Turkey Letter 15 July 2019

Foreign Policy: 

  • Russian planes continue to deliver S-400 parts to Turkey 
  • EU punishes Turkey for gas drilling off Cyprus coast 
  • Trump Aides Pick Sanctions to Punish Turkey for Russian Missiles 
  • Turkey begins second wave of operations against PKK in Iraq 

Economy & Energy: 

  • Turkish cenbank governor: real interest rates, not nominal, should define monetary policy -Anadolu Agency 
  • Turkey dollar bonds suffer fresh losses over U.S. sanctions fears 
  • Lira Watchers Expect U.S. Sanctions on Turkey Will Be Limited 
  • Erdogan Pledges to Lower Turkish Rates After Central Bank Fight 
  • Fitch cuts Turkey’s credit rating after sacking of central bank head 

Domestic Politics: 

  • Turkey marks 3rd anniversary of failed coup 
  • Turkey Seeks 176 Officers Over Links to US-Based Cleric

Foreign Policy 

Russian planes continue to deliver S-400 parts to Turkey 

The Turkish defense ministry says two more Russian cargo planes have landed at an airfield near the capital, Ankara, as Russia continues to deliver parts of its S-400 missile defense system to Turkey in defiance of U.S. objections. 

Washington Post, Russian planes continue to deliver S-400 parts to Turkey, 15 July 2019 


EU punishes Turkey for gas drilling off Cyprus coast 

Turkey’s relationship with the West suffered a fresh blow on Monday when the European Union decided to suspend contacts between high-level officials, as well as to pull financial aid, in response to Turkey’s gas exploration in Cypriot national waters. 

New York Times, EU punishes Turkey for gas drilling off Cyprus coast, 15 July 2019 


Trump Aides Pick Sanctions to Punish Turkey for Russian Missiles 

President Donald Trump’s team has settled on a sanctions package to punish Turkey for receiving parts of a Russian missile defense system and plans to announce it in the coming days, said people familiar with the matter. 

Bloomberg, Trump Aides Pick Sanctions to Punish Turkey for Russian Missiles, 13 July 2019 


Turkey begins second wave of operations against PKK in Iraq 

Turkey’s defense ministry says it has launched a new military operation against Kurdish militants in northern Iraq. 

AP News, Turkey begins second wave of operations against PKK in Iraq, 13 July 2019 


Economy & Energy 

Turkish cenbank governor: real interest rates, not nominal, should define monetary policy  

Turkey’s new Central Bank governor hinted at rate cuts in his first remarks since taking office nine days ago, state-owned Anadolu Agency reported on Monday, emphasizing that the bank had “room for maneuver” in its monetary policy. 

Reuters, Turkish cenbank governor: real interest rates, not nominal, should define monetary policy , 15 July 2019 


Turkey dollar bonds suffer fresh losses over U.S. sanctions fears 

Turkey’s dollar-denominated government bonds came under further pressure on Monday amid rising concerns that Washington could slap sanctions on Ankara over its purchase of a Russian air defence system. 

Reuters, Turkey dollar bonds suffer fresh losses over U.S. sanctions fears, 15 July 2019 


Lira Watchers Expect U.S. Sanctions on Turkey Will Be Limited 

U.S. sanctions on Turkey that lira traders have been dreading will probably be announced in the coming days, but the expectation that their economic impact will be minimal may prevent a rout. 

Bloomberg, Lira Watchers Expect U.S. Sanctions on Turkey Will Be Limited, 14 July 2019 


Erdogan Pledges to Lower Turkish Rates After Central Bank Fight 

Turkish President Recep Tayyip Erdogan promised significantly lower interest rates by the end of the year, a week after ousting the country’s central bank chief. 

Bloomberg, Erdogan Pledges to Lower Turkish Rates After Central Bank Fight, 14 July 2019 


Fitch cuts Turkey’s credit rating after sacking of central bank head 

Credit rating agency Fitch downgraded Turkey’s sovereign debt by one notch on Friday in a move that comes less than one week after president Recep Tayyip Erdogan fired the country’s central bank chief. 

Financial Times, Fitch cuts Turkey’s credit rating after sacking of central bank head, 12 July 2019 


Domestic Politics  

Turkey marks 3rd anniversary of failed coup 

Turkey is marking the third anniversary of the July 15 failed coup attempt against the government with prayers and other events remembering its victims. 

Washington Post, Turkey marks 3rd anniversary of failed coup, 15 July 2019


 Turkey Seeks 176 Officers Over Links to US-Based Cleric 

Turkey’s state-run news agency says prosecutors have issued warrants for the detention of 176 serving military officers over suspected links to the U.S.-based Muslim cleric who is blamed by Ankara for a failed coup attempt in 2016. 

New York Times, Turkey Seeks 176 Officers Over Links to US-Based Cleric, 9 July 2019