Turkish sanctions

Dünya Executive - - REPORT - Capital E.

President Donald Trump tweeted a threat on July 26 to impose “large sanctions” on Turkey unless U.S. Pastor Andrew Brunson – who has been detained in Turkey on terrorism charges for the past eighteen months – is released. This has rattled financial markets. The lira fell by around 3.5 percent against the dollar last week, although it pared some of those losses by week’s end. It’s not clear what sanctions the U.S. administra­tion is contemplat­ing but a bill passed by the U.S. Senate last week that would restrict financing to Turkey by internatio­nal financial institutio­ns may be a sign of things to come. On their own, sanctions would not necessaril­y deal a major blow to Turkey’s economy. However, they would come at a time when strains in the balance of payments have built – Turkey is heavily dependent on foreign capital inflows – and concerns are mounting over the direction of policymaki­ng under a strengthen­ed President Erdogan. We’ve been downbeat on Turkey’s prospects for some time but the imposition of sanctions could ultimately tip the country into a full-blown crisis. (July 27)

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