-Quraishi, on Aug. 3. The jihadist group said its self-styled "caliph" had been killed in clashes with the rival Hayat Tahrir al-Sham (HTS), the al-Qaeda offshoot that is dominant in Syria's Idlib province, and not by Turkey back in April, as Ankara previously claimed.
Biden administration officials speaking to Al-Monitor not for attribution confirmed that the IS leader had not been slain by Turkey. "Turkey lied," one of the officials said. One US military official phrased things more diplomatically, telling Al-Monitor this week that there was reason to doubt Turkey's claim, adding that IS' allegation of HTS responsibility was seen as credible.
IS' rebuttal has revived debate over the veracity of Erdogan's claim. It has also refocused attention on the opaque relationship between Turkey and HTS amid Ankara's professed desire to restore relations with the Syrian government. The al-Qaeda offshoot is alongside the Kurdish-led Syrian Democratic Forces the most influential armed opposition group in Syria and is designated as a terrorist organization by the United Nations, the United States and Turkey.
Orwa Ajjoub, a senior analyst at the risk assessment consultancy COAR Global who specializes in Syria and jihadism, agrees. "Cooperation between HTS and Turkey, especially regarding the security situation in northern Syria, is no secret," he told Al-Monitor. "While it is difficult to tell the nature of their information exchange and the extent to which Turkey might assist HTS in targeting IS figures, both parties view IS as a shared enemy."
In a recent interview with the French daily Le Figaro, former head of France's external intelligence service Alain Chouet suggested that HTS was mainly interested in profit and power and was being aided by Turkey. "HTS has settled into a profitable economy, powered by international aid and by the Turks," Chouet observed.
"Erdogan the Survivor" by Henri J. Barkey, Foreign Affairs
Policymakers must not hope that Erdogan's eventual support for Sweden's accession to NATO represents a category shift. The chaos leading up to Vilnius, and Erdogan's anti-Western election rhetoric, merely represent the most recent twists in the long corkscrew of mixed signals, miscommunication, and mistrust that has characterized the U.S.-Turkish relationship over decades.
Erdogan may have hoped his brinkmanship would enhance the perception of him as an invaluable power broker. After Vilnius, he spun a story that his clever maneuvering forced concessions from the West. But these concessions were small, and in the end, the outcome in Vilnius represented a defeat. Despite capturing so much attention, Erdogan's grandstanding alienated his allies. Creating international dustups over such a vital issue as Sweden's NATO membership and at such a crucial juncture for NATO has made him look smaller.
To turn things around, Washington must take the initiative. US leaders must be frank about their concern that the U.S.-Turkish relationship is in danger of deteriorating beyond repair. Pretending Erdogan's provocations are not serious only inflames and encourages him. The United States must vigorously counter the anti-American rhetoric that originates from Erdogan, his government, and his allied press outlets. US leaders can express their displeasure by canceling meetings and visits with high-ranking officials. They can register more significant anger by, for example, holding congressional hearings on Turkish disinformation campaigns.
Turkey will almost certainly have to ask for assistance from the International Monetary Fund. The United States will inevitably play an essential role in helping shape the contours of an IMF plan and its financing. But Washington must insist on making IMF support conditional on improvements to the rule of law, such as restoring the Turkish central bank's autonomy and shoring up the credibility of financial institutions that produce economic statistics.
POLITICS
Leader of Free Cause Party criticizes Turkish President's approval of Sweden's NATO bid
Zekeriya Yapicioglu, the chair of the Free Cause Party (HUDA-PAR), a radical Islamist ally of the ruling Justice and Development Party (AKP), expressed criticism on August 13th regarding President Erdogan's endorsement of Sweden's application to join NATO.
Speaking at his party's 3rd regular congress held in Istanbul's Pendik district, Yapicioglu stated that the responsibility of those in charge of the state should go beyond issuing a condemnation message regarding recent attacks on the Qur'an in Sweden. He also mentioned, "We will make every effort to prevent the approval of Sweden's NATO membership in Parliament."
Given that the AKP holds 263 out of 600 parliamentary seats, the support of other parties in the ruling alliance would be necessary for Sweden's NATO bid to be ratified, should the opposition not cast their votes in favor.
Istanbul Mayor Ekrem Imamoglu announces bid for re-election in upcoming local elections
On August 15, Istanbul Mayor Ekrem Imamoglu announced his intention to run for re-election in Turkey's local elections in March 2024. In his speech, he addressed divisions within the main opposition Republican People's Party (CHP) and emphasized the transformation of his party as a key mission of his political career.
Imamoglu also said that he wouldn't be running for the main opposition leadership but highlighted a potential link between the party's success in local polls and the resignation of its current leader, Kemal Kilicdaroglu.
The ex-transport minister considered as ruling party candidate for Istanbul Mayor elections
On August 16th, well-known journalist Fatih Altayli said that the ruling Justice and Development Party (AKP) might nominate Adil Karaismailoğlu, the former Minister of Transport and Infrastructure, as its candidate for the Istanbul mayorship in the upcoming 2024 municipal elections. Altayli claimed this information is based on intelligence from sources close to the Presidential Palace.
Currently, Karaismailoğlu serves as the AKP's Trabzon representative and holds the chair position of the Parliament's Public Works, Reconstruction, Transport, and Tourism Commission.
ECONOMY
Moody's Upgrades Outlook for Turkey's Banking Sector from Negative to Stable
On August 15, Moody's Investor Services upgraded its outlook for Turkey's banking sector, changing it from negative to stable. Despite ongoing economic hurdles and high inflation, Moody's noted that the government's efforts to adopt more conventional monetary policies after the May 2023 elections contribute to a more favorable environment for Turkish banks.
Moody's highlighted that while profitability will normalize compared to 2022's peak levels, it will remain strong. The factors contributing to this stable outlook were the improved external funding position, reduced dollarization levels, and sufficient liquidity, especially in foreign currency, Moody's added.
Moody's also projected that Turkey's economic growth would reach 4.2% by the end of 2023, a decrease from the 5.6% recorded in 2022.
Turkish Civil Servants Unions protest government's raise proposal amid bargaining talks
A civil servants union close to the Turkish government, the Confederation of Public Servants Trade Unions (Memur-sen), organized nationwide protests on August 18. The protests came after the government offered a 25% raise for 2024 in ongoing collective bargaining negotiations that began on August 14.
The government's increased proposal by two points was met with dissatisfaction from Memur-sen, as it remained eight points below the Central Bank's projected inflation rate of 33%.
A new and final offer from the government is expected on August 22. If an agreement isn't reached by that date, the matter will be referred to the Public Officials Arbitration Board. The board's decision on the contract is expected by the end of the month.
The Confederation of Public Employees Trade Union (KESK) also went on strike against the government's initial offer, advocating for a minimum salary of at least 45,000 Turkish liras ($1.6K).
Central Bank initiates rollback of FX-protected deposits
In the early hours of August 20, the Turkish Central Bank took a step towards more conventional policies by rolling back a scheme that aimed to protect lira deposits from foreign exchange depreciation. In its latest move, the central bank lifted targets for banks regarding conversions of foreign exchange deposits to the lira-protection scheme known as KKM.
Instead of encouraging KKM accounts, the central bank is urging lenders to transition these accounts into regular lira accounts. This shift aims to promote macro-financial stability and bolster lira deposits.
Additionally, the central bank increased reserve requirement ratios for foreign exchange deposits with a separate decree in the Official Gazette. The reserve ratio for FX accounts with up to one-month maturities was raised from 25% to 29%.
HUMAN RIGHTS
Mistreatment of jailed Kurdish politician on route to her sister's funeral, reports Labour Party MP
On August 16th, Sevda Karaca, a Labour Party MP, released a statement revealing that Gultan Kisanak, a jailed veteran Kurdish politician, experienced mistreatment while being accompanied by prison guards on her way to her sister's funeral. Kisanak was transferred from Kandıra High-Security Prison in northern Kocaeli province to eastern Elazig province for the funeral on August 9th.
The MP claimed that after the funeral, Kisanak was taken back to the prison in Elazig without being informed, and she was left there overnight without her belongings or medication. Karaca further reported that following her time in Elazig, the 62-year-old politician was subjected to a seven-hour car journey to central Anatolian Sivas province, which is more than 311 km away because there were reportedly no available flights.
FOREIGN POLICY
Russia's ship raid off Turkey's coast raises concerns amid grain deal diplomacy
Armed marines raided a Turkish-based vessel using a helicopter on August 13, about 60 km off Turkey's northwest coast. The incident occurred in international waters close to Istanbul and was termed an inspection by Moscow before the ship continued its journey to Ukraine. Russia fired warning shots using automatic weapons at the Palau-flagged Sukru Okan ship when it didn't respond to a command to stop.
Russia's recent raid on a ship near Turkey's coast brings the Ukraine war's impact to a NATO frontier and raises concerns as Turkey aims to restore a grain-export deal with Russia for stability in the Black Sea.
Turkey, NATO's second-largest military, hasn't publicly commented on the incident. Analysts say this tests President Erdogan's commitment to maintaining relations with President Putin, whom he has invited to discuss resuming a UN-brokered deal protecting grain exports from Ukraine.
A Turkish defense ministry official stated that Ankara is investigating the Black Sea raid. Last month, Turkey announced a potential visit by Putin to Turkey, but Russia hasn't officially responded so far.
On the other side, the USS Mount Whitney, the flagship of the United States Navy's 6th Fleet, arrived in Istanbul on August 18, marking the second consecutive visit of US ships to Turkey during a tense period in the Black Sea.
On August 13, the US Gerald R. Ford Carrier Strike Group arrived in the western Çanakkale province's Gökçeada island as part of the Exercise Sage Wolverine.
Ambassador Jeffrey L. Flake introduced the ship to the press, stating, "I think this visit is an excellent example of cooperation and coordination between Turkey and the USA.
President Erdogan visits Budapest, holds several meetings with leaders
President Recep Tayyip Erdogan traveled to Budapest, the capital of Hungary, for official talks. During his visit, he had bilateral discussions and meetings with Prime Minister Viktor Orban, Hungarian President Katalin Novak, and other leaders. He also attended celebrations for the Founding Day of the Hungarian State and a portion of the World Athletics Championships hosted by Hungary.
President Erdogan's meetings included talks with President Mirziyoyev of Uzbekistan and President Vucic of Serbia. During the meeting with President Vucic, discussions covered Turkey-Serbia relations and regional matters. Erdogan emphasized the importance of Serbia for Balkan peace and stability, while Vucic acknowledged Turkey's influential role in the region.
Additionally, President Erdoğan met with Zeljka Cvijanovic and Milorad Dodik, members of the Presidency Council of Bosnia and Herzegovina, during his visit to Budapest.
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