Turkey remains numb while its economy is expected to shrink further due to a cocktail of EU and US sanctions

G20 summit in Osaka, Japan
Date: 27/06/2019. Location: Japan, Osaka
© European Union, 2019. Source: EC – Audiovisual Service. Photographer: Etienne Ansotte

The EU Council decided to impose sanctions on Turkey for continuing its illegal drilling operations in the Cypriot territorial waters violating the EU member’s sovereignty rights. The Turkish side however keeps claiming the natural sources in the area and insists on the myth that they have equal rights with the Republic of Cyprus.

The under recession Turkish economy cannot be left unaffected by the imminent US sanctions due to Turkey’s acquisition of the S-400 system from Russia to which Trump’s administration clearly opposes. But it remains to be seen how punitive these sanctions will be and whether or not the US will attempt to ease them seeking for a closer cooperation with Turkey.

EU sanctions the Turkish illegal activity in the area

The European Council came to several conclusions two days ago. The EU expressed its concerns about Turkish drilling operations off the coast of Cyprus and called once more Turkey to respect the sovereignty of the member state in accordance with the international law.

Moreover, the bloc decided not only to stall negotiations and meetings on the Air Transport Agreement issue but also to reduce next year’s financial aid to Turkey. The EU Council proposed to the European Investment Bank to revise its lending to Turkey which last year’s figures totaled to 434 million dollars.

Turkey’s stance

On the other hand, the Turkish side seems quite apathetic continuing their operations in Eastern Mediterranean and insisting on their exploring rights off the island since allegedly Turkish Cypriots have equal rights with Greek Cypriots. However, Turkey is the only country in this world that recognizes the Turkish Cypriot declaration of independence while Cyprus, the EU and the international community consider the northern part to be occupied territory of the Republic of Cyprus and the waters surrounding it to be part of Cyprus’ Exclusive Economic Zone. This means that EU nations have the exclusive right to fish, drill and carry out economic activities.

Nonetheless, the Turkish Foreign Ministry stated on the issue yesterday that the EU’s calls and sanctions are just not enough to stop them from drilling in the area. In particular, it was mentioned that the EU decisions “will not affect in the slightest our country’s determination to continue hydrocarbon activities in the Eastern Mediterranean… These are simple things. These aren’t things that will impact us… These conclusions demonstrate how prejudiced and biased the EU is with regard to Cyprus as they make no reference to the Turkish Cypriots, who have equal rights over the natural resources of the Island, in total disregard of their existence in Cyprus”.

Will the US response worsen Turkish economic predictions?

The Turkish economy is under gloomy forecasts following the recent decision of Recep Tayyip Erdogan to fire the central bank chief of Turkey, the lunched EU sanctions together with Moody’s downgrading of Turkey’s debt rating from Ba3 to B1. The negative outlook of the economy continues with inflation at nearly 16% and unemployment at 14%. In detail, the US credit rating agency stated last month: “It remains highly vulnerable to a further prolonged period of acute economic and financial volatility.”

Furthermore, Turkey faces also imminent US sanctions because Turkish President decided to import the S-400 antiaircraft system from Russia. This system was originally designed to shoot down the North Atlantic Treaty Organization’s airplanes and is opposed by the West and United States. Particularly, Donald Trump is required by law to impose economic sanctions on Turkey, but it is still vague how severe these sanctions will be and to what extent the American President wants to jeopardize an escalating political dispute with Turkey. It is highly likely though that Mr Trump will remove Turkey from the F-35 aircraft programme in a diplomatic attempt to protect the US interests.

Notwithstanding, Turkey continues ignoring the West and putting at risk their fragile relations. The Sultan’s way of ruling seems to cause serious concerns to the EU and US officials. The first round of sanctions, which are about to take place, are taken lightly by Turkey as the Turkish Foreign Minister Mevlut Cavusoglu said yesterday that “there is no need to take it very seriously” and “let them understand that they cannot deal with Turkey with such methods”.

All in all, the EU and US relations with Turkey are in dire straits as Erdogan insists on its autocratic policies. The Turkish economy is bound to be affected by the EU sanctions but it is always the US reaction that can greatly define how rigorous the impact will be.

One thing is for sure; Turkey will hold its impassive stance and the West will have to prevent Erdogan from imposing his exploration and exploitation views.