High potential, but economic crisis and regional conflicts are obstacles
The future of Turkey is in flux, as the Eurasian power is being hit by economic, financial and political instability. The last years Turkey’s government has been subsidizing large parts of the economic growth seen in real estate, industry, logistics and defence. The success of the AK Party, the power base of President Tayyip Erdogan, is undisputed. Since Erdogan took power the formerly fledgling Turkish economy has boomed, supported by an influx of international capital, operators and new global alliances. Turkey’s new role in the region has also been supporting its success, as Turkish companies have been successful in acquiring multibillion construction, defence and finance contracts in every Arab country in the Middle East and North Africa. At the same time, Ankara has not been afraid to open up new economic-military alliances with other parties, such as Russia, Iran, Qatar and China. The former Western-orientated Turkish strategy, build on its membership of NATO and possibly the EU, has been put on ice. Turkey is now actively cooperating with former adversaries, such Moscow (defence, energy, investments), Iran (energy) and China.
These developments have however been given diffuse results. By playing other cards, Western investors have become wary of the course taken. At a time of a potential financial crisis, as the Turkish Lira has tumbled, and economic growth is lagging, Turkey is being confronted by a lack of new investments. Ankara’s choice to play the Russian-Chinese card could backfire as hard-needed high tech, FDI or markets for its goods, are still mainly on the European and US side. The negative impact of the “Eastern policy” being implemented by Turkey does not yet prevent an economic meltdown.
Geopolitical risk is also increasing lately, as Turkey has become a very active party in Syria, while supporting Iran against US sanctions, and is supporting Qatar in its conflict with the Saudi-led alliance. The last months a new possible area of conflict has re-emerged, as Turkey actively is confronting the Cyprus-Greece-Egypt-Israel alliance in their quest to find and develop the vast offshore gas reserves in the East Mediterranean. Not only is Turkey taking its own approach that it has the right to drill in disputed EEZs of others, but it also is reviving by military action the fear of a new Cyprus conflict.