America’s Currency War Against Turkey: Comparative Resistance and Solutions
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America’s Currency War Against Turkey: Comparative Resistance and Solutions


USA Really presents the first essay applied for The Global Democracy Award (John Reed nominee).

Turkey is being attacked by Anglo-n finance as punishment for Ankara’s perceived noncompliance with America’s geostrategic goals.  Despite Turkey’s Justice and Development Party (AKP), under President and once Prime Minister Recep Tayyip Erdoğan, running a successfully growing emerging markets economy for nearly a decade and a half while enduring multiple scares, Turkey’s economy is now uniformly described as in dire straits by the collective London-New York banking juggernaut and its media tentacles.  Despite the West’s reasoning for why the nation’s currency – the lira – is plummeting, Turkey is enduring this imposed situation due to seasoned, disciplined internal defensive economic measures, plus its insistent relations with China, Russia and Iran.

For years, independent Turkey has been leaning excessively, in the eyes of the West, toward these interlinked Eurasian partner nations and their growing intercontinental economic, political and security corridor while trying to balance them against its western interests.  Yet, judging from acutely speculative attacks on the lira, plus an attempted coup in July 2016, as well as repeated terrorist attacks within its borders, it becomes clear yet again that Atlanticist nations do not tolerate sharing what they perceive as their strategically vital client states with any other major powers.

In the new year, the lira’s rout has been described as the worst in nearly a decade, with the Anglo-n banking sector putting the blame acutely on the Erdoğan government lowering interest rates, on security instability via terrorist attacks, and more widely on Ankara’s efforts to vertically integrate power in order to, ironically, reduce risks to Turkish stability.  Subsequently, the lira has apparently replaced the South African Rand as the “World’s Most Volatile Currency”.

Turkish President Erdoğan has notably stated that the lira’s troubles have mostly resulted from attacks against it from speculators and financial “terrorists” abroad.  Although these accusations have been criticized in the West as paranoid at best, and ineffective and harmful at worst, a sober viewing of the actors involved, and the history of such currency wars affecting other nations unpopular with Anglo-n economic power, reveals a viable pattern that vindicates Ankara’s honest, fearless sentiments.

Such are among the risks which currencies of sovereign states face in a world economy still dictated to by Dollar Hegemony.  Thankfully, and based on lucid awareness of global affairs as well as a learned sense of monetary history, Turkey’s AKP Government knows of and is acting on alternative currency valuation arrangements, which will provide needed defensive measures against foreign deployed currency wars as well as provide invaluable, overdue modelling for other nations who’ve faced, or will face, similar economic frontal attacks.

Reasons for Atlanticists hitting the lira?  Turkey has gradually been incentivized by both Russia and China, through means including certainly economic ones, to rely more on the rising Eastern hemisphere.  Turkey sees itself as a willing participant in China’s vast, multi-billion-dollar One Belt, One Road, and New Silk Road, projects.  The feeling is certainly mutual.  Turkey has also negotiated significant energy pipeline deals bilaterally with Russia.  The Turkstream natural gas pipeline, which is meant to replace the cancelled South Stream project, was first announced by Russian President Vladimir Putin in December 2014, making the timing of America’s turning against Erdoğan’s rule not coincidental

Another reason for the West’s consternation with Ankara involves its assisting neighbor Iran with trade and currency relief in spite of US-initiated sanctions against Tehran.  For years, Turkey traded gold bullion for needed Iranian natural gas, a plan which not only avoided using US dollars, but also added to Iran’s capital resource base, provided hard currency for Iran to conduct transactions for goods, and most importantly essentially re-introduced gold as money into global finance.  Although this practice was small in volume compared to the much vaster global currency markets, let alone US Dollar Hegemony in general, it was nonetheless significant as an act of mutual defiance by Iran and Turkey, as well as a model for other nations to emulate against said hegemony.

Lastly, western finance’s tools have been used against other ‘misbehaving’ nations for decades.  These nations include Iran, Russia, Venezuela, Zimbabwe, Egypt and even western ‘allies’ India and the Philippines.[i]

Turkey’s Economy Doesn’t Warrant a Plummeting Currency

Despite the interlinked US/UK banking, press and credit rating agency-issued financial misinformation, Turkey’s overall economic condition doesn’t justify a plummeting currency.  The “total debt” picture in Turkey isn’t as precarious as it is painted to be, based on Turkey’s debt-to-GDP ratio beating those of many leading industrialized western nations, and the government’s current and intended steps toward managing private debt burdens.  Regardless, Ankara is painted as bordering on state collapse, fiscally-speaking, in banking circles.  President Erdoğan shrewdly derived that, essentially, the same enemies of Turkey are behind both kinds of recent attacks against his nation – false flag terror and economic ones.

Professor Kerem Alkin of Istanbul Medipol University, proclaimed recently that “[i]f the economy was truly in trouble, then not only the foreign exchange rates but also the CDS [Credit Default Swap] rates, the risk premiums of the Turkey's treasury stocks, should rise very rapidly [sic]."  Alkin also noted that Turkey’s national stock exchange had not dropped sharply, and “second hand market interest rates” of Turkish sovereign bonds had not increased “with maturities in two to 10 years [sic].”  The disconnect between these internally acute, closely followed indicators and said accusations from western analysts at the least invites further restrained scrutiny over the latter’s claims.

Plus, credibility-wise, it is worth noting that the large, US-based so-called “credit rating” agencies – Moody’s, Fitch (US/UK) and Standard & Poor’s (S&P) – are notoriously politicizedwhen need be’ (as the lead up to the 2008 Financial Crisis, for one, proved to be) and are routinely deployed for economic propaganda purposes, not the least instance of which involves Turkey today.

Existing and Proposed Solutions

In defending Turkey’s economy while preserving its independence, the Erdoğan government has already taken certain shrewd assertive steps, based in part on its recently challenging currency experiences and wider modern monetary history.  The Erdoğan government and the Central Bank of Turkey have responded with specific policy measures to protect the lira and fight general risks to Turkey’s finances in the current currency war climate.  Ankara should – and possibly will – consider other steps as well involving its rising eastern partnerships.  By reassuring Turkish citizens as to the sanctity of liras and gold versus foreign currencies, Erdoğan has been urging economic nationalism while labelling the reversion to dollars and other western currencies out of fear as “representative of imperial logic”, as the issuers of said currencies wish to “destroy” Turkey.  Lowering the central bank interest rates to urge growth – in defiance of demanded rate increases by UK/US finance – coupled with fiscal policy instruments for preventing forced increasing in exchange rates, should also help weather the storm. 

One of Ankara’s most assertive responses to the currency war is the $8.8 billion Sovereign Wealth Fund (SWF) started in August 2016 – right after the failed coup attempt of July 15 – with only a $13 million endowment.  A clear manifestation of economic nationalism, the SWF retains consolidated state-owned assets and is meant to help orchestrate more favorable terms of financing than those resulting from the externally engineered perception of Turkey as harboring too many risks for attracting ‘smart money’ investment capital – a tainted image which said western credit agencies have fanned alongside forex speculators.  The SWF represents both a defensive move in protecting said assets and an offensive one in deploying productive Turkish state and corporate resources to access better terms of financing.  In essence, it is the Erdoğan government making a (very) educated bet on Turkey.  One wonders if the SWF resulted partly based upon the friendlier, innovative, collaborative urgings of China, Russia, Iran and Turkey’s other Eurasian partners, who continue to seek economic partnerships with Ankara

Another of Turkey’s current defensive strategies involves targeting nefarious global foreign exchange speculating directly by reducing the maximum level of leverage on forex trading accounts while simultaneously raising the minimum deposit requirements for such trading activity.  These steps are meant to limit damages due to aggressive leverage – intentionally inflicted or otherwise – while sending reassuring signals of prudent capital controls to future investors and stakeholders. 

Lastly, there is the impending result of the Turkish Constitutional Referendum, scheduled for April 16th 2017.  The government proposed said referendum in order to “grant Mr Erdoğan an executive presidency” [sic], per the FT, and potentially “giving him a huge economic lever to guide the development of the country” when combined with the strengths of the SWF, according to Global Source Partners Analyst Atilla Yesilada.  Deputy Prime Minister Şimşek expects much of the economic uncertainty facing Turkey “to disappear after [the] constitutional referendum in April” and a “strong reform agenda is realized” after its presumed passing. 

Additionally, Erdoğan has offered eastern partners Russia, China and Iran the chance to partake in bilateral currency usage, where each nation trades with Turkey using only their respective national denominations.  This concept of ‘currency pairing’ is certainly not exclusive to Turkey’s relationships with said Eurasian powers, as Russia and Iran have been solidifying such an arrangement at the Moscow Exchange.

Despite enduring decades of sanctions and other economic duress from the US and its allies, Iran has survived and endured patiently.  In issues involving discipline, Iran has thrived, and now presents a formidable emerging market case study for growth.  Hence, Iran serves as an exemplar to Turkey in many ways, not least of which involve how to connect productively with the rising Eurasian powers, foremost China and Russia.[ii]

Per analyst Dmitry Bokarev, “China has been the reason why the Iranian economy even survived these difficult times [of sanctions].”  China’s ambitious New Silk Road (NSR) - or OBOR – project, is expected to eventually render Iran as immune to US or EU sanctions.  Naturally, Turkey can be expected to also benefit to a great extent from that ‘insurance policy’ from China, which will then be joined by Russia, Iran and the Turkish-speaking Central Asian nations.

In fact, China, which now has its renminbi (or yuan) currency admitted into the IMF’s Special Drawing Rights (SDR) basket of currencies, could ultimately request that the over-leveraged US dollar lose its reserve currency status, especially as expected further deficit spending and debt issuance by Washington flirt with a formal Dollar Crisis.  Just the mere request would trigger economic shockwaves, and China retains the credibility to make it more than simply a request.  These ‘macro-factors’ are ones which Turks who doubt Erdoğan’s ‘monetary nationalism’ should be aware of.

Lastly, in addition to reducing dollar reserves at home, arranging currency pairings with allied countries and hoisting the Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB), China and Russia are also avidly pursuing their own independent rating agencies as well as an alternative to the SWIFT global monetary transfer system.  Such developments will grant Ankara further global monetary options for nurturing confidence in its economy.

As mentioned, President Erdoğan urged Turks to transfer their foreign currency holdings into liras and gold.  Why gold?  Because gold is money, and has been for millennia.  Also, because the Russian, Chinese and other nations’ central banks are stockpiling as much gold bullion as possible in order to preserve and strengthen economic sovereignty while crucially preparing a future re-linking of gold to oil pricing.  Erdoğan thus urged the height of monetary nationalism, and a platform that will be readily assisted by Turkey’s eastern partners in turnkey fashion.

Turkey, like Russia, China, Iran and India, is a rising gold importer and user.  Turkish citizens, commercial banks and the Turkish central bank retain gold.  The World Gold Council reveals that Turkey ranks as 14th highest in global central bank gold reserves, at 396.5 tonnes.  Yet per GoldCore, these numbers could be understated due to Turkish commercial banks being empowered by the central bank to hold privately held gold for their reserve requirements.

There is a clearly coordinated collective institutional effort to protect the nation’s gold while arming it for defensive insurance measures.  By 2014, gold had “become the top investment option amongst Turkish citizens, ahead of real estate”, while “lessening the financial stability risks” of the nation.

Upwards of between 3,500 and 5,000 tonnes of gold is held outside Turkey’s banking system, and the government has attempted to have people deposit them into said banks in order to cushion reserve requirements, strengthen foreign exchange positioning, allow for lira printing when necessary, reduce risks of a liquidity crisis (like the one Turkey experienced in 2000/2001), and match the similar actions of other prudent Eurasian nations seeking to interlink across the eventual transcontinental free trade zone.

Considering its sober awareness and valuing of gold as a monetary asset, as well as certainly the amount of gold it produces, recycles and trades with, Turkey is well positioned between Europe, Asia and Africa, as a future solidified economic pillar to help provide tangible alternatives to the increasingly insolvent western fiat currency paradigm.

Lastly, considering how deeply undervalued gold is currently vis-à-vis US Treasuries and oil, there is a tectonic arbitrage opportunity which gold producing, valuing and trading nations like Turkey should take advantage of by working in increasing lockstep economically and thus geopolitically with Russia, China, Iran, India and other nations responding to the above-described unprecedented geo-economic opportunities.  By doing so, Turkey would not only defend acutely against currency wars heaved at it from the West, but would also climb aboard the right side of (impending) history.

Global Economic Stakes Are Massive for the West

In addition to the above, why else are Atlanticist nations, led by the US and UK, so persistent in targeting Turkey economically and politically?  Because the global economic stakes – and specifically, those the West faces acutely in global finance – are massive, nay, unprecedented.  London and Washington can thus ill afford to have an important NATO member and literal bridge to East, South and Southwest Asia (as well as, again, in various ways, to Africa), be lost to the core challengers to Dollar Hegemony, who smell blood in the water.  Especially considering the influential knock-on effects Turkey’s Eurasian shift would have on EU nations such as Germany, Greece, Italy and others who carry their own various qualms with EU, US and UK economic, monetary and political mismanagement.


Turkey is clearly not new to coups, currency attacks and other externally sourced interference into its internal affairs and sovereignty.  That said, this proud, resilient nation has managed to consolidate past experiences into balancing both modern defensive and offensive arrangements, economically and politically speaking.  The recent fiscal attacks by transatlantic banking powers will be used as a global case study in how to deflect economic threats while providing catalysts for further Eurasian developmental integration and growth.

[i] In our more detailed paper on this subject, we will review this sordid history as well as how such nations have sought to fortify their respective sovereignties while, in certain instances, fighting back.

[ii] Sir Richard Dalton, who served as UK Ambassador to Iran (2003 – 2006), views Iran

as an emerging Bric country, alongside newly advanced economies such as Brazil and India.  “They have a $1.4tn diversified economy, growing at some 4-5%, with a backlog of investment in all sectors, a reforming government (for the next year at least) and a well-educated population (total 80 million) striving to take advantage of the country’s improved prospects … Crude production will soon go above 4m barrels per day. The oil minister projects a production capacity of 4.8m barrels per day within five years.”

On the regional context, Dalton wrote that “we should compare [Iran] not with post-Ottoman, post-imperial Egypt or Saudi Arabia, but with Russia and other Asian powers.”


Author: Pye Ian