​A note on Turkey’s foreign policy dilemmas

TURKEY - In Brief 06 Jul 2021 by Atilla Yesilada

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A series of minor health problems stayed my hand from updating our audience over the last three weeks. I have fully recuperated, and am proud to dispatch my first Market Brief. While a lot happened during my forced absence, most of it is in the nature of “smoke” rather than fire. Thus, I merely focus on three developing stories which I think will be relevant to market pricing in days to come.These are the fate of Turkey’s S-400 anti-missile systems, Halkbank trial and the Customs Union with EU which urgently needs to be renewed. The S-400 issue did come to the table during the Biden-Erdogan summit, where Erdogan apparently stated that US should not expect any change in Turkey’s position.Yet, several sources confirm that both sides authorized high level bureaucrats to find common ground.There is talk of technical bi-lateral committees being formed to work out a solution. Turkish press reports that Deputy Secretary of State, Mrs. Wendy Sherman did propose to relocate the S-400 batteries to Incirlik NATO base, where they will be strictly monitored to prevent activation.I can’t confirm this news from international press sources. I’m still hopeful that Erdogan will give up his precious toys in return for economic concessions. However, I expect the story to fade away during summer, as politics in both countries slow down.To some extent, Erdogan’s willingness to negotiate in earnest will depend on the economic recovery.If Turkish economy accelerates over the summer, Erdogan will stick to Turkey’s current position. Regarding Halkbank, rumors surfaced in the Turkish press that its management is seeking to bargain with American prosecutors to have the case dismissed, presumably ...