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Daily Memo: Mixed Signals from the US and Turkey, Circled Wagons in China

All the news worth knowing today.

GPF Staff |August 8, 2018

Two stories stand above the rest today.

The first concerns the U.S. and Turkey’s on-again, off-again relationship. On Tuesday, things seemed to be going well again. A Turkish delegation headed by the deputy foreign minister arrived in Washington, where the two sides reached a preliminary agreement over imprisoned American pastor Andrew Brunson, according to Hurriyet. The U.S. Embassy in Turkey piled on the good news, tweeting that “the U.S. continues to be a firm friend and ally of Turkey despite current tensions.” The embassy also emphasized the vibrant “economic relations” between the two countries – a notable statement, considering the value of the Turkish lira continues its nosedive. (It fell to a new record low against the dollar – down to 5.4 – marking a 28 percent slide on the year and an almost 8 percent drop this month. On Tuesday, the Turkish Central Bank changed its foreign reserve requirements. It hoped to strengthen the lira but instead weakened it further.) The government in Ankara insists that it will not abide by U.S. sanctions against Iran, but the events from Tuesday suggest the U.S. and Turkey can find a way to pursue their interests without bludgeoning the Turkish economy.

By Tuesday evening, though, the relationship soured again. A spokesman for the U.S. State Department said that no deal had been made over the Brunson affair – and that if it had, Brunson would be safely on U.S. soil with his fellow citizens, not in Turkey. Maybe the spokesman was just talking tough, knowing full well that a deal was already in place, but the recent animosity between the two countries suggests otherwise.

What we know for sure is that the Turkish delegation currently in Washington will meet with U.S. officials on Wednesday or Thursday, that Turkey’s economy continues to struggle, and that, aside from rumors, there is little indication that Washington and Ankara have overcome their differences on Brunson or on Iran sanctions.

The second story involves China, which is becoming more dictatorial as its relations with the U.S. deteriorate. On Tuesday, the Trump administration moved forward with new 25 percent tariffs on an additional $16 billion worth of Chinese imports, set to take effect Aug. 23. On Wednesday, Beijing responded in kind. (The sanctions were originally announced in March and so had been expected sooner. It’s unclear why they were delayed.) Yet the U.S. remains undeterred in its moves against China, even as smaller U.S. companies begin to grapple with higher materials prices, according to a Wall Street Journal report Wednesday morning.

But you wouldn’t know it by reading Chinese media, which are focusing not on the trade war but on newly reimposed U.S. sanctions on Iran. Their relative silence is in keeping with Beijing’s media strategy, a public relations version of “bide your time.” A notable exception to this was a report from China’s National Bureau of Statistics, according to which there was a 3.9 percent decline in Chinese retail sales last month. If China is to weather the trade conflict with the U.S., it needs retail sales to remain buoyant. This NBS report is just one data point, but it’s a foreboding one.

The government, meanwhile, continues to slowly and steadily crack down on Chinese society. From the People’s Daily to the Global Times, news of measures to “enhance patriotism” among intellectuals is everywhere. These are surely a response to recent high-profile op-eds written by Chinese professors in recent weeks making veiled critiques of Xi Jinping. A government-run newspaper called the Beijing Daily also noted that Chinese authorities were investigating private tuition centers for “violating curriculum and safety standards.” Put simply, Beijing is trying to make sure Chinese intellectuals toe the party line – an important tripwire, considering what previous crackdowns on Chinese intellectuals have presaged in the People’s Republic’s short history.

Other areas are being similarly restricted. The China Banking and Insurance Regulatory Commission announced it would be cracking down on criminal activity in the country’s financial sector. Caijing reported that Beijing will more heavily scrutinize local government debt and public-private partnerships.

We would be remiss if we failed to also point out that the latest official data from China showed impressive regional growth rates throughout the country, especially in the poorer western reaches. The books may be cooked, of course, but Xi has also made an example of those who falsify statistics, and as suspicious as the figures may be, they cannot be ignored outright.

Honorable Mentions

  • The Syrian government and Iranian proxies continue to deploy their forces in northern Latakia province.
  • Turkey’s energy minister announced that China will help Turkey build a nuclear power plant northwest of Istanbul. This lends credence to the rumors that China and Turkey are enhancing bilateral ties.
  • A group of influential Nicaraguans have written a letter to the head of the army, asking him to disarm government-backed paramilitary groups.
  • An Afghan newspaper claims the U.S. and the Taliban have reached an agreement to restrict media activities in Afghanistan.
  • Poland, Lithuania, Latvia and Ukraine have issued a joint statement condemning Russia’s recognition of Abkhazia and South Ossetia after the Russo-Georgian War, which began 10 years ago yesterday.
  • In a speech on Tuesday, Australia’s prime minister struck a more conciliatory tone toward China, which commended what it called “positive remarks.”