|April 26, 2018
Cole Altom: Hello everyone, welcome to another Geopolitical Futures podcast, I am Cole Altom. This is Jacob Shapiro. Jacob, how ya doing?
Jacob Shapiro: It’s a beautiful Monday morning.
Cole Altom: It is a beautiful Monday morning. It’s a busy Monday morning. And it’s not just the comings and goings of the world. Although it’s partly that, we’ll get to that in just one second. There’s also just you know the basic exigencies of our commercial enterprise. That’s neither here not there.
Jacob Shapiro: No it’s actually there because I think the readers should know that there’s a special report coming out soon, which is applying our methodology to a city, the city of London. So look out for that.
Cole Altom: That is really interesting I think. We’ve kinda been kicking this idea around for little while and we have a very set way of looking at the nation-state and we apply a pretty rigid you know geopolitical model to it. So we always kind of thought well what if we did that to a city? What’s a good city? What’s an important city? What’s an old city? London kind of makes a lot of sense.
So we’re gonna roll out the geopolitics of London here pretty soon. And we’re gonna see how it goes. And please, please feedback. We know you’re not shy. I know you’re not shy so come with us with feedback. You like it, you don’t like it. We’ll see what happens. That will be available to subscribers at some point in time. We’re not quite ready for it. In fact, I think we’re gonna go over it more in detail next week. But we got some more ideas to kick around in that regard. We’ve also got something coming out next Sunday I think.
Jacob Shapiro: Yes in celebration of GPF’s favorite holiday, we will be producing a piece on a topic that we will not reveal. I think we should just hint by saying to our readers that fear is the mind killer.
Cole Altom: Right, it’s just for fun again, we like to apply this model to a bunch of different things and hopefully you guys like it. We like doing it so without further ado, week ahead, what’s going on? The Middle East is on fire as it is, this should basically just be the Middle East roundup at the beginning of every podcast because there’s so much every time to say.
Jacob Shapiro: You know we had a reader write in earlier this week saying that you guys are focusing way too much on the Middle East. And on the one hand, I understand that it might feel that way because a lot of the content that we’ve been pushing out in the first quarter of this year has been on the Middle East.
But when you sit down on Monday morning and you see that over the weekend Turkey announced that it was going to be commencing operations in northern Iraq. Iraq said no you’re not and deployed its army there. You had unconfirmed reports in Arab media that said the Israelis had hit Hezbollah targets. You had Hezbollah denying, the Israelis pleading the fifth basically. You had Houthi missiles flying into various parts of Saudi Arabi.
Cole Altom: And last time that happened, flurry of activity thereafter. It’s just one of those things.
Jacob Shapiro: So it’s just there’s a lot of, a lot to get through just from what happened over the weekend to sift through what’s important, what is not important. What’s real, what’s not real.
Cole Altom: And it’s a good point, we do appreciate like the opinions of our readership obviously. And we hear you. But we didn’t force the retreat of the Islamic State and ascension of Iran into some of those vacuums. They did that on their own. So we are consigned to talk about it.
Jacob Shapiro: Yes and you know while all this is going on and while we’re figuring everything else out, we should note that coming up end of the week, beginning of next week, the leaders of Russia, Turkey and Iran are going to get together for the first time in awhile and they have a great deal to talk about in the region so Middle East, a lot of stuff going on, a lot of things going on.
Cole Altom: Speaking of Russia, you want to talk about the diplomats?
Jacob Shapiro: Yes. So the other thing that we are watching right now is that, and you’ve probably seen this, a number of countries, not just the U.K. and the United States now, have expelled Russian diplomats. So the full list here is we have diplomats expelled from Canada, Germany, France, Ukraine, Poland, Lithuania, the Czech Republic, the Netherlands, Latvia, Estonia.
Cole Altom: Not token countries, like these are really important countries, these are big names.
Jacob Shapiro: Yes and there was internal argument at GPF among the analyst team about whether or not Germany and France were gonna go along with the U.K. and with a harsh response to Russia over this alleged spy poisoning in the U.K. And it turns out that yes, they are going along. The E.U. perhaps not the entire E.U. but large blocs of the E.U. are all signing on to express displeasure with Russia. Russia has said it will respond reciprocally and considers all of this nonsense.
It may be that’s where this ends. This may be just another diplomatic kerfuffle that you know declines into history and we don’t remember it in a year’s time. But that’s, we’re looking at really all these different countries what they’re doing and whether there are blocs now forming within the E.U. for those countries that I didn’t name that haven’t expelled diplomats.
Cole Altom: Well either way unanimity is the name of the game in the E.U., right? And so either way, it doesn’t really bode well for sanctions relief for Russia so.
Jacob Shapiro: Exactly. And then last but not least we cannot forget the dear leader over in North Korea. North Korea has been relatively quiet lately. It has been understanding of South Korea and its needs to you know continue strong relations with the United States.
But South Korea let it be known that they wanted to deploy some F-35 fighter jets and buy more missiles from the United States. And a North Korean newspaper came out strongly criticizing South Korea saying that South Korea was jeopardizing the spirit of peace and reconciliation that had so far obtained on the Korean peninsula.
Cole Altom: So you’re saying a peace agreement is NOT a forgone conclusion?
Jacob Shapiro: Well I hope I’ve never said it was a forgone conclusion.
Cole Altom: No I mean I’m being a little smug I guess. But that, you didn’t read those words verbatim in the media but you got the sense that like wow this is a new chapter. This is the turning of the tide, this is a new thing and there are some of us out there who are like well maybe not so fast.
Jacob Shapiro: Well it’s a new chapter, whether it’s the turning of the tide we don’t know. All we can say right now is you know most of the time North Korea says crazy things all the time. Right now saying this thing at this particular time might be important. Now it might be that this is within the realm of what North Korea considers polite disagreement.
But this really is the first sort of blip in the last couple weeks where North Korea has very loudly made its displeasure vocalized. So we’ll have to see where that goes and whether it was just a small expression of disapproval or whether North Korea perhaps in the wake of John Bolton’s appointment is reconsidering options.
Cole Altom: Alright well thanks very much. I want to bring up one point before we forge ahead into our future segment. Like last week, it was pre-recorded, right. So me and Jacob and Xander Snyder sat down and we kind of wanted to talk about the Middle East.
But it turns out all the things that we wanted to talk about were sort of revolving specifically around Turkey, so we kind of called an audible and focused specifically on that. Now the reason I want to bring that up right now is again it’s pre-recorded, so this is kind of like non-linear. So hopefully it doesn’t come off that way and there are no questions.
On that note, I remember we brought up the possibility of Turkish troops in Sinjar, to which Jacob just alluded so at that point Iraq hadn’t even really responded very much. They hadn’t sent troops so I just wanted to, if that’s unclear in any way, I want to make sure everybody knows we didn’t get around back to editing and it’s already done. It’s in production and it’s over, the podcast not the actual conflict. That continues apace. And without further ado, let’s cut to me and you and Xander talking about Turkey.
Cole Altom: Ok great, joining us is Xander Snyder from California. Xander, how’s it going?
Xander Snyder: It’s going well. How are you Cole?
Cole Altom: I’m doing very well thanks. Jacob is here as always. Now the last time we three gentlemen got together we spoke at great length about the Syrian civil war. It turns out that’s still going on and they haven’t resolved it quite yet. So you know that gives an opportunity to explore this you know at length again.
However, there’s a whole lot going on with one specific aspect of the Syrian, excuse me, one specific actor in the Syrian civil war and that is Turkey. So much so in fact you know I kind of wanted to make this sort of kind of like a sequel to our previous conversation. But I don’t think that makes a whole lot of sense because I think there’s a whole that’s kind of happened subsequently since they’ve tied up operations in Afrin.
So that is kind of a long-winded way to say that we’re going to kind of get into the nuts and bolts of Turkey. Now Turkey is a pretty important player in our model, we kind of see it as a country on the rise. And you know some of its behavior in Syria is emblematic of its ascension, more or less.
So I’ll turn it over to you first Xander. What happened last week right? So when we last left off with Turkey, they had invaded Afrin and they kind of taken it over now. What’s next in that regard and where does that now put them with some of their friends and allies in the region?
Xander Snyder: Sure so Afrin has fallen. The operation that began in late January is effectively over. It seems like the YPG which is sort of the main militia, Syrian Kurdish militia, has fled and has pulled back and basically turned over the area to the Turks. A YPG spokesmen made an announcement basically saying ok fine we’re resorting to guerilla warfare now. But you know effectively they can’t put up a fight anymore.
So Afrin has fallen to the Turks. And since then, you know Turkey continues to make announcements that it’s going to be moving on Manbij which is a city just a little further east than Afrin city. And this is consequential as we’ve written about because while the U.S. effectively green lighted Turkey’s invasion of Afrin because there are no anti-ISIS operations going on there, the U.S. has made it very clear that its support of the YPG fighters and forces based in Manbij is going to continue. The U.S. has a presence there and it supports those Kurds and is not going to pull that support back.
And Turkey keeps saying ok well its really important for us to clear our border with northern Syria of this Kurdish presence. So now we’re kind of waiting to see how conversations, dialogues between the U.S. and Turkey work out.
Cole Altom: So if I read you right, it kind of sounds like its pitting Turkey against the United States over this issue not militarily of course. But something’s got to give, right? And so, in fact Jacob correct me if I’m wrong, there were recent statements I want to say today or yesterday, where the U.S. said we’re not going anywhere in Manbij, correct?
Jacob Shapiro: Well it’s all very unclear. And the resignation or forcing out of Rex Tillerson makes it even more unclear and McMaster also doesn’t make this particularly clear. So I mean just yesterday you had a State Department spokesperson saying the U.S. has not agreed to leave Manbij. The U.S. forces will remain on the ground there. You had a phone call between Trump and Erdogan and the White House readout of that phone call was pretty vanilla as most White House readouts are.
But Erdogan made a speech a little bit later where he said look I talked to U.S. President Donald Trump today and I talked to Russian President Vladimir Putin two days ago and I told them that Syria’s not leaving. This is not like before when we sort of dipped our toes into the water of Syria and then withdrew. We’re in Afrin and we’re in this for the long haul. We’re going to keep going.
And you’ve had the sort of back and forth with the Turkish foreign minister and the United States State Department where it’s like well is there an understanding, is there an agreement? There’s even you know fighting about the difference between understandings and agreements between those two offices.
So all that to say, there’s a major problem here for Turkey. Turkey has committed itself into northern Syria. If Turkey is going to commit itself into northern Syria, it has to do more than Afrin. And the United States has you know forces on the ground in Syria and has been supporting the Syrian Democratic Forces and the Syrian Kurds generally and that is going to lead to a problem between the United States and Turkey and we talked about this last time.
The moment at which I start to worry about issues like this is when one side is backed up against the wall and they put themselves in this situation where they can’t save face. If Erdogan is going out there and saying no we’re in this, we have to take over this part of northern Syria in order to protect Turkish interests. And the United States is saying well no we can’t do that because that’s going to ruin our credibility and that’s going to ruin the fight against ISIS and by the way, we don’t particularly like Turkey telling the United States what to do, you start to get the making of a real break in relations.
Now Xander I mean, I would put it to you, neither one of us thinks that Turkey is quite ready to go this far yet. But I will say that Turkey is pushing the envelope pretty hard.
Xander Snyder: Yeah and I think the discrepancy that you mentioned Jacob is worth just repeating for clarity sake where there have been on-going negotiations between the U.S and Turkey of course. And in the last one or two weeks we’ve pretty persistently seen either Turkish leaders like Cavusoglu or Turkish state media repeating that an agreement has been reached with the U.S. And the U.S., we’ve had no announcement to that effect in the U.S. And in fact I think it was a spokesperson from the State Department that came out and said unequivocally that that had not happened. So we’re getting very different messaging from both sides of the negotiating table between these two allies.
Now as far as why we don’t think Turkey is really truly ready to challenge the U.S., a lot of it has to do with Turkey’s relationship with Russia. So Turkey is and Russia have been historical enemies, they’ve fought a number of wars stretching back to the 16th century. But really heating up in the 18th century with a number of different fairly major engagements that resulted in or at least contributed to a material decline in the strength of the Ottoman empire. And part of this is just because they’re right next to each other. So they have some competing interests geographically.
Now right now, Turkey and Russia have been cooperating and we expect them to continue sort of a pragmatic set of relations in the course of the next year as Turkey kind of works out its role in Syria. And Russia basically let Turkey use airspace in Afrin to support its invasion there. So we know some sort of cooperation is going on, but ultimately Turkey and Russia cannot be friends, right? They’re gonna have competing interests.
And we think that until Turkey develops its military power and well frankly its economic stability to the point where it can support that military power, in order to confront Russia independently, not necessarily with an invasion but in order to basically hold its own. We think until Turkey gets to that point, it will remain dependent on U.S. support to some degree. So while they might be talking big and saying we’re going to march on Manbij regardless of whether the U.S. is still there or not, we think that that’s probably right now more Turkey trying to generate some degree of leverage in negotiations with the U.S. rather than a legitimate threat.
Jacob Shapiro: I agree with all of that and I just want to add two things to it. The first is this is a great example of how countries and leaders don’t get to make decisions like this out of a place from what they want. Turkey didn’t really want to get dragged into northern Syria and was resisting being dragged into northern Syria for a long time.
And when you’re thinking about our long-term forecast, which I think is pretty well associated with us which is Turkey sort of the rising power in the Middle East. If you’re looking at how that forecast plays out, you’re watching it play out right now. It wasn’t like there was some you know secret mastermind in Ankara or Istanbul deciding that Turkey was now going to conquer Syria or the rest of the Middle East. What happened was Syria when into civil war and the security threat to Turkey became so intolerable that Turkey decided that it needed to do something.
The only, well I don’t not the only equivalent, but one equivalent that comes to my mind is what if you’re looking at the United States and the border with Mexico develops into a civil war with radical groups blowing things up and moving across the border at will and creating some cells on the other side of the border, you can bet that that would draw the United States into a conflict that it didn’t want to be involved in either.
So the first thing is just you know a lot of people think that Turkey making aggressive moves forward, it’s being pulled in. And part of the reason that we think of Turkey as a power that is going to be involved in the Middle East is because it’s going to be drawn in, it can’t resist it. And then the second thing is I was just thinking about this when we were talking about some of the differences between you know negotiations and agreements and what Turkey is saying, what the United States is saying.
I think we should keep in mind, we’re in the Middle East and one of my favorite stories to tell about the Middle East is not Bashar al-Assad but Hafez al-Assad, Bashar’s father. There’s a story about how he was in a negotiation and I believe it was Henry Kissinger who said of Hafez that he was the only negotiator he ever did any business with where instead of you know going right to the end of the cliff and sort of threatening to jump off it, Hafez al-Assad would launch himself off the cliff knowing that he could grab onto a stick on the way down to hold himself off.
The point being that you know if Turkey is in a negotiation with the United States, you know there is still room I think to say, ok there’s a lot of posturing here. Turkey is just making itself very clearly known and sees disorder in the White House, sees inconsistency in the White House and has to make sure the White House knows exactly what Turkey wants and how far it’s willing to go. That doesn’t necessarily mean that Turkey is willing to back it up, but I have to say that there’s been enough happening to where even I’m beginning to get a little shaky on that.
Cole Altom: And let’s not forget either that one of the reasons it’s not getting pulled into Syria, not maybe the reason, but one of the big reasons is Iran, which we haven’t even really touched on yet either. And it’s not in Turkey’s interest to see a pro-Iran or Iran friendly regime propped up in Syria which the Assad regime essentially is.
Which is also why you’ve seen, and Xander maybe you can elaborate on this a little bit, why we’ve seen Turkish deployments actually in northern Iraq too which is you know Iraq’s got a complicated relationship with Iran but it’s generally you know a friendlier state too. And its deploying Turkish forces there under the auspice of fighting Kurdish groups there as well.
So you’ve got, what you have is Turkish forces fighting Kurds in northwest Syria right? And then you’ve got Manbij in the middle. And then you’ve also got Turkish forces deployed in Iraq or there might even be pro-Turkish militias, you can correct all of my mistakes Xander here in one second once I actually get to a point. But yeah but then you have Turkey like in Iraq trying to make Iran sweat a little bit too, yeah?
Xander Snyder: I think it is correct and accurate to say that Turkey is legitimately concerned about the Kurdish presence along its border in Syria. I think it is also correct to say that it is, Turkey is using that as justification to acquire more territory, even though it keeps claiming that it does want to be an occupying force in Syria in order to weaken Assad’s position thereby weakening Iran’s position. So that’s what’s going on in Syria.
And as Assad continues to consolidate his power over the country and gradually the war has been going in his favor with Russian and Iranian support, Turkey sees essentially a shrinking window of opportunity where it can say ok well there are these terrorists on our border, we have to do something now, there’s this crazy civil war and in that sense, they are getting sucked into it.
But they are also making the conscious effort to minimize the threat from Iran which has really emerged from the civil war of the last several years in really the best position compared to other Middle East regional powers. It now has really substantial influence in Iraq, not omnipotent power, but it is in control of large number of militias in Iraq. And of course, directly supports Assad as well as a number of militias and of course Hezbollah in Syria. So that’s what’s going on in Syria.
In Iraq, there does seem to be a deployment of Turkish forces to the east of Sinjar. In this region, Sinjar is where the PKK, which is the Kurdish terrorist group that even the U.S. recognizes is a terrorist group, is stationed or it has a substantial presence. So Turkey we’ve seen some reports of Turkey increasing its deployment to the east of this region in a town called Sidekan and another called Soran. Some reports of paratroopers being deployed from helicopters and we’ve really seen sort of, not ambiguous but contradictory statements coming from the Iraqi government as to their sentiments of the Turkish deployment there.
We saw one day I think it was Wednesday this week where there were reports that the Iraqi government was totally ok with this Turkish deployment and literally the next day an Iraqi spokesperson came out and said no we entirely reject the Turkish presence in Iraq. But to your point, part of what Turkey is trying to do here is take out the PKK in Iraq. Part of what they’re trying to do is show Iran that they can play this same game. And if Iran is in Syria on Turkey’s border, Turkey can be in Iraq on Iran’s border.
Jacob Shapiro: Well I just want, there are two different things going on here and I want to simplify it maybe a little bit for the listeners. First there is the relationship between Turkey and Iran, and if you’re going to talk about the relationship between Turkey and Iran, one of the first things you have to talk about are Kurds. Because there are Kurds in Turkey and there are Kurds in Syria and Iraq and there are Kurds in Iran.
Iran is actually the first, the only time there was a Kurdish independent state it lasted for like two or three years, it was way back in the 1940s I think. It was a very short-lived experiment in Iran. You saw pragmatic cooperation between Turkey and Iran last year against various Kurdish aspirations for independence. The problem is when you look at the historical model, it’s not that Iran and Turkey cooperate to put down Kurdish independence. What Turkey and Iran usually do is they use different Kurdish groups to fight against each other.
And I would imagine that as this develops and as you see Iran try to encroach more and more upon a sphere of influence that Turkey is showing us that it thinks is a Turkey sphere and not an Iranian sphere of influence, I think you will begin to see Iran trying to use its Shiite militias and some of the proxy groups that Xander was just talking about. And whatever Kurdish groups it can motivate against Turkey, Turkey will try to do the same thing to Iran.
People write in to us and ask about the Kurds all the time. This great power competition between Turkey and Iran, is going to suck for the Kurds. They’re really caught in-between and unless the Kurds can unify, if all those different groups in those different countries can come together and try and get some kind of unified sense of what’s going on, the problem for these various Kurdish groups is they are just not strong enough to resist. And they are historically vulnerable to having one patron that uses them against another patron. So Turkey and Iran is really sort of the bigger clash that’s happening here at the broad 30,000 foot altitude. Did I say that right? Feet altitude, foot altitude.
Cole Altom: It’s really high up. It’s just high up. High level.
Jacob Shapiro: From a really high level, you know this is going to come down to Turkey versus Iran and some other countries maybe on the periphery that I don’t know. Cole do you want to move us on or?
Cole Altom: I actually do. That I think we accidentally stumbled into like a very sensible transition here. And so like if we’re going to say you know Turkey and its international dealings, it’s starting to butt heads a little bit with the United States, as Xander pointed out like historical enmity with Russia. They don’t get a long with Iran very well.
And they use Kurds you know to their advantage, which is just like so it’s just like interesting to me too. Like we use the words allies a lot but like just because you use a hammer in a nail doesn’t make the hammer your ally, it’s just something you’re using right? So I think that’s important to keep in mind.
But there’s all these other, there’s a lot of other actors in the Middle East so like let’s talk about some of them, right? Let’s talk about Turkey’s relations with some of these people, do you I mean starting with anywhere, I mean if things aren’t good between Turkey and Iran right now, I think a logical place to start is how do Turkey and Saudi Arabia see each other right now? How do they interact? How do they get along? How do they do what they do?
Jacob Shapiro: Well the unsaid thing in Cole’s question was that as recently as seven or eight years ago, it was Turkish foreign policy to have zero problems with neighbors and it now seems like it’s all…
Cole Altom: Always have as many problems with neighbors as you possibly can.
Jacob Shapiro: Which again goes to this notion that you can’t choose. But look the different countries that are both opposed and for or ambivalent about Turkey, it depends where they are. I think Saudi Arabia is probably long-term uncomfortable with Turkey expanding into the region, at the same time I think Saudi Arabia would rather deal with Turkey than with Iran. And is certainly happy that Turkey seems to be stepping into that role that is going to push back against some of Iraq’s moves right now.
You have also seen Egypt though, another of the two major Arab powers still left standing in this crazy region, also has at least made statements about how it does not like what Turkey is doing. Of course that makes sense, Turkey is encroaching upon the Arab world and any Arab state is going to be nervous about that.
The thing that Turkey has going for it is that Turkey is still a Sunni country and it does have this historical legacy of having ruled much of this region. And I would note that one of the reasons Turkey is relying so much on proxy groups in Syria and using its soldiers and its Air Force mainly to back up Syrian Arab rebel groups that are against Assad is because Turkey knows that even a country like Syria is not going to welcome Turkish presence there. The relationships that Turkey has to develop with Sunni Arab countries has to be on some level an issue maybe of mutual respect.
Turkey doesn’t want to go in and occupy all these places and Turkey has an advantage versus an adversary like Iran versus an adversary like Russia. Because it is the only one that has been here before and has something in common with some of these other groups.
So a lot of different countries are uncomfortable with Turkey for a lot of different reasons. Some more than others. But I guarantee you that they are more comfortable with Turkey than they are with say Iran or any of these others dominating the region. And they are certainly happy now that there is at least some kind of balancing force in the center of the region. Do you feel that way Xander?
Xander Snyder: Yeah and I’ll just maybe add that as it just relates to Turkey/Egyptian relations, there is some historical precedent for Egypt to be wary of Turkey growing in power. For hundreds of years, Egypt was a province of the Ottoman Empire. And while the forum of administration changed over time, it wasn’t always direct but they ruled sort of through like a proxy person who was in charge there. And Egypt essentially became or began to become independent when Napoleon invaded in the late 18th century and Muhammad Ali used the opportunity to kind of break away and become his own man.
Cole Altom: Ok Xander another question for you here so we haven’t really talked much about Europe. Turkey has always been kind of been this tweener state of is it an Asian country, is it an European country? And its kind of always gone back and forth throughout history.
So let’s I guess talk a little bit about its relations with Europe. They’re a little I don’t know if I want to say fraught now. Because there’s some diplomatic tiffs and there’s some very strong worded statements being bandied about right now. Do you want to talk a little bit about what’s going on in the eastern Mediterranean between the European Union and Turkey right now?
Xander Snyder: Yeah well there are some very strong worded statements and then there are some actual developments, some things that have happened. So on the strongly worded statements side, there’s been sort of a diplomatic spat if you want to call it that about this agreement that the E.U. made with Turkey to sort of control the flow of refugees and in return the E.U. would provide some funding to Turkey in the amount of $6 billion euros. And as I understand it, that $6 billion euros was going to broken up into two tranches.
Turkey claimed it hasn’t received all of the first tranche because the E.U. is only providing that aid through like projects, specific projects. And Turkey wants the cash moneys in its coffers. So that’s kind of been, that has come up in the last week or so and that is, the refugee issue is part of the diplomatic tension between Turkey and the E.U. right now.
In terms of actual military developments, if we look at the eastern Mediterranean, the island of Cyprus which is bifurcated into a Greek Cyprus that everyone except Turkey, well I actually I don’t know if Turkey recognizes Greek Cyprus. But northern Cyprus is a Turkish Cyprus that’s only recognized by Turkey and no one else recognizes it as legitimate because they see Turkey as having invaded Cyprus in 1974 and taken it through force.
Now because Turkey recognizes Turkish Cyprus, they’re basically saying ok well we have right to certain area of Cyprus’s economic zone which includes all the natural resources below it. Which in the last two years, fairly large reserves of natural gas has been found. And when an Italian company Eni sent a drilling rig to begin exploration in one of these blocs that Turkey claims, Turkey sent warships and blocked it. And when the drilling ship made another attempt, Turkey blocked it with even more warships.
So Turkey has, everyone’s calling it gunboat diplomacy but Turkey is deploying naval force to prevent Europe from exploiting resources that it considers to be its own. And in response the E.U. has again issued some very stern warnings and aggressive finger wagging in Turkey’s direction but so far nothing has happened in terms of confrontation. Turkey has recently as I understand sent or is about to send a drilling ship to these blocs in the exclusive economic zone around Cyprus that it claims is theirs. I imagine an attempt to execute some sort of fait accompli where it’s just there and there’s nothing that you can do about it.
But as Turkey grows in power, history shows us that it really has to go in both directions because unlike say the U.S. that is buffeted on both sides by ocean, Turkey is buffeted on both sides by potentially aggressive enemies that neighbor the eastern Mediterranean and then of course the land borders to the east. So that is increasingly bringing it into confrontation with Greece for example.
Jacob Shapiro: Yeah I think that’s the key point to make and Cole you kind of alluded to it, Turkey is not just a Middle Eastern country. When we think about Turkey, certainly its power is felt most in the Middle East but Turkey is also a European country. No matter what Europe wants to say about it.
And the fact that you have countries in the Balkans that are becoming either uncomfortable or pragmatic about Turkey’s interests in that part of the world, you have countries on the Mediterranean that are as Xander alluded to, in Italy, France, Spain, all these countries are keeping an eye on what Turkey is doing. I would point out that Turkey has a larger population than any of those countries that I just mentioned.
So when you think about Turkey, right now it is certainly being pulled into northern Syria and that has to be where the bulk of Turkish activity is going. But if Turkey is going to become more independent and is going to pursue a more independent foreign policy, you can bet that you will see that manifest itself in Europe.
But I wonder if Cole might let me segue for just a second and say, I think one of the biggest arresters to that in the short term is just the Turkish economy, which no matter what you look at it, whether it’s IMF or the Bank of International Settlements or even if you want to go through Turkish government data, which is a chore, I don’t wish it upon anyone, you will see that Turkey has some serious problems in the economy ranging from the development of crony capitalism as Erdogan has had to increase his control over the government to debt issues. I saw the Lira was at a sixteen-month low on the dollar just today, although that probably has something to do with Trump and his tariffs.
But Xander you have been following this issue and you’ve actually called some of these developments before they actually happened. So where do you think the Turkish economy is right now? And I’m curious how you think that might affect Turkey’s moves in Syria or its ambitions in southern Europe.
Xander Snyder: Sure well I think certainly we can look to the natural gas reserves off Cyprus and say well Turkey has always wanted to be an energy exporter to Europe and if it can control reserves that the chief executive of the Italian company Eni said could supply all of Europe, then that would be an added relief to the economic challenges that Turkey is facing and just more money in its coffers. It would also be a lever on Russia but that’s kind of a different story.
There’s a lot going on with the Turkish economy right now. A lot of it stems from Erdogan’s desire to generate as much growth as possible politically. Because growth makes you know, provides more jobs, makes everyone happy, gets him re-elected. And he’s been doing that, by encouraging low interest rates. Although I say low interest rates relatively because the deposit rate in Turkey is still like 12% so it’s much higher than the U.S.
But the problem with relatively low interest rates is twofold. One, it generates inflation, which is why we have seen in part the Lira becoming weaker and why the Central Bank has generally been advocating against Erdogan’s wishes to raise interest rates in order to strengthen the Lira. And the Central Bank wants to do that because in order to finance this current account deficit and keep the economy growing, Erdogan has essentially had to, not Erdogan, Turkey has had to resort to a lot of external debt financing. And the problem with external debt is, it’s fine so long as your currency remains strong but if your currency becomes much weaker relative to the dollar. And if you have to repay your debt in dollars all of the sudden it becomes a far more expensive for Turkey to service its debt in the Lira.
So the Turkish Central Bank wants to raise the strength of the Lira by increasing interest rates in order to prevent the debt burden from becoming out of hand while Erdogan wants to keep interest rates low to keep Turkey growing. And the net result is 11% inflation right now. External debt remains high. Turkey is trying to pay it down but it’s doing it in very small amounts and not very effectively.
So that’s a lot of what the IMF noticed when they released the report earlier this week and it’s something that we covered in pretty good detail back in a deep dive in December. And I think if I were to summarize all of this I would say Turkey is I don’t think at an imminent crisis point when it comes to its economy. But the external debt adds substantial risk to its economic position and of course if something catastrophic were to happen to Turkey’s economy or even if it were just to, if its growth were to slow substantially, that would impair its ability to fund its military activities. So its economic position impairs and influences its ability to project power both in the eastern Mediterranean and through the Middle East.
Jacob Shapiro: And one of the interesting things that comes from what you’re saying is that when you look at both Turkey and Iran, both of them are facing domestic issues that will hamper their ambitions in the greater region. You know if you look domestically inside Turkey, you still have a state of emergency, you still have reorganization of media companies. The attempted coup was not that long ago.
Iran we saw earlier this year had a spate of protests, has an internal competition between hardliners and conservatives and pragmatists and we don’t need to go into all that here. But this is just to say that as we’re looking the competition emerging between Turkey and Iran and the Middle East for example, I think a lot of how that competition is going to be resolved in the next few years is who can deal with their internal problems better.
And if you’re looking at Turkey’s relationship with southern Europe, I think it actually has a lot more to do with how confident and strong Turkey is feeling not just from a military perspective but also from an economic perspective. So you know we can talk a lot about the fundamentals of Turkish power and how it’s dealing at the international level, but internally Turkey is in a very strong place of dynamic flux. I hate myself that I just said the phrase dynamic flux.
Cole Altom: You’re not alone.
Jacob Shapiro: What does that mean? But I’m just saying that when you see Turkey and when you’re looking at Turkey from the outside, I see a society that isn’t quite sure what it wants to be. Does it want to just defend Turkey? Does it feel like it needs to go into other countries to secure its interests? What is going to be the relationship between Islam and a secular government there?
What is going to be the relationship between the media and the government there? What is the role of the military right now? The military had most of its officers, not most of its officers, but a number of its officers were replaced in that attempted coup.
So you know none of what we’re saying here means that Turkey is on the verge of taking over the world. And I hope that we never have sounded like that. I would just say that you see Turkey getting pulled into northern Syria even as Turkey internally I think is going under, is under a great deal of stress.
Cole Altom: Well I think another question worth asking too is like is that form of governance they have what they want to go with moving forward? And you alluded to the media, and we just heard a report today or yesterday about that. Do you want to expand on that, right? We have a little bit more time before we go if you want to talk about that a little bit. You noted about how difficult it can be to get some Turkish data. We have reason to believe through some media acquisitions that it’s going to be perhaps a little bit more difficult to get more reliable, unbiased reporting out of Turkey. Go!
Jacob Shapiro: Well look this is a question I get a lot, and this is why does there seem to be a rise of strongman leaders all over the world?
Cole Altom: I didn’t want to say strongman but…
Jacob Shapiro: I know you hate the word strongman. But you do have these leaders who are generating pretty rabid support from different groups of the population and then are trying to increase their power so that they can make structural changes. We’ve seen this in China, we’ve seen this in Russia, we have seen this in the United States, I think that is some of the impulse behind the election of Donald Trump, we’ve seen this in a number of different places.
Turkey is no exception. And Erdogan I think for some in Turkey represents stability, represents power, represents somebody who sees the challenge that Turkey is facing and recognizes that you have to give a leader power in order to make things happen. I think there are other parts of Turkey that are profoundly uncomfortable with the direction that Erdogan is steering Turkey.
So I’m not sure if I actually answered your question. I would just point out that Turkey like a number of other different countries, has these internal stresses that are pushing Turkey in a number of different directions. And one of the outcomes of that has been a great deal of support for Erdogan, who has used that to increase his political power.
Now I will say that what if some kind of massive economic crisis in the world happens and Turkey is at the forefront of it because of its debt. You know what happens in Turkey if there is a major economic or financial crisis. I don’t think we can say that Erdogan’s rule is completely secure. I don’t know in ten years’ time if the government that runs Turkey today is going to be the government that runs Turkey in ten years, and I mean that both in terms of the personalities and the actual structure. What I can tell you is that the challenges for Turkey will probably be the same.
But you know as for whether its going to be Erdogan, whether its going to be this Presidential system, whether there’s going to be a military attempt, you know that’s the type of stuff that nobody can really predict and anybody who can is selling you false goods. What I will say is that when all the dust settles, where Turkey is positioned internationally, should leave in a stronger position in ten years than its adversaries.
Xander Snyder: Real quick, I just want to quickly correct myself. I said earlier when I was talking about the Turkish economy, an I.M.F. report, it wasn’t an I.M.F. report it was a Moody’s credit downgrade that happened earlier this week. So that’s the report I meant to refer to.
Cole Altom: Great thanks. Actually that could be a recurring segment at the end of each one of these features where you know we just like correct each other and say you didn’t answer this question that I asked you. Or is something like that, you know we’ll hammer that out in post or whatever. But yeah I think it’s a pretty good idea. So like for example Jacob, you did not answer my question. But it’s ok you gave a more substantive answer on something else than I even asked for.
Jacob Shapiro: Wait then ask your question again.
Cole Altom: I’m talking about the media acquisition in Turkey.
Jacob Shapiro: Oh but yeah what’s the question though?
Cole Altom: Well the question is, well I guess it’s not so much a question, explain it to our listeners who may not know as much about the comings and goings of media business in Turkey.
Jacob Shapiro: Look I don’t know the ins and outs of it, I can just tell you that there has been a process of consolidation inside the Turkish media for awhile and one of the main media groups, basically the ownership structure has changed. That was announced in the last day or two and this is the media group that owns Hürriyet, CNN Turk, a lot of these other sources.
Cole Altom: It’s English speaking ones in Turkey.
Jacob Shapiro: Yeah and sources that those of who watch Turkey very closely read every day. I’m still going to be reading these sources every day. But again this goes back to when I say that Erdogan is trying to take control so that he can keep Turkey together through a period of internal stress and internal instability.
Any type of leader like that is going to want to be able to exert more control over the media, more control over the economy, make sure they have loyalists in important places like the military intelligence apparatuses. You can begin to see how the things I’m describing aren’t just Turkish. They can apply to many different places.
Cole Altom: Exactly. You brought up the coup from a few years ago, what is one of the first things that the usurpers did? They occupied media buildings and tried to control that message so that it’s like very, very, very important. Unfortunately, I think that’s about all the time we have today. And it’s probably as good as any place to stop.
Do y’all have any parting thoughts? Any last words? Last words sounds a little macabre, I don’t mean, nobody’s going to shuffle off this mortal world just yet but anything you want to say to me or Xander or to our listeners before you go.
Jacob Shapiro: The thing that I want to say is just you know I’m so glad that people have been listening to this podcast and we’ve actually been getting more listeners. A little bit of an increase in hate mail too but also more listeners as we’ve come to a more steady format.
I don’t want to shill for the website that we all work for but I would just say that you know we write for http://geopoliticalfutures.com All of the thoughts and analysis that we do here are enabled by that business. And by the work that we do there. If these conversations interest you, I’d encourage you to check us out. We have some free offerings, we also have paid offerings if you want to you know make the full commitment. This is really, all of that builds off of the work we do there. So we appreciate you all listening but come check us out if you haven’t already.
Cole Altom: And improbably all three of us are involved in just about every piece that gets put up on our site too. It’s a very collaborate effort. And but not to take too much credit for myself, I think I’m more responsible for more of the hate mail then you are but it’s not a competition. Like it’s fine. But…
Jacob Shapiro: Well look like Erdogan and Putin and Xi are trying to bring some logic to a chaotic and unstable situation so…
Cole Altom: Oh Christ, if we’re the strongman, God help us. Ok that’s all for today. Thanks for joining us. Bye.
Jacob Shapiro: Bye.