The telephone call last week Wednesday between Turkish President Recep Tayyip Erdoğan and his U.S. counterpart Donald Trump led to positive developments in the markets. The Turkish lira stood out among other currencies and gained value against the dollar.
Those who follow the market day and night found other reasons for this, however, the overwhelming impact of this development on the strengthening of the Turkish lira is too significant to ignore.
There is no need to discuss in length the sensitivity of the economy on Turkey-U.S. relations. Remembering the Pastor Brunson crisis we experienced in August 2018 is sufficient. It is known that the markets are similarly sensitive with respect to the Russian S-400 missiles. However, this sensitivity is not with respect to Turkey’s purchase of these missiles, but the likelihood of the heavy damage this buying process will inflict on the two country’s relations.
There is a fine line here. If a solution can be found, with this crisis being solved before it leads to harsh sanctions, the markets’ reaction to this may take a positive turn like in the last example, rather than being negative or neutral.
You may ask how this will be possible while the U.S. makes no concessions, with threatening discourse and blackmail statements made daily. It is not so easy to say that there is any shift in the U.S. corporate structure’s position.
Yet, if Trump can get that structure to listen and accept, or resist the pressures, his stance can lead to a solution. Following Erdoğan and Trump’s latest telephone call, I consulted a source who knows the content of the phone call:
“Is there anything new? What is Trump’s position on the matter?”
The answer was that “There is nothing new. We are going to discuss the matter in detail in Japan.”
Our source is referring to the G-20 summit to be held in Osaka, Japan on June 28-29. It is clear from the statements that there will be a detailed and perhaps a final meeting at the end of the month in Japan on the S-400s.
So, when are the S-400s going to be delivered to Turkey? Common information is that they will be delivered by July. However, when discussions on whether the delivery date could be brought forward started, June was deemed appropriate. A date has even been set.
According to information from two different sources, the Russians are able to start the delivery of these missiles on June 21.
However, it is clear that with National Defense Minister Hulusi Akar’s statement last week, there is a new situation at hand. Akar then stated that the S-400s will come to Turkey, but this will not happen within June. This indicates that even though a change in will is not in question, there may be a slight deviation in the date.
What could be the reason behind this? Most likely waiting for the Erdoğan-Trump meeting to take place at the end of the month and the results of this meeting.
President Erdoğan has not been speaking too frequently about the S-400 missiles in public recently. This is probably the case as he is aware of the sensitivity of the topic. Yet, he has not changed his position in the slightest despite pressures from the U.S.
When this topic came up on the agenda in a National Security Council meeting held recently, Erdoğan touched on an interesting point. As you know, there are those who think that if Turkey withdraws from the S-400s, tensions are going to ease and this is going to lead to a spring in Turkish-U.S. relations. However, according to inductions, Erdoğan thinks the complete opposite. It is a kind of, “Give them an inch and they will take a mile” stance. We can state that he does not trust the U.S. Can it be said that he is wrong to think or feel this way?
