This article throws light on Turkey’s crucial position a bridge between the East and West and what it needs to achieve the tremendous growth it once saw

A coup that lasted for less than 24 hours left a mark even deeper. Turkey’s history of coups and administration change, unlike scotch, does not get better with time. It opens an interesting window into the terrifying loss of liberalism in the Middle East. A recent report by the UN shows that chances of another revolution since the Arab spring are higher than ever.  By 2020, predicts the report, almost three out of four Arabs could be “living in countries vulnerable to conflict”. The youth unemployment rate, at 30%, stands at more than twice the world’s average of 14%. I will be throwing light on Turkey’s political history, its relation with the NATO and what the most recent coup means for a country that was termed as a Breakout Nation (in the eponymous book) by Ruchir Sharma only until a few years ago.

Peeling the first layer off reveals an interesting phenomenon. Turkey’s current political administration is a testament of the slow degradation of the Ataturk Reforms, the modernising project initiated by the country’s first president. Over the years, the current president has insinuated a staunch Islamic non-liberal stance, questioning the founding pillars of secularism first introduced with the 1928 amendment of the Constitution of 1924. The failure of the coup was a clear result of its inability to gain momentum within the mass. Culminating into  arrests of army conscripts and mobilisation of  angry Erdogan loyal mobsters, the coup brings us to the first logical conclusion of lack of a proper secular force due to ongoing conflict and volatility in the Middle East; a hole filled by opportunist radical politics of hatred and division.

The dynamic change in liberalism ranging from France and UK to Turkey has left investors in a state of constant guessing. It results from the obvious dynamic change in the EU. Europe, in the early 20th century represented certain ideals that inspired cultural and ideological import through ‘westerners’ such as Ataturk himself. Modern day Europe is anything but an encouraging sign of liberalism with major events that establish far-right agendas, promote extreme form of nationalism that delineates foreign policy as a pessimistic zero-sum game. The bureaucratic blockage, red tapism in Brussels, and major inward looking political parties in countries such as France and Spain gaining momentum, its is naive to just blame a country like Turkey for authoritarian regime and falling investments. The EU, once considered to be a sign of political stability, is on shaking pillars owing the recent turn of events such as Brexit and Italian referendum [in process at the time of publishing].

The Turkish coup stimulated some major economic, military and political changes. It is only justified to consider all these factors in retrospect while considering Turkey’s final economic and financial situation. Until 2014, Erdogan and his political party has steered Turkey to strong emerging economy for a decade. Termed as a Breakout Nation by Ruchir Sharma, Turkey was one of the few G-20 nations that did not plunge into a recession during the financial crisis; strengthening the country’s ground for membership into the EU. However, Turkey has since come a long way. Tourism which adds $30 billion to the Turkish GDP every year has fallen steadily over fear of terrorist threats, disruption in relations with Russia, involvement with Syria and collapse of talks with the Kurdish separatists.

Recent events have shifted age old dynamics in terms of relations with the US and Russia. Turkey has taken a tough stance against the NATO and subsequently concerned western parties. The current events are in some ways similar to the ones Turkey faced post World War II when the US first extended its help to Turkey under Truman Doctrine. It fuelled the belief that military could only be strengthened with the help of the US. As a consequence, Turkey missed out on the opportunity of benefitting from Khrushchev’s political idea of peaceful coexistence as a founding pillar of USSR’s foreign policy and opportunity to trade with the Eastern bloc like many others that did not recognise China till 1971 because of heavy American influence. Very soon, Turkey saw political change in the 1960s with rise of the country’s first vocal left wing ideas and intellectuals who questioned NATO’s purpose of merely an imperialistic arm of the US.  Erdogan’s announcement to be a part of the Shanghai Cooperation Organisation is nothing more than the president learning from history to capitalise on lost opportunities before it gets too late.

The coup allowed Erdogan to gain momentum with anti-US or more appropriately pro-Turkey policies. Turkey lost the the opportunity to dominate the world stage in the middle of the 20th century due to the heavy costs associated with its involvement with the US. The political isolation and military costs of early engagement with the US were enormous [it provided for 32 million square metres of land which costed the government 30 million Turkish Iira annually]. The current shift from the NATO and EU is not only a long term effect of the deterioration of relations with the US during the Iraq War [Northern Iraq serves as a safe haven for the Kurdish Workers Party], but also military and nationalist concerns due to American support of Kurdish YPG fighters in the Syrian Civil War.

These recent events in Turkey have come with huge economic costs to the country. Tourism, which adds $30 billion to the Turkish GDP every year has taken the first hit. According to official data from the Tourism Ministry, a total of 2.45 million tourists visited Turkey in October, representing a 25.79% drop from the previous year. Rampant arrests have pushed the country to take the number one spot for most number of journalism-related arrests. Moody’s has dropped the credit rating for the country to near junk. According to Economy Ministry data, FDI in Turkey for the first half of 2016 plunged 54% compared to the same period last year, dropping to $4.8 billion from $10.5 billion.

The recent US presidential elections have added nothing but misery for the country’s exchequer.The Turkish lira has lost 20% of its value since 2015 and is to lose further with the strengthening dollar. Desperate for stability, the Central Bank has increased 0.5 percentage points in its benchmark one-week rate to 8% for the currency has lost 9% in value in the month of November 2016 alone. While this reflects positively on the autonomy of the central bank, it has done little to help the ailing infrastructure projects that are much needed for the country to grow. High interest rates are crushing the corporate growth [Corporates hold more than $160bn in foreign currency debt]. 75% of Turkey’s current account deficit  [7% of the economy] is financed by volatile short term capital inflows.

Erdogan recently requested the citizens to cash in their foreign currency holdings and buy the Turkish Lira in order to boost the currency. He has also floated the idea of trading with China, Russia and Iran in local currencies to curb deficits and is set to discuss them in his upcoming state visits. “We need to solve the interest question. I know I’m alone, but I will keep fighting. I’m determined,” Erdogan said. “We need to stand up for our economy like we stood up for our future on July 15.”

Turkey stands as a crucial point, marking a bridge between the east and the west, democracy and autocracy. It is important for Turkey to realise that a shift towards east does not result in a zero sum game; turning to east should not necessarily mean turning a back towards the west.Turkey’s trade with EU was $147 billion compared to a meagre $24 billion with Russia and it is a fact that cannot be ignored. Erdogan must not fall victim to partisanship like his predecessors in the 1950s.

Turkey’s strategic position between the east and west comes with complex opportunities. China and Turkey have voiced their readiness to revive the ancient Silk Road, along which the links are expected to extend from China to Central Asia and the Middle East, and then on to Europe via Turkey. Erdogan stands at a critical point for the country and must undoubtedly execute the mammoth task of integrating the East and West to make Turkey a breakout nation once again.