Cash-Strapped Turkey Received $1 Billion From Currency Swap With China
Just when Erdogan and the Turkish lira needed it most
Editor’s note: China swapping $1bn in currency for the first time under a 2012 deal with Ankara whose currency is falling is not good business and wasn’t done for business, but for geopolitical reasons. Certainly China will expect, or has already received a gesture of gratitude from NATO Turkey elsewhere.
In a new report released by Bloomberg, it was revealed that Turkey received around $1 billion from a currency swap deal with China in June of this year. According to Bloomberg’s unnamed sources, the currency swap was a part of an agreement signed by Turkey and China in 2012 but this is the first large cash infusion by Beijing.
The money came at a crucial time for President Recep Erdogan and his ruling Justice and Development Party (AKP) as June was the period when the municipal elections were being held. At that time, the Turkish economy was also deeply troubled (as it still is) and, despite Erdogan’s best efforts, the AKP was losing elections in major cities including Istanbul and the capital Ankara.
While the AKP still managed to lose these elections, including a second vote in Istanbul, the $1 billion from China is still important for Erdogan as Turkey’s relations with the US have been driven into the ground. During the period Turkey would’ve been brokering a deal with China, Ankara was also clashing with Washington over issues including the situation on the ground in northern Syria, the fate of Venezuelan President Nicolas Maduro, the delivery of the F-35 fighter jet that Turkey is a partner in developing, and, of course, the purchase by Turkey of Russian S-400 missile defense systems.
The money for Turkey also seems to have paid off for China. Earlier in this year’s election season, Erdogan had publicly criticized China multiple times by parroting Washinton’s propaganda on “concentration camps” in Xinjiang. Initially, it seemed Erdogan was going to use these lies about fellow Turkmen in China to whip up nationalist fervor and get the right-wing nationalist and Islamist voters to the polls.
Following AKP’s loss in the initial Istanbul election, Erdogan was forced to shift his strategy for the second round by moving away from some of his previous voting bases. If there was one thing that the first election in Istanbul did show the AKP, it was that they could no longer count on these more secular nationalist allies in parties like the Nationalist Movement Party (MHP) to turn out for the AKP candidates.
In the second Istanbul election, with tension with the US still heightening and the economy still spiraling, Erdogan seemed to be looking for new voters, including Kurds. While the AKP used to pull Kurdish votes in Erdogan’s early years, it has been a long time since any Kurdish territory went for the AKP in a fair election. However, during the election, Erdogan seemed to be looking to draw some Kurdish voters by making moves such as allowing lawyers to finally visit Kurdish leader Abdullah Ocalan for the first time in years.
The relationship between Turkey and the US has been on the rocks for quite some time, not just under Trump, and this has led to some major shifts in geopolitical relations. Following the attempted coup in Turkey in July of 2016, relations with the US began to sour when the Obama regime refused to extradite exiled Turkish cleric Fethullah Gulen and stop supporting the Kurdish People’s Protection Units (YPG) in Syria, which Turkey classifies as a terrorist group.
As relations have gone downhill between Turkey and the US, Ankara has begun to look for new partners to fill essential roles in their economy and defense. One benefactor of this shift in Turkish policy has been Russia, who not only sold the S-400s to Turkey, with Erdogan knowing there would be repercussions from the US but also began working with Turkey on trying to negotiate an end to the Syrian war in talks that excluded Washington.
Another apparent change in Erdogan’s strategy after the first Istanbul election seems to be his attitude towards China. While the billion dollars didn’t help the AKP win in the second Istanbul election it probably did help alleviate some of Turkey’s pain as the country came incredibly close to crisis and several of Erdogan’s close associates had been slapped with sanctions. Soon after this and after this apparent influx of Chinese cash, Erdogan soon changed his tone on China and began to offer assistance to Beijing as well in helping them deal with extremism in Xinjiang (although how close the Communist Party will allow the Muslim Brotherhood AKP to work to Uighurs remains to be seen).
It now seems that relations are changing between Turkey and China and that Turkey may be looking to diversify their economy in a move to better protect themselves from future US economic warfare. If this is the case, and Turkey truly is shifting East, China would be the ideal partner and it is well known Turkey could easily play a key role in the Belt and Road project based on their crucial position as a gateway between Europe and Asia.
China has helped Turkey in a rough period for its economy, and with the US still on unstable ground with the AKP over issues including the S-400s and Syria, it seems Ankara is already seeking to have Beijing play a greater role in their economy. Turkey is still under some US sanctions (which Erdogan is no stranger to breaking) and Beijing is locked in a trade war with Washington, Turkey may soon find it more appealing to work with China. The US is still pushing Turkey, although they have recently made some small concessions, if the pressure ever becomes too great, Erdogan could immediately throw NATO into a panic should he decide his interests are better served with the worlds other superpower.
Source: Geopolitical Alert