Turkey vows U.S. boycott; talks resume

American pastor’s arrest that spurred trade conflict still at center of fight as lira edges up

ANKARA, Turkey — Turkey's president appeared to escalate a dispute with the United States that has helped foment a Turkish currency crisis, claiming Tuesday that his country will boycott U.S.made electronic goods. Behind the scenes, however, diplomats resumed contact to ease tensions.

Addressing a conference of his ruling party faithful in the capital, Recep Tayyip Erdogan added fuel to the spat with the U.S., even as local business groups called on his government to settle it.

Investors seemed to look through the fiery rhetoric, pushing the lira off record lows on confirmation that Turkish and U.S. government officials met Monday.

“We will implement a boycott against America's electronic goods,” Erdogan said at the conference. He suggested Turks would buy local or Korean phones instead of U.S.-made iPhones, though it was unclear how he intended to enforce the boycott.

The move is seen as retaliation for the United States' decision to sanction two Turkish ministers over the detention of an American pastor on terror-related charges, and to double tariffs on Turkish steel and aluminum imports.

Behind the scenes, however, diplomatic dialogue appears to have resumed. U.S. officials say National Security Adviser John Bolton had met with the Turkish ambassador to Washington on Monday.

That helped ease the turmoil in financial markets, with the Turkish lira stabilizing near record lows. It was up about 5 percent on Tuesday, at about 6.52 per dollar, having fallen 42 percent so far this year, with most of those losses coming in recent weeks.

Investors are worried not only about Turkey's souring relations with the U.S., a longtime NATO ally, but also Erdogan's economic policies and the country's high debt accumulated in foreign currencies. Independent economists say Erdogan should let the central bank raise interest rates to support the currency, but he wants low rates to keep the economic growth going.

In a statement issued Tuesday, the industrialists' group TUSIAD and the Union of Chambers and Commodity Exchanges called on the government to allow the central bank to raise interest rates to help the currency crisis.

The business groups also urged diplomatic efforts with the United States and an improvement in relations with the European Union.

The finance chief, Berat Albayrak is due to address hundreds of foreign investors Thursday in a teleconference, the state-run Anadolu Agency said.

Meanwhile, the lawyer representing Andrew Brunson, the American pastor at the center of the dispute, renewed an appeal for his release from house arrest and for a travel ban imposed on him to be lifted.

Brunson, 50, is being tried on espionage and terror-related charges, which he and the U.S. government vehemently deny. He faces a long prison sentence if convicted.