Moon of Alabama
Turkey's ongoing currency crises creates some new regional aspects that will influence the war on Syria and the fate of its U.S. occupied north-east.
Over the last two weeks Turkey's Lira (TL) behaved extremely volatile.
At the beginning of the year one U.S. dollar cost 3.5 lira. At the beginning of August it cost 4.80 lira. It then went up to 7.00 lira/$ and at Friday's closing it was down again at 6.00 TL/$. But Monday morning lira will again lose more of its value:
Turkey’s credit rating was cut further into junk Friday by S&P Global Ratings and Moody’s Investors Service, which said the volatile lira and wide current-account deficit may undermine the Middle East’s largest economy.
S&P reduced Turkey’s foreign-currency rating to four notches below investment grade at B+ from BB-, on par with Argentina, Greece and Fiji. Moody’s lowered its grade to Ba3 from Ba2, three notches below investment grade. The ratings companies said the weak currency, runaway inflation and current-account deficit are Turkey’s key vulnerabilities.
Turkey's crisis is homemade. The current spat with the United States only exaggerates it. For years Turkey borrowed large amounts of money from abroad and invested it into local infrastructure instead of producing exportable products. Its current account deficit this year will again be some $50 to $60 billion. International banks and other foreign lenders now demand interests rates above 20% from Turkish lenders because the chance of losing the lent money is high.
After the 17% crash on August 13 down to 7 TL/$ the Turkish Central Bank used some one-time measures to support the currency without raising its interest rate. The Turkish president Erdogan is ideologically adverse to interests and keeps the bank from doing what it must do to cool the Turkish economy and to stabilize the currency.
Erdogan asked Russia for help but received nothing but good advice. He also called in favors. When in June 2017 Saudi Arabia's clown prince Mohammed bin Salman (MbS) tried to take over Qatar and to steal its juicy $350 billion sovereign wealth fund, the emir of Qatar called on Turkey for help. Erdogan sent the Turkish army and air force. His troops protected Qatar from a Saudi invasion.
With the lira in trouble the emir flew to Ankara and promised a new $15 billion investment into Turkey. Additionally some mysterious cargo was unloaded from his plane. That saved the lira for a few days. But Turkey's structural problems are unsolved. Erdogan is no longer trusted and his son in law, who he made finance minister, lacks the necessary qualification for the job. Thus:
"We forecast a recession next year," S&P said. "Inflation will peak at 22 percent over the next four months, before subsiding to below 20 percent by mid-2019."
The Qatari move came a few days before its arch enemy Saudi Arabia also moved into the area. On Friday the U.S. announced that Saudi Arabia would support the U.S. occupied north-east Syria with 100 million dollar. The Wahhabi Saudis are now financing the secular Kurdish terror organization PKK/YPG, the local U.S. proxy in north-east Syria.
If the Saudi clown prince MbS wants to take revenge on Turkey's Erdogan for messing up his plans for Qatar, he now has his chance. The PKK has been fighting Turkey for decades to establish a Kurdish state in east Turkey, north Iraq and north Syria. Saudi money and lots of U.S. weapon supplies will multiply their capabilities in their guerilla fight against the Turkish army.
In north-east Syria the U.S. is settling in. Trump had complained about the occupation and wanted the U.S. troops to leave as soon as possible. But his beef was only with the money the occupation would cost, not with the neo-conservative plan to overthrow the Syrian government. The financial problem is now solved. The Saudis and others stepped in and with that no U.S. funds are needed to finance the further occupation.
While the Pentagon continues to build more military infrastructure and the State Department named three high level envoys to push for its desired results:
The State Department will pull back funding it had allocated to rebuild parts of Syria once held by the Islamic State, saying Friday that other countries will now provide $230 million in planned spending....
Commitments from other countries already total $300 million, according to State Department officials, including $100 million announced this week by Saudi Arabia...
Trump’s initial announcement that he expected an early withdrawal of U.S. forces from Syria — and the freezing of stabilization funding — sparked widespread concern that the United States was giving up leverage to press for its long-term goals in Syria, including the eventual departure of Assad and end to Iranian influence there, ...
The State Department named James Jeffrey, a former ambassador to Turkey, as "representative for Syria engagement." Recently Jeffrey worked at the Washington Institute which is part of the Zionist lobby. His latest opus there was guidance for the Trump administration policies in the Middle East. Its number one aim: "Containing Iran and its Shiite proxies".
Retired Army Col. Joel Rayburn, who was a senior director for Iran, Iraq, Syria and Lebanon in the National Security Council, now joins the State Department as deputy assistant secretary for Levant Affairs, and as a "special envoy for Syria." The current envoy to the U.S. coalition to defeat ISIS, Brett McGurk, will continue in his position.
There are now three high caliber State Department envoys tasked with dismantling Syria into federated entities that they can easily manipulate and control. But too many cooks tend to spoil the broth. And the U.S. isl not the only entity with a plan.
Publicly the U.S. will keep the threat of ISIS alive to justify its illegal occupation of north-east Syria. That is why it planted way too high estimates for remaining ISIS members.
Brett McGurk confirmed that the several times announced assault on the remaining ISIS forces in the U.S. occupied area will be delayed further until the bit of ISIS that is left is no longer of use:
Although 99 percent of territory formerly held by the militants has now been retaken, “we still have not launched the final phase to defeat the physical caliphate,” McGurk said. “That is actually being prepared now, and that’ll come at a time of our choosing. But it is coming.”
McGurk described a “very significant military operation, because we have a significant number of ISIS fighters holed up in a final area of the Middle Euphrates Valley. And after that, you have to train local forces to hold the ground, to make sure that the area remains stabilized so ISIS cannot return.”
“So this mission is ongoing,” he said, “and it’s not over.”
The U.S. wants to stay in Syria and anyone but Israel and the Kurds dislikes that.
Today Erodgan's Justice and Development Party's (AKP) held its sixth grand congress. With regards to Turkey's economic problems Erdogan was defiant:
"They were not able to make us collapse and they will never be. If they have their dollars, we have our God. We will walk toward the future together with firm steps," Erdoğan told the crowd, referring to what he described as an "economic attack" on Turkey and its national currency.
He also announced that he will continue his plans to attack the PKK/YPK in Syria even as it is under U.S. protection:
During his address to the AKP congress, Erdogan also repeated his intention to continue military operations to push the Kurdish People’s Protection Units (YPG) and its political wing, the Democratic Union Party (PYD), back from Turkey’s southern border...
“Turkey will continue cross-border operations by expanding them further,” Erdogan said, according to the state-owned Anadolu Agency.
“We will do what we previously did in Jarabulus, Al-Bab, Afrin along our border starting from Suruc to Cizre,” he added, referring to Syrian territory to the east of the Euphrates River controlled by the US-backed Syrian Democratic Forces (SDF).
A renewed fight with the PKK/YPK Kurds, who are leading the U.S. proxy force SDF, will be a nice diversion from Turkey's economic troubles. That such a fight is now also a match between Qatari and Saudi money will intensify and prolong it. For serious national security reasons Turkey can not accept the U.S. proxy entity in north-east Syria. It is a dagger at its underbelly.
Syria and its allies will try to use the intensifying of the U.S.-Turkish conflict to their advantage. Turkey failed to dismantle al-Qaeda in Idleb governorate and the Syrian army has now been tasked with removing it. The Turkish plans to eventually annex the province are over. Other parts in north Syria held by Turkish allied forces will meet a similar fate. The best outcome Turkey can hope for is a sovereign and centrally ruled Syria that can keep the Kurds in Syria under tight control and hinder them from attacking Turkey.
Turkey will have to cooperate with Syria to reach that desirable end state. To achieve the removal of the U.S. from Syria necessitates a common plan.
When will Erdogan understand and accept this?