Saturday, December 5, 2015


Turkey may be about to experience a perfect storm in its economy, mainly through the missteps committed by its government of late. While any one of these issues might not, in and of itself, be sufficient grounds to raise Country Risk, rest assured that the combination will most certainly result in a large amount of economic damage, and the country's national policies could spell financial disaster.

Here is what we are concerned about:

Russia's minimal incursion into Turkish  airspace

(1) Turkey's shoot-down of a Russian warplane, that appears to have intruded into its airspace for no more than 10-15 seconds, in the extreme southernmost frontier area, has resulted in what could be crippling economic sanction imposed upon it by an angry Russia. It will especially affect Turkey's tourism industry, its need for natural gas, and its exports to Russia.

(2) The disclosure that Turkey continues to allow ISIS/ISIL to sell its bootleg oil through Turkey ( mentioned on this blog more than one year ago), and that senior government officials ( e.g. President & Prime Minister) are known to be personally profiting from it, means that Western sanctions may not be far behind.

(3) The sale of arms and supplies to ISIS, reportedly by the Turkish intelligence services, could mean that foreign trading companies might be implicated, in terrorist financing sanctions violations. Trade with Turkey just became a clear and present danger.

(4) The fact that Turkey allowed thousands of wannabe jihadists to enter Syria's civil war through its territory has not been lost upon Western leaders. Can a NATO member be sanctioned by its fellow members ?

(5) Turkish official statements, directed at Israel, a former de facto ally, including threats to conquer the holy sites in Jerusalem, coupled with Turkey's grant of safe haven to Hamas, thereby allowing it to operate in the West Bank, could result in an Israeli response, plunging the country into a wartime situation, just when things with Russia were grave.

Will the Turkish economy falter ? Even if it does not, it could be fatally weakened by any one of the above, and drop into a recession, or worse. You are advised to recalibrate Country Risk for Turkey to the highest level, meaning no extension of credit, no bank client shipments on credit, and no investment in-country, until & unless all of the issues presented here are resolved. 

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.