Erdogan warns Turkey will 'find new friends' as US row deepens

Virginia Carson
August 11, 2018

The Lira has lost almost a third of its value this year, as relations with the United States have become increasingly strained.

The lira's plunge is one of the most serious economic crises that Erdogan has faced since coming to power in 2003 in the wake of a financial crisis in 2001 that brought the economy to near meltdown.

"As we have seen during the Greek debt crisis, financial markets are sufficiently interwoven that concerns over debt serviceability in one region can spread quite quickly within European banks".

"Repeated efforts to communicate to the USA administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", Trade Minister Ruhsar Pekcan said in a statement.

The lira tumbled 14 per cent in one day, to 6.51 per dollar, a massive move for a currency that will make the Turkish poorer and further erode worldwide investors' confidence in the country.

US President Donald Trump wrote on Twitter late last month that his country "will impose large sanctions on Turkey for their long time detainment of Pastor Andrew Brunson".

He also said it was wrong of the United States to try to bring Turkey into line with threats, a day after Trump doubled tariffs on steel and aluminium imports from Turkey.

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"Unfortunately, our words have fallen on deaf ears, and American weapons ended up being used to target civilians and members of our security forces in Syria, Iraq and Turkey", he said.

The move could affect $1.7 billion of Turkish exports. The White House said he had authorized them under asection of USA trade law that allows for tariffs on nationalsecurity grounds.

Later speaking in northeastern Rize province, Erdogan spoke of Turkey's plans to trade in local currencies with some countries.

Ankara wants the United States to extradite Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the 2016 coup attempt in which 250 people were killed. Like many other countries around the world they are at odds with the Trump administration and have been hit with US sanctions.

In what appears to be a diplomatic riposte, Turkey later said Mr Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

Ties have been strained by differences over Syria, and the trial in Turkey of U.S. evangelical Christian pastor Andrew Brunson for allegedly supporting the group Ankara blames for an attempted coup in 2016.

"This will be my people's response to those who have waged an economic war against us", he said.

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Turkey remains at loggerheads with the United States in one of the worst spats between two North Atlantic Treaty Organisation allies in years over the detention of American pastor Andrew Brunson and a host of other issues.

"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks".

The lira, which has always been falling on worries about the government's influence over monetary policy and the US tensions, plunged more than 18 percent at one point on Friday to a record low against the dollar.

'This is a national, domestic battle.

"Confidence needs to be regained". That makes a loan in dollars that much more expensive to repay.

Presenting the government's new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust. Hard currency debt issued by Turkish banks suffered similar falls.

Treasury and Finance Minister Berat Albayrak has vowed to execute Turkey's new economic model together with "all national and global stakeholders", while stressing that a "decisive" approach and the Central Bank's independence would be maintained.

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