Election campaign runs into S-400s
Turkey and the US stepped towards the ring once again, with Pentagon issuing a final warning to Ankara that the purchase of S-400s is a sanctionable act. Ankara doesn’t take the threat seriously, hoping that Trump will intervene at the last second. Turkey’s relations with the West has taken a turn for the worse in general, as Germany too, complained about opaque accreditation procedures for its journalists and the presumed threats by Interior Minister Mr. Soylu of arrest warrants for its citizens traveling to Turkey. Ankara suspects that the sinister West is once again up its old tricks, trying to sabotage Erdogan at the polls, which is likely to complicate compromise and solutions.
While this climb-up has all the makings of last year’s “Nazi” and “Father Brunson” crises, we doubt AKP will elevate the defying of the West to the centerstage of its campaign, because there is little mileage to be made.
Polls are confusing to read, but it appears the opposition has not exploited the deepening economic slump adroitly to increase its lead. On the other hand, Erdogan whistle-stopping around the clock and daily doses of pork-barreling has not done much for AKP-MHP’s poll standings, either. We concur with the view that this election is pregnant with surprises, but on account of the potential of rising S-400 tensions to be reflected to financial markets, grant a small edge to the opposition in close races.
Having covered February inflation print and the MPC meeting during the week, we report briefly on the February cash budget data, which was poor, and share our forecasts on Q4 GDP and January current account balance data, which will be released this Monday and should show, respectively, a material contraction and a modest deficit.
Cosmo has not been convinced by the EM rally, or Turkey’s so-called rebalancing story so far, staying out of TL assets for at least the last month. Now He has another reason to be bearish: The Curse of Father Brunson.
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