Turkish relations spiraling amid tit-for-tat penalties over detained pastor

Devin Lawrence
August 16, 2018

In recent days, Qatari supporters of Turkey have begun a public campaign in Doha to change their riyals into lira in an attempt to shore up the plunging Turkish currency.

The US doubled tariffs last week over Turkey's refusal to extradite a US pastor who is imprisoned there.

Tensions between the two North Atlantic Treaty Organisation allies have been strained amid Turkey's detention of American pastor Andrew Brunson.

"They are killing offshore lira liquidity to stop foreigners shorting the lira", he said.

Charged with espionage and aiding Kurdish militants and a USA -based Turkish cleric accused of fomenting that coup attempt, Brunson was imprisoned for almost two years and moved to house arrest last month. The recovery also spilled into the bond market, with yields on 10-year local debt falling 28 basis points to 21.1 percent.

"Remarkable turnaround", Tim Ash, Bluebay Asset Management senior emerging markets analyst wrote in a client note.

Qatar's Emir Tamim bin Hamad Al Thani announced the package while meeting with Turkish President Tayyip Erdogan in Ankara on Wednesday.

The court in the western city of Izmir ruled that Brunson, who faces 35 years in jail over terror and espionage charges, will remain under house arrest, the state television TRT reported.

On August 10, Trump intensified the spat with Turkey over the detention in Turkey of US evangelical pastor Andrew Brunson on terrorism charges by imposing higher tariffs on metal imports.

The Turkish lira rallied 3 percent on Thursday ahead of a presentation by Finance Minister Berat Albayrak to investors, shrugging off US comments ruling out the removal of steel tariffs on Turkey even if it frees a USA pastor.

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Tariffs on cosmetics, rice and coal were also increased.

Even though a meeting between National Security Adviser John Bolton and Turkey's US ambassador on Monday yielded no public progress, the White House is now leading the talks with Turkey over Brunson's release and a host of other issues that have dragged down the alliance.

Turkish Vice President Fuat Oktay said on Twitter that the measures were in response to "the deliberate attack of the USA administration on our economy".

Washington said the move was inadequate.

Pekcan said, according to the report, "the United States is an important trading partner, but it is not our only partner".

Doha has $20 billion worth of investments in Turkey, official figures showed last month, and Ankara is now one of the top exporters to the emirate.

The two countries have been at loggerheads over diverging interests in Syria, Ankara's ambition to buy Russian defence systems and Andrew Brunson, a pastor on trial in Turkey on terrorism charges.

In a tweet on July 26, Trump called Brunson a "great Christian, family man and wonderful human being" and said he "should be released immediately".

Erdogan, rejecting economic fundamentals as the cause of lira weakness, said Turkey was the target of an economic war. A higher court is still to rule, his lawyer told Reuters. Erdogan stressed that any product made by the USA could be made even better in Turkey and that for the time being the country would pivot to using South Korea's Samsung electronics.

The growing tensions between Washington and Ankara have sent the Turkish currency tumbling to historic lows.

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