Above page content

    Site map  Cookie policy

Features

Turkish election revives border issues

John Redwood, Charles Stanley’s chief global strategist, look at issues on the borders between the EU and the Middle East.

by
John Redwood

in Features

26.06.2018

It is a short boat journey from Turkey to some of the Greek islands. In 2015, when many hundreds of thousands of Syrian migrants made their way to Turkey, many moved on to Greece. The EU responded with a Joint Action Plan. The EU helped pay for Syrian migrants in Turkey, and put up money for improved border processes and security, in return for Turkish promises to stem the flow of Syrian refugees into Greece. Turkey built strongly protected walls and fences along her borders with Syria, Iran and Iraq and has seen a sharp reduction in numbers entering the country as a result. In the Turkish election much was made of the need to help Syria reassert government discipline so more Syrians can return to their homeland from Turkey.

Despite these changes, this week we will see the general issue of refugees and economic migrants still haunting the EU. The Heads of Government Council on 28 June will have to debate what to do about the continuing high levels of Middle Eastern migration into the southern states, now that Italy is refusing to accept the reduced numbers that still call there first. The German interior minister does not wish Germany to accept more migrants coming north across the Italian border, any more than the Italian minister is prepared for Italy to have to absorb a disproportionate share of migration into the EU as a whole. The Eastern states are unhappy about current levels of migration, are strengthening their borders and urging a less liberal approach. The migrant crisis is forcing the EU to question the idea of a border-free Europe where people can move freely between countries once they have legally entered anyone of the EU states. It is also encouraging successful challenger parties to put forward policies hostile to migration in general, with proposals for much tougher criteria before accepting any migrant. These issues have the potency to set member states against each other and to poison relations between states. Italy and Germany have opposing interests over migrants.

The Turkish election also shows that Turkey is on the move. Prior to Erdogan's tenure as President the country presented itself as western facing. Established as a secular modernising state by Ataturk in the 1920s, Turkey became a Nato member and an applicant to join the EU. Its constitution does not formally recognise any religion nor promote any one religion, so the state was said to be secular. In practice, there is a Presidency of Religious Affairs, more than 70% of the population is Sunni Muslim and the state does provide money for the Sunni mosques and imams. Under Erdogan there has been more recognition of traditional Sunni practices. In a recent referendum he also secured support to move Turkey to an elected presidency with substantial executive power, away from a more-balanced constitution. Erdogan will abolish the role of prime minister, appoint the ministers himself, can use decrees, and exert substantial influence over the parliament.

Turkey's membership of Nato is stretched by the close common interests Turkey shares with Russia over how to settle Syria and by her determination to prevent an independent Kurdish state emerging on her borders. Nato has been in alliance with the Kurds and unhappy about Russian proximity to Assad, at a time when Turkey and Russia think Assad reasserting control over the country is the least bad option. All of this means that Turkey is no longer a western outpost in the Middle East, no more just a candidate country for EU membership prepared to go along with the West view. Erdogan is out to assert himself and his country, to crush what he sees as Kurdish terrorism against the Turkish and Syrian states, and to transmute democracy into powerful government. He used an attempted coup against him to arrest and remove from office many officials and military personnel, and operates tough policies against critics and journalists who dare challenge him. The Kurdish leader had to fight the recent election from prison.

Erdogan went to the polls early in part because the economy is overheating. He sought to create favourable conditions by fostering rapid growth. As a result, Turkey now suffers from 12% inflation. The Turkish lira has fallen by one third over the last year. Interest rates have risen from 8% to 17.75% since April. The president blames the central bank and is looking to extend the boom, regardless of the inflation and currency effects. Turkey is running a balance of payments deficit which has been increasing as the economy sucks in more imports.

We see Turkey as one of the emerging market economies that will suffer from a stronger dollar, from the balance of payments deficit and from general overheating. Erdogan secured just over half the vote, and probably enjoys the support of half of Turkey's population. It is true the government hogged the airwaves and did not hold an election up to the best western standards of fairness, but it is unlikely this made a crucial difference to the results. Putting political opponents in prison is also not a pleasant way to conduct a democracy, but that is now true of Spain as well as of Turkey.

The true significance of the Turkish result rests in the trouble torn world of borders, border fences and security, migrant flows and the relationships between the Middle East and Europe. Turkey is part of the EU borders and migration problem, which is back on the agenda in a divisive way. The EU summit this week will resume talks about trying to find a new migration settlement the whole of the EU can live with. It will highlight the tensions between Germany and Italy, and be an unhelpful background to a likely Italian challenge to the financial disciplines of the euro.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

 

Get in touch

Find out more

Our focus on clients has endured since the foundation of Charles Stanley in 1792 and has helped make us one of the UK's leading wealth management firms. Your interests give shape to everything we do.

Please call us to talk about your circumstances or complete the enquiry form.

020 3797 1783

Make an enquiry

Local Office

Your local office

Your local Charles Stanley office can help advise you on a wide range of investment management services.

Select an office

Share

Newsletter banner signup