A developing Greek-Israeli defense partnership and the potential of establishing an armed drone program in the Hellenic Armed Forces is increasingly worrying Turkey.

While Turkish President Recep Erdogan is trying to enhance ties with Israel, the possibility of Israeli drones operating from Greek islands in the Aegean Sea is a concern for Ankara. In fact a prominent Turkish newspaper recently claimed claimed that Athens’ actions are an act of aggression which could quickly escalate to war.

The Greek-Israeli Agreement

The Hellenic Parliament approved a bill earlier this year on July 7 which established the partnership between the Greek and Israeli Defense Departments. The bill came as the concluding step of long negotiations between the two states that officially started back in 2011, when both sides signed a Principal Memorandum of Understanding.

The agreement formally consolidated the cooperation of Athens and Tel Aviv in the defense sector and highlighted the aligning geopolitical interests of the countries in the Eastern Mediterranean region.

Among other matters, in the context of this defense bill, the Israeli defense industry has agreed with Greece to provide a number of Heron drones on a leasing basis. Athens will initially lease the drones for a three-year period; at the end of the leasing timeframe, the drones could then be fully purchased by the Hellenic Armed Forces, according to further arrangements that will be finalized at a later stage.

How Will the Drone Partnership Work?

At the moment the program is ongoing, with military personnel of the two countries already working together in terms of training and familiarization with the control and operational procedures of the new systems. According to the current reports from the Greek side, Heron drones are expected to be operational within the next few months.

Based on information provided by senior-level officials the drones will be strategically based on specific Aegean islands in the proximity of the Turkish coastline. It is not clear as of now if Israeli personnel will be assigned to Greece for the primary stages of the drone deployment, but there are indications that the system will be fully operated only by Greek personnel once the necessary training has been completed.

The Strategic Significance of Drone Deployment in the Aegean

The eventual deployment of advanced drone systems in the Aegean islands would probably mean Athens turning the tables on Ankara. Both countries share extended maritime boundaries and airspace across the Aegean region. The Greek-Turkish decades-long dispute – which has been rapidly escalating during recent months – never led to a full-scale war, partly due to the balance of powers between the two sides.

Air power is a critical aspect of this balance of power, and the Hellenic and the Turkish Air Force have been in a state of constant antagonism, with both trying to outdo the other in their abilities, equipment and strategic edge.

The remarkable advancement of the Turkish drone industry and operational capabilities – as have been witnessed in Syria, Libya, and Nagorno-Karabakh – indicate clearly that Turkey has been rapidly establishing key infrastructure and skills in this vital field over the last few years.

Greece is seemingly behind. The scheduled deployment of Israeli drones in the Aegean islands could totally change the current status quo. However we should emphasize that in order to fully exploit the capabilities of the drone, the Greek government should make a priority the armament of the recently obtained UAVs.

According to the press release following the Greek-Israeli Heron deal the drones will be used vaguely for border defense purposes. The notice did not clarify if there is a potential for the drones to be armed, or they will be only utilized for reconnaissance missions.

Heron Drones and the Turkish Backlash

At the moment, two Heron drones have  reportedly been stationed at the Greek island of Skyros. The Heron model is one of the pioneering UAV systems of the Israel Aerospace Industries (IAI). With a Beyond Line of Sight (BLOS) range of over 1,000 km, an operational attitude of over 35,000 feet and endurance up to 45 hours, Heron presents a huge challenge for Turkey.

It should be noted here that in early 2010s, Turkey has purchased a former version of the Heron UAV and there are unconfirmed claims that this model was used as the base for the development of Turkey’s Bayraktar TB2 drones. 

Heron is not only superior from the Turkish UAV spearhead, the Bayraktar TB2, but also the geographical advantage of Greece – namely the numerous small islands in the proximity of the Turkish mainland which can be used as a base of operations for the Greek drones – presents an unparalleled challenge for Ankara.

On the top of that, Herons have the capacity to be equipped with ATG Missiles, laser-guided bombs, and long-range Air-to-Surface Missiles. This is why the deployment of armed drones would give a strategic advantage to Greece. Any weapons systems that will be chosen for the potential armament of Heron, combined with the unique capabilities of the drone, could literally enable Athens to conduct crucial strikes in the very center of the Turkish heartland.

Turkey is Worried About The Greek Drone Deal

If Greece take the decisive step to deploy a considerable number of armed drones across the Aegean islands, a harsh reaction should be expected from the Turkish side. President Erdogan will fully exploit any sort of leverage available to establish his plans for the eventual dominance of Turkey in the Eastern Mediterranean, and in this sense any move that could give a strategic advantage to Greece will not go uncontested.

Turkey has been traditionally putting forward the casus belli blackmailing method to create geopolitical faits accomplis, with the most prominent example being the Greek reluctance to make use of its legal rights and expand its territorial waters from 6 to 12 nautical miles in the Aegean Sea.

Back in the late 1990s, we saw a much weaker – politically and militarily – Turkey blackmailing the Cypriot Republic (and essentially Greece) with regards to the deployment of the S-300 missile system in the island of Cyprus. In that case Athens and Nicosia eventually backed down and the missiles were transferred to Crete in a quasi-solution.

In the current situation, with Turkish operational and strategic capabilities significantly upgraded and an expansionist foreign policy from the Turkish side ever growing, it is up to the Greeks to have political willingness to proceed with the necessary steps, in order to consolidate robust defense and military capabilities, before the balance of power has irreversibly turned in Ankara’s favor.

L'articolo Turkey Goes Ballistic After Greece Announces Possible Drone Deployment in Aegean Sea proviene da InsideOver.

Recent developments in Libya are setting the ground for a renewed cycle of violence. While both sides are gradually fueling the tension, UN and international concerns are focused on the potential failure of the ongoing peace process.

Haftar Reacts Angrily to Turkey’s Libya Troop Extension

On the day marking the 69th anniversary of Libyan Independence, commander of the Libyan National Army (LNA) Field Marshall Khalifa Haftar stated that as long as Turkish Forces remain stationed in Libya, there will be no peace in the country. As predicted, Turkey’s Grand National Assembly recently approved a bill extending deployment of Turkish troops in Libya for another 18 months.

In his inflammatory remarks, Haftar stated that Ankara should withdraw its forces, otherwise the “Libyan people would by force drive out the colonizing force.” With these words, the Benghazi-based Libyan strongman indirectly passed an ultimatum to Turkey at a point where there is no chance that Ankara would back down. This highlights the fragility of the ongoing peace process.

Turkey Responds to Haftar’s Demand

Shortly after Haftar’s speech on Dec. 26 there has was a straightforward Turkish response. Turkish Defense Minister Hulusi Akar landed in Tripoli accompanied by Turkey’s military leadership in an unscheduled visit to inspect the Turkish Forces based in the country. It was clear that at the same time Akar’s visit was intended to send a message to Haftar, emphasizing that Ankara is ready and committed to fully support Fayez al-Serraj’s Government of National Accord (GNA).

Prior to Akar’s visit, his Libyan counterpart Minister Salahaddin al-Namroush stated in a televised interview that the UN-recognized Tripoli GNA government would not let Haftar carry out another major offensive to capture the Libyan capital. He also said that the Libyan Army, under GNA command, has been following and respecting the ceasefire terms, however the armed forces would be standing by to effectively respond to any provocations from the Haftar-led LNA.

Even earlier, during an interview on Dec. 11, al-Namroush was even more critical of Haftar, calling the General a war criminal and ruling out any possibility of forming a political coalition where Haftar could play any role at all. Considering that al-Namroush will remain one of the key GNA players and his footprint -in both the political and military aspects of the process — is significant, we could assess that a new escalation between the two sides could be likely. Therefore it is understandable that while Haftar remains in the equation, some GNA key officials could hardly negotiate to reach a consensus; in this respect a realistic precondition for the successful completion of the peace process would be the withdrawal of either party, which is not expected to be easy or uneventful.

We should note that the completion of the process could be the successful organization and implementation of the Libyan elections, scheduled for December 2021.

What is UNSMIL Doing to End the Libyan Conflict?

While the UN Support Mission in Libya (UNSMIL) has publicly congratulated the Libyan people in several instances, the in-country situation still remains far from optimistic. The recent exchange of prisoners between the opposing sides and the successful organizing of municipal elections in Al-Zawiya Al-Gharbia and Ar-Rajban areas in the northwestern parts of the country, are definitely positive signs.

However, the current transitioning period of the mission, will be critical for the next steps on the process. The experienced diplomat Nickolay Mladenov — who was expected to succeed Ghassan Salamé as the Head of UNSMIL — recently turned down the position due to personal and family reasons. Mladenov has previously held key roles in the UN Mission in Iraq and in the Middle East Peace Process; additionally his appointment was expected to be welcomed by Turkey as the Bulgarian diplomat built strong ties with Turkey, while serving as the Foreign Minister of Bulgaria several years ago.

For the moment, Stephanie Williams will remain the Acting Special Representative of the Secretary-General and Head of UNSMIL, until a new decision is reached for the permanent placement of the Head of the Mission.

Many Challenges Lie Ahead

Despite the positive signs, mainly derived from the exchange of prisoners, there are many challenges ahead, with one of the most prominent threats being related to the oil industry of the country. The LNA’s recent raid in Awbari (or Ubari) underscores this reality. UNSMIL has also strongly condemned the efforts of armed groups to intimidate the National Oil Corporation (NOC) in Tripoli. With oil exports being one of the main sources of revenue for the Libyan economy, any disruption in this sector could trigger hostilities and further destabilize the country.

Occasional skirmishes during December also indicate that the ceasefire agreement is not being fully adhered to, and an incidental unfortunate event could easily lead to another vicious cycle of violence. Finally, the harsh rhetoric and the military build-up from both sides is another worrying sign.

Turkey’s overt action and deep involvement in Libya — not only through the deployment of military forces but also through a direct intervention in the shaping of the political context — is also a critical destabilizing factor. The most telling example of this political involvement was the recent surprise resignation of al-Serraj — which rather disappointed Ankara — only to be revoked shortly after its announcement.

L'articolo Haftar Demands That Turks Leave Libya proviene da InsideOver.

With a Greek-Turkish impasse ongoing since the summer, a new incident has now come out that puts even more tension on the relationship between the two countries. Two Greek citizens — both belonging to the Muslim minority of the country — have been arrested in the island of Rhodes and are being accused of spying on behalf of Ankara; and, as if this was not enough, one of them has also been serving as a Secretary at the Turkish Consulate General in Rhodes.

Greek Authorities Uncover Turkish Spy Operation

As per the latest reports the Greek authorities have put in their radar the two suspects since early August. As Greek-Turkish relations have been swiftly deteriorating since mid-summer, the Greek intelligence community was closely monitoring any suspicious activity near the borders, especially focusing in islands which Ankara has been trying to destabilize through the increase of the migrant flows, like Lesbos.

They were also focused on areas that have been directly targeted by Turkey like the small island of Kastelorizo, and also places like Rhodes. Sebahattin Bayram is one of the two individuals who have been arrested; Bayram comes from Western Thrace and has been serving in the Turkish Consulate of Rhodes for the last few years. Surprisingly, after being initially put in a translator position he was quickly promoted to the high-ranking Secretary of the Consulate. According to the latest information Bayram has been in direct contact with MIT, the Turkish National Intelligence Organization, thus his fast promotion to a key position in such a sensitive location for the Greek-Turkish affairs.

The second suspect has been working as cook for a ship regularly covering the trip between the islands of Rhodes and Kastelorizo. This is a very important detail, as many officers of the Greek army are quite often travelling with this ship.

The investigation from Greek authorities has revealed that the two men have been in regular contact, frequently using mobile encryption applications as an additional layer of protection for their communications. The Turkish Secretary of the Consulate was also likely using the Turkish mobile network — which overlaps the Greek network in specific areas of Rhodes — to provide updates to Turkish intelligence officers. Under Bayram’s guidance, his accomplice was trying to gather information from military personnel traveling on the ship using very basic HUMINT methods, such as overhearing and possibly recording conversations. He is also accused of taking pictures of military facilities and tracking the activity and intercepting codes of the Hellenic Navy as well as collecting data about the numbers and the routine of the Greek Forces based in Kastelorizo.

Why Were the Two Suspected Spies Released?

Both suspects were arrested on charges of espionage and conspiracy. However, after their initial arrest in December 13, the two charged individuals have been set free. Greek intelligence sources have unofficially claimed that this controversial move was made on purpose in order to track the immediate moves of both individuals right after their release, however there is always a risk that Bayram could be able to conceal additional evidence in the meantime.

A few days later, between December 17 and 18, both suspects were again arrested. Within the following days the Prosecutor in charge of the case will collect and asses their testimonies and decide the next steps of the process.

As the story is developing the Greek authorities are worried about the role of the Turkish Consulate in Rhodes and most importantly Thrace; in Greek areas where high numbers of Muslims can be found, the local Turkish diplomatic services are trying to control and manipulate members of the Islamic Community. The fact that both suspects are Muslims from Western Thrace, raises concerns regarding the extent of covert Turkish operations in Greek territory and how such cells could be utilized in the case of a Greek-Turkish confrontation. With this in mind the Greek government could take advantage of the current situation, as described below.

A Bargaining Chip for Athens — or Maybe Not

Let’s recall what happened in 2018 when Turkish authorities arrested two Greek officers over charges of alleged trespassing of the Greek-Turkish border in the area of Evros. Back then the Turkish government kept the two servicemen in custody for more than six months. Even though there was no solid ground for the detention the Greek second lieutenant and sergeant, they were actually used as a bargaining chip in exchange for the extradition to Turkey of the eight Turkish ex-officers who had fled to Greece requesting political asylum after the July 2016 failed coup attempt. Eventually the two Greeks were set free after a tense period, spending all that time under harsh conditions and under close monitoring by Turkish intelligence officers.

In the recent incident of the suspected Turkish spies who were in Rhodes, Greece has a much stronger case considering that the suspects have initially accepted — at least partly — the charges. Furthermore, both of them are Greek citizens, therefore the Turkish capability for any official action is quite limited.

There has already been a formal reaction from the Turkish side through a statement of the Turkish Foreign Ministry; the December 18 press release claims among others that “Greece has violated the provisions of the Vienna Convention on Consular Relations, the right to freedom and security, and the right to respect for private and family life in the European Convention on Human Rights.”

Athens is at a Crucial Crossroads

Athens is now standing at a crossroads. This development could be used in its favor considering that the Greek government has been struggling over the few months to convince other EU countries to take a more rigid stance against Turkey, a strategy that has not been really fruitful so far. The recent espionage revelation could give Greece leverage in the context of antagonism between the two countries; however there is no doubt that Ankara will try to put pressure on the Greek authorities through backchannels regarding the handling of this case. Thus Athens has a choice: move forward strongly or back down.

From what Greece has shown so far, it is questionable if Athens will be able or willing to take advantage of the current conditions and there is a real chance that it will eventually retreat under Turkish demands and threats.

L'articolo Greece-Turkey Tensions Rise After Shocking Spy Revelations proviene da InsideOver.

A proposal for the extension of the deployment of Turkish forces in Libya has been submitted for approval in the Turkish Parliament.

In January 2020, the Turkey’s Parliament approved the deployment of Turkish assets to Libya in support of the Tripoli-based Government of National Accord GNA).

Turkey’s Previous Deployment Approval

According to that bill, the Turkish Forces would assist Tripoli for one year, including – but not limited to – logistics coordination, training, intelligence services and shipments of weapons, arms, and provision of technical equipment. The motion for the extension of the Turkish military presence has already raised concerns, as it comes at a moment where a ceasefire is ongoing between the opposing sides and the international community is urging for an arms embargo in Libya.

Ankara has officially announced that the latest moves of General Khalifa Haftar’s Libyan National Army (LNA) are worrying, and a potential restart of the clashes could put at risk the Turkish interests in North Africa and the Mediterranean. It should be noted that Turkey has invested heavily in its Eastern Mediterranean presence and the Memorandum of Understanding with Tripoli has been a crucial and integral part of Turkish foreign policy so far in terms of its 2020 strategy.

Turkey is allegedly seeking the consolidation of the ceasefire agreement which has been in force since late October, under the condition that the GNA will maintain and potential expand its power and control across the country. The motion will be discussed in the Turkish Parliament in late December, and the most probable result is its approval by the majority of the MPs.

The establishment of Turkish assets in the country is fully aligning with my previous conclusions on Erdogan’s long-term plans for Libya.

Recent Incidents That Provoked Ankara’s Wrath

Earlier last week the Libyan National Army seized the Turkish commercial cargo ship Mabrooka as it was en route to the port of Misrata. The Turkish Foreign Ministry has harshly responded to the incident declaring that these are attempts to target the Turkish interests in the region, and such moves come at the expense of any efforts for a peaceful solution to the Libyan conflict.

The vessel was seized on the grounds that it entered a restricted zone, and did not answer to repeated calls from the coastal authorities. The incident came a few weeks after the Merchant Vessel (MV) Roseline A was boarded and inspected as per the standard operating procedures of the EU Operation IRINI; during the search, Turkish authorities rushed to officially deny the right to inspection, prompting the EU personnel to disembark the ship. The incident has been deemed as illegal by Ankara and caused friction between Turkey and Germany, considering that the inspection team operated off the German frigate Hamburg.

Is the Ceasefire at Stake?

While Turkish foreign policy dictates bold moves across Mediterranean and North Africa, the context of the Libyan ceasefire on the ground seems more and more fragile. GNA Defense Minister Salahaddin Namroush has warned that actions of Haftar and teh LNA are putting the ceasefire agreement at stake and could force Tripoli to withdraw.

An attack against a GNA military camp near Awbari last week was attributed to an LNA-affiliated militia. Namroush urged that such moves could trigger a new round of battles in the country. Awbari is located near the Sharara oilfield, one of the most important oilfields in Libya, therefore the latest attack could easily lead to a rapid escalation, without warning.

In the meantime, according to the latest information from the Sirte-Jufra Joint Operations Unit, Haftar is boosting the presence of LNA forces and military resources in the proximity of Sirte and Jufra. Reportedly during the weekend there has been a – possibly Russian – shipment of at least 23 armored vehicles, arms, and ammunition. These indicators raise further concerns for the viability of the current ceasefire deal.

Growing Presence of Foreign Fighters in Libya and Proxy War Scenario

Stephanie Williams, the UN Acting Special Representative of the Secretary-General for Libya, highlighted in her opening remarks on the October agreement, that the immediate departure of all foreign fighters should be a prerequisite for the effective implementation of the ceasefire. More than a month later, Williams sounded the alarm again, stating that an estimated number of more than 20,000 foreign fighters are still in-country.

This fuels a serious crisis and constitutes one of the greatest challenges in Libya at the moment.  Despite the continuous negotiations and attempts for a long-term agreement, the EU and UN efforts for an arms embargo and the progressive monitoring of the situation on the ground, the mercenary numbers in Libya at the moment are growing exponentially and a major military build-up through foreign shipments for both sides is still ongoing.

Despite the random skirmishes and the expansion of mercenaries, the most important factor is essentially the ultimate intentions of the foreign forces involved. The Libyan Civil War has taken on all the characteristics of a proxy conflict over the last two years, the prospects for a stable and peaceful Libya that could go through an institutionalization process undisrupted, are depending on the long-term objectives of the major powers, backing the opposing sides.

A lasting ceasefire and peace would be desirable for Ankara, considering that current GNA elements could ensure their certain win in the elections planned for December 2021, thus prevailing all across Libya. Abu Dhabi and Cairo on the other hand treat this scenario as a catastrophe, considering that such a political outcome could boost the Muslim Brotherhood presence and undermine erratically the regional and domestic security status quo at their expense.

Even though those powers would also like to see stability in Libya, they demand that it should be achieved under their own terms, which means the marginalization of the GNA forces. Finally Russia seems to be benefiting from the extension of the conflict, gaining time and influence in the war-torn country. The combination of these particular circumstances and the conflicting interests of each side could possibly compromise the current truce any time and quickly drag the country back into chaos once again.

L'articolo Turkey Prepares to Extend Military Presence in Libya proviene da InsideOver.

The multinational military drill Medusa-10 was completed last week and highlights some of the current key security and geopolitical trends in the Eastern Mediterranean region. The armed forces of Cyprus, Egypt, France, Greece, and the UAE participated in this annual exercise, which this time — compared to previous years — conveyed significant political messages in addition to its typical projection of defense capabilities.

Training was held November 30 to Dec. 6 in the eastern Mediterranean off the coast of Alexandria, Egypt.

Composition of Forces

Since Egyptian-Greek defense cooperation and coordination were the key objectives of this exercise, these two countries contributed the bulk of the participating forces.

Among the participating forces from the Egyptian side, were several high-mobility multipurpose wheeled vehicles (Humvees), a mechanized infantry subunit, a multi-mission guided-missile frigate with her organic Kaman SH-2G helicopter, one Submarine, two fast patrol boats, several multirole aircraft, 1 CH-47 Chinook, and 4 Kamov Ka-52 helicopters.

From the Greek side were included two frigates, one type 214 submarine, one landing ship, four F-16 fighter jets, operating from Greece and another four fighter jets operating from Cairo, one Airborne Early Warning and Control Unit (AEW&C), four helicopters of the Hellenic Army Aviation Force (one CH-47 Chinook and three AH-64 Apaches) and one C-130 transport aircraft.

Cyprus deployed an Offshore Patrol Vessel (OPV) and the United Arab Emirates contribued four Mirage 2000 aircraft, and four Black Hawk helicopters. Finally, the French Cassard-class anti-air frigate Jeane Bart also took part in the exercise, solidifying the presence of the French Navy in the region.

The Key Role of Special Operators in the Drills

Apart from the aforementioned forces, we should highlight the unique role of the SOF units (Special Operations Forces) in Medusa-10. The contributing countries proved that they are able to coordinate in terms of special operations and asymmetric warfare tactics by including some of their most prestigious and high-caliber military elements the drills.

These units held a prominent role for the duration of the exercise, but the most important aspect of Medusa-10 was the direct cooperation and integration of SOF personnel in joint drills, something that has never happened in the past. Specifically there have been occasions where multinational SOF teams were created and worked together on several scenarios, a rare practice which underscores the great degree of cooperation and the high professionalism of those units.

Incident with the Turkish Navy

While the exercise was ongoing a vessel of the Turkish Navy tried to interrupt the training. The Turkish frigate Kemal Reis began moving close to the area of the drill on Friday December 4, one day prior to the final and most important phase of the exercise (DV Day).

Kemal Reis was en route to an Egyptian frigate and reached a distance of 20 nautical miles away from the exercises. Once the course of the Turkish vessel was spotted, the Egyptian ship adjusted its direction pointing to Kemal Reis, pushing the Turkish vessel to begin a retreat. Kemal Reis was moving into the proximity of the area of the drill under the close monitoring of the participating forces; whatever the Turkish intent actually was, the whole presence of their ship was rather pointless and failed to disrupt the ongoing exercise.

Medusa-10 was a Success

I have been in contact with officers who participated in the exercise and they confirmed that the level of cooperation and operational coordination was extremely high. Medusa-10 brought together staff from five different countries with mutual goals in the Eastern Mediterranean and enabled high-level collaboration among the armed forces of the participating states, from the tactical to the strategic level.

The Greek and Cypriot sides have been traditionally working closely, sharing a similar mindset regarding the security landscape and defense doctrine in the region. During Medusa-10, the Egyptians and Emiratis showcased that they share many of the same concerns and are aligning with this approach. At the mid-senior level the officers of these countries agree on the threat perception fueled by the Turkish activity in the Eastern Mediterranean.

Exercises like Medusa-10 bring units closer together who could eventually operate in the region during a potential confrontation with Turkey. The feeling of a mutual mission and common objectives is the most significant aspect of the whole process, probably more essential than any pragmatic training activity.

A Perplexing Reality is Developing in the Eastern Mediterranean

While Medusa-10 has been successfully completed, further geopolitical developments and new alliances are emerging in the Eastern Mediterranean region. Greece has repeatedly witnessed a lukewarm EU response against Turkish aggression, so a potential partnership with regional powers who share aligning interests with Athens could prove to be a much more fruitful tactic.

However, the situation in the Eastern Mediterranean is not that simple. Even though France is backing Greece in this dispute, there is no guarantee from Paris that it would militarily intervene in the unfortunate event of a Greek-Turkish escalation. Even though that is an unlikely scenario it could accidentally happen given the pressure and the tense activity of the previous months.

On the other hand, Athens and Abu Dhabi signed a defense agreement in November, which among other things dictates that each country should militarily assist the other in case of an attack from a third party. This specific part is rather utopic in the case of a potential attack from Turkey, and its only purpose was to create political impressions.

Considering that Greece and Turkey are NATO members, any UAE involvement in a potential confrontation between the two would create a very complex situation for the North Atlantic coalition and is highly unlikely to happen — not to mention the controversy of a Sunni monarchy joining an officially Orthodox Christian country fighting against a fellow Muslim power.

Even if politics could override religion at the senior levels of these nations’ political leadership, the situation would be much more challenging moving bottom-up from the soldiers to the junior and mid-level officers. In this sense the current status quo in the Eastern Mediterranean remains fluid and highly unpredictable.

L'articolo Medusa-10’s Geopolitical Implications in the Eastern Mediterranean proviene da InsideOver.

The European Council is meeting again from December 10 to 11 and tensions with Turkey will be at the top of the agenda. In particular, the situation in the Eastern Mediterranean as well as the European policy towards Turkey can be found at the top of the External Relations agenda of the summit.

EU leaders will discuss possible responses against Turkish provocative actions in the East Mediterranean region over the last few months, as per the conclusions of the previous European Council in October. Despite speculation about the potential EU reaction, what has been gathering even more attention lately is the ongoing escalation between France and Turkey.

Tensions between France and Turkey have not only come via traditional diplomatic means, but also on a personal level between Emmanuel Macron and Recep Tayyip Erdogan. The harsh rhetoric lobbed between Erdogan and Macron and personal verbal attacks indicate that Ankara and Paris are bracing for a clash, with potential domestic and international impacts on the political and security landscape.

From les Gilets Jaunes to Erdogan’s Red Vests

In late October, Erdogan bluntly criticized the French President and urged Turkish people to boycott French products, as the tension between the two countries rises. Paris has protested Turkish unilateral actions in the Eastern Mediterranean and candidly taken the side of Athens with regards to the ongoing Greek-Turkish disputes.

At the same time Macron’s strategy to deter radical Islam within France through the closure of Islamist associations, prosecution of suspicious individuals, targeted home searches and constant monitoring of social media content has further angered the Turkish President and given him leverage for directing anger at France and Macron.

This time, Erdogan has been even more aggressive in his comments, calling Macron a dangerous burden for France and advising the French people to get rid of this “trouble” soon. Erdogan also stated that the Yellow Vests  — the famous Gilets Jaunes movement which is seeking economic reforms in France through popular protests — could promptly turn to “Red Vests”, implying that Ankara is able to mobilize thousands of Turkish and Turkish-supporting people within the French territory to cause significant disruption in the country via massive protests.

Once again Erdogan has played the neo-Ottoman card, emphasizing that the self-proclaimed Turkish position as a leading power in the Muslim world globally can be employed to shift the political balance and the security apparatus of other countries.

Macron’s Response and Competing Interests Overseas

The French President has chosen to be careful in his response, highlighting that the mutual respect should be a fundamental part of the relations between two countries. He totally condemned the use of personal insults against the head of a sovereign state.

Meanwhile, Macron’s reforms to underscore the secular character of the country are taking place in France, in a major state-coordinated effort to distinguish religion from politics. Macron has publicly endorsed and personally announced this campaign, being targeted by his critics — and especially by Turkey — for allegedly adopting a discriminatory policy against the Muslim community of France.

While Erdogan is threatening that Ankara could directly meddle into the domestic affairs of France, a much more tangible Turkish interference is possible in some traditional French strongholds across Africa. Despite the universal disapproval of the colonial legacy of the major powers of the past, one cannot question that Paris still holds a prominent role in the political, security and economic developments of the Economic Community of West African States – or ECOWAS.

Turkey has been gradually and methodically building up its presence and expanding its influence in several states of West Africa and the Sahel. As the political and security challenges in countries like Mali, Burkina Faso and Niger are multiplying, France is consolidating its military operations accordingly; in the meantime Turkey is reshaping its role in the region, emerging as an alternative power to the French presence, which a considerable number of the nationals from the respective countries, occasionally blame for their long-term grievances.

An unpredictable — yet promising — strategy for Turkey would be to combine well-tested soft power methods such as sending humanitarian aid to countries in need across the region, with the deployment of unconventional means, like giving covert support to radical militias that undermine the French efforts for security.

While Ankara’s influence in the Sahel can by no means be compared to the Turkish footprint in Libya, Erdogan’s aspirations are limitless. It is clear he is willing to internationalize the Turkish-French standoff, spanning from the heart of Paris to the mainland of West Africa, where crucial French interests are at stake.

Germany is Unlikely to Stand up to Turkey

Returning to the EU developments, it should be expected that France will escalate pressure against Turkey this week as we approach the European Council meeting. Paris will call for decisive action against Turkey, focusing on the unilateral unauthorized Turkish activity in the Eastern Mediterranean and hoping that the EU will finally impose some substantial sanctions on Ankara and will implement a stricter policy; however apart from Greece and Cyprus — the EU member states who are most affected by the Turkish recent actions in the Eastern Mediterranean — the rest of the European powers are not expected to make any essential changes to the stance they have adopted so far.

With regards to sanctions the most favorable plausible scenario for France, Greece and Cyprus would be an arms embargo on Turkey from the EU, a step that would immediately and drastically undermine the most important factor of the Turkish Foreign Policy: the capability and battle readiness of the Turkish Armed Forces.

Even though Germany has mentioned in the past that sanctions would be discussed if Ankara kept not complying with the EU calls, the possibility of a German agreement on substantial sanctions should be ruled out. On the contrary, as Germany is about to complete its six-month presidency of the EU Council, there will likely be a major effort — even if it prompts a public disagreement with France — to block any serious action against Turkey, underscoring the German approach since the tensions started in the Eastern Mediterranean in July.

L'articolo France and Turkey Brace for Clash Ahead of European Council Meeting proviene da InsideOver.

On November 21, Turkey announced through a NAVTEX from Antalya Station, that its research vessel Oruc Reis accompanied by the vessels Ataman and Cengiz Han, would once again conduct seismic research activities in the proximity of the Greek-Turkish maritime borders.

The announcement by the Turkish Ministry of Energy and Natural Resources indicated that the nine-day process, would be the final act of the month-long activity of the vessel, which has prompted much tension between the two neighboring countries. As this chapter is to be concluded quite soon, analysts are now focusing on how much Turkey achieved of its objectives and what is likely to happen next in the Eastern Mediterranean context.

Ankara Uses Diplomatic Pressure After Achieving Main Objectives

In previous days, senior Turkish officials — including President Recep Erdogan — have called upon the EU to act “impartially” and stop targeting Turkey. During a recent speech to fellow Justice and Development Party (Adalet ve Kalkınma Partisi) or AKP members, the Turkish President emphasized that Turkey is a part of Europe and fully supports an EU perspective for his country. However he highlighted that at the same time, the leading EU countries should keep their promises to Turkey.

Turkish Minister of Foreign Affairs  Mevlüt Çavuşoğl also stated in front of the Turkish Parliament that the European Union should acknowledge its mistakes. At the same time, Hami Aksoy, spokesman of the Turkish Foreign Ministry, slammed Athens for the Greek unwillingness to engage in dialogue with Ankara, and personally attacked Greek Foreign Minister Nikos Dendias for his recent open criticism of Turkey.

Ankara Wants de Facto Control of Greek Maritime Territory

Ankara is turning to this sort of diplomacy and adopts this strategy of public grievance at a key point for the Turkish endeavors in Eastern Mediterranean. As we have mentioned in previous articles, Ankara has been looking to establish de facto control in Greek maritime zones.

Once the first NAVTEX was published from the Antalya station last summer covering parts of this region, major controversy arose in Greece and the issue made the headlines; at the same time the Greek Armed Forces have been fully mobilized across the country.

The latest NAVTEX from Antalya is directly stating that the vessel will conduct research in the Turkish Continental Shelf (a term that the Turkish side has been carefully avoiding) and also the zones enclosed in the Navigational Warning are located in the immediate proximity of — if not overlapping — the Greek territorial waters, namely six nautical miles or less from the Greek island of Kastelorizo.

Athens Has Made Many Mistakes and Failed to Engage in Strategic Long-Term Planning

Surprisingly, this latest development has been hardly covered from the major Greek media, while some commentators rushed to present Turkey’s wrapping up of seismic research activity as a Greek success; apparently all these media — probably on purpose — have missed the main point here: the end of the seismic research by no means indicate an actual Turkish withdrawal. It should be simply perceived as the end of the research phase in the Greek maritime zones, setting the ground for the next moves, according to long-term Turkish plans.

Amidst this unprecedented situation for Athens, some major mistakes from the point of the Greek side should be highlighted. First, Greece seemed to be putting too much effort to manipulate the domestic public opinion, rather than pragmatically handling the real challenges, ensuing from the Turkish claims. This dubious stance gave Turkey the necessary room to keep pushing further its positions, while Ankara apprehended that its neighboring country would hardly manage efficiently any provocations in both domestic and international level.

Greece is Too Dependent on Foreign Support

Greece has also been relying too heavily on foreign support, especially from the EU. As thoroughly examined in previous articles, the major EU nations — excluding France — are unwilling to directly challenge Turkey, considering their bilateral economic ties and the political balances across the continent. Therefore, Greek hopes have been rather unfounded, and the sought-after sanctions against Turkey have always been too little too late; and this will keep happening unless major changes are made.

Finally the most critical mistake from the Greek side in this dispute, has been the lack of a strategic plan towards Turkey and the absence of an adequate response mechanism that would block Ankara from establishing de facto conditions in the Greek maritime boundaries.

Paradoxically Athens has neglected the essence of strategic planning both in diplomatic and operational level, totally losing the initiative and forming its actions according to the Turkish moves. The unfortunate comment of Greek Prime Minister Kyriakos Mitsotakis last September regarding  — once again — the activity of the Oruc Reis is perfectly indicative of this whole ongoing situation. As previously analyzed, the Greek administration consistently failed to correctly interpret Turkish maneuvers and never implemented a long-term or realistic policy towards their neighbors.

What’s Turkey’s Next Move?

Ankara has been executing a well-planned strategy to establish Turkish claims across Eastern Mediterranean. Judging from the Turkish moves in northern Cyprus and Ankara’s unilateral drilling activities, alongside the aggressive rhetoric after Ersin Tatar’s victory in the self-proclaimed Turkish Republic of Northern Cyprus, we should only expect Turkish demands to keep increasing.

Any de-escalation from the Turkish side is out of the question for now. The latest statements regarding the European Union indicate that Turkey will seek to keep a balance with the major EU powers while Ankara keeps expanding westwards in the Mediterranean Sea.

With regards to the dispute with Greece, if we accept that this really will be the last operation of Oruc Reis in the area, we can anticipate two different courses of action. Either Ankara will proceed to unilateral drilling during 2021 in the zones where the research vessel has been conducting seismic studies or Greece and Turkey will come to an agreement for joint exploitation of the resources in the area under question.

The latter scenario would likely be welcomed by the Greek administration, going by the lackluster approach that Athens has taken up to this point.

L'articolo What’s Next for Turkey’s Oruc Reis Research Vessel after Greece? proviene da InsideOver.

Turkey’s Defense Industry has been through pioneering and promising developments over the last two decades. The latest signs of Ankara’s cutting-edge defense technologies have been aptly showcased in two different instances, where the technological novelties in the defense industry field fully aligned with the Turkish geopolitical goals abroad.

The wide use of Turkish drone technology in Libya and Artsakh, have been literally game-changers, tipping the balance in favor of the Turkish allies — the Government of National Accord (GNA) and Baku, respectively — and helping achieve the operational and strategic goals of both sides. After displaying the strategic gains and leverage that Turkish drones could provide in modern warfare, Ankara is now promoting the latest features of domestically-produced anti-drone systems.

Drones are Reshaping the Modern Battlefield – and Anti-Drone Tech is Crucial

Drone technologies have essentially reshaped the modern battlefield. Following the extensive deployment of US drones within the scope of anti-terrorist operations worldwide, the use of drones emerged as an accurate and effective method to neutralize targets, without risking the safety of military personnel.

An ample modus operandi at a much lower cost, when considering the total budget behind a combat pilot, a jet fighter and the necessary components or a fully operational Special Forces Task Force. The massive use of modified drones from ISIS cells in Iraq and Syria in since 2014, projected the asymmetric nature of this technology, as commercial drones – after the appropriate amendments – have been used as a very cheap weapon, able to seriously harm or totally destroy critical infrastructure and personnel.

Turkey was fast enough to realize the significance of this novel reality in the defense and security affairs and aggressively invest in a domestic Turkish drone industry. The active Turkish engagement in the two aforementioned conflicts further emphasized the advantages of the drones in the battlefield; but simultaneously their critical role in the developments of the ground highlighted the importance of an integrated and functional drone-defense solution.

The success of Turkish-built drones in Libya and Azerbaijan have eventually strengthened the position of the country’s industry, securing their reputation as a drone warfare expert. A particular point of attention in the anti-drone systems is that the cost and operational functions of the defense mechanisms should be proportionate to the threat, otherwise any Counter Unmanned Aircraft Systems (CUAS) would not be financially and logistically viable. Ankara has timely and fully comprehended this necessary condition.

Turkey’s Strategic Vision and the IHA-MAX Deal with Albania and Qatar

The Antalya-based National War Technologies Defense Systems Inc. (Ulusal Harp Teknolojileri Savunma Sistemleri A.Ş.) is a private Turkish company, founded in 1996, specializing in electronic warfare and defense anti-access systems. Lately the company has been exclusively working on anti-drone solutions.

In terms of marketing Ulusal is moving smartly; following the unparalleled success of the Turkish-designed and manufactured Bayraktar TB2 drone, Ulusal is looking to capitalize on the name that Turkey has built in the Unmanned Aerial Vehicle (UAV) security environment, through developing and promoting reliable and cost-effective Anti-Drone and CUAS solutions. Ulusal is also counting on another parameter; from the research and development phase, to the production and distribution of their systems, the company is solely relying on Turkish technologies, know-how, software tools, personnel, and equipment.

This aspect also brings them further toward enhancing the potential of the company in the domestic market. It is also fully in line with President Recep Erdogan’s strategic vision. Erdogan not only wants a self-sufficient Turkish Defense Industry, but is also determined to increase the export of Turkish-built defense and security systems abroad.

One of the latest Ulusal products in the Anti-drone/CUAS category is the IHA-MAX Drone Repellent; with less than 4.5 kg and compact dimensions, this anti-drone device is fully portable and can be easily operated by one individual. The range of IHA-MAX can cover up to 1.5 km; considering that Ulusal has announced that the device is supposed to be used for security or law enforcement operations in urban environments, the range is more than adequate. However, considering the long-battery life of IHA-MAX (up to 30 days on standby), its easy portability and the ability to function in extreme temperatures (from -25°C to +65°C) it highly likely that that the device could easily fit in a special operations team in a war theatre in the near future.

Turkish progress in the drone/anti-drone industry has not gone unnoticed in the international scene. Recently Albania and Qatar reached a deal with Ankara and will soon integrate IHA-MAX in their security forces. It should be noted here that according to the Turkish Law the security and defense patents are subject to state regulations, with the Ministry of Defense being responsible to allow private entities selling such equipment abroad. After IHA-MAX was used for a given period of time by the Turkish Armed Forces and Turkish state agencies, the first export deals have also now been completed.

Gaining Political Leverage Through Defense Deals

The countries that Ankara selected for the first exports of the device have were not randomly chosen. Turkey traditionally holds strong ties with Albania; the intensification of the Greek-Turkish relations over disputes in the Aegean Sea constitutes a worrying situation, which has been only deteriorating since the summer. At the same time, even though the Albanian-Greek relations are rather normal over the last decades, the historical debate between the two countries around the Greek minority in Northern Epirus is always looming.

Hence in a possible Greek-Turkish escalation, Ankara could be looking to Tirana as a potential ally. Albanian-Turkish cooperation on defense and security issues could be perceived as a well-played maneuver by Erdogan to boost Turkey’s strategic depth in the Balkans.

In the case of Qatar, Ankara is dealing with a vital allying force able to assist the Turkish economy in a time of significant pressure. The recent groundbreaking developments in the Middle East, with some of the Sunni landmark monarchies re-establishing relations with Israel also open the road to Ankara to come out as the only reliable power to support Islamic interests in the Middle East and North Africa. The fact that Qatar is at odds with all these regional powers further increases the Turkish motives for multi-dimensional cooperation with Doha.

L'articolo Turkey is Now Using its Drone Prowess to Master and Sell anti-Drone Tech proviene da InsideOver.

Since the outbreak of the COVID-19 pandemic, the oil industry has been one of the most heavily-affected sectors of the economy hit by the unprecedented crisis. The unique anomalies that have been noticed in the supply and demand equilibrium have shattered oil prices, leading to the historical moment in April 2020 when future oil contracts being traded in negative (below zero) rates.

As a renewed surge of CIVID-19 cases hits in a second wave, and given the latest developments following the outcome of the US elections, worries around the oil prices threshold are coming once again into the foreground.

Second Wave of COVID Raises Grave Concerns for Oil Markets

As we are leaving the summer far behind, more and more COVID-19-related cases and deaths are being reported at the global level. By mid-October 2020, there was a remarkable trend in the Covid-19 incidents across the world, indicating that a second more aggressive wave of the virus is due.

This has been the exact case up to date, as we are witnessing the virus numbers moving rapidly upwards. As a response several governments, including Germany, France, and the UK have decided to reimpose lockdowns across several parts of the country or in the national level.

This new situation has created grave concerns as the lockdown policies not only sharply reduce the daily consumption of oil products in the everyday life of the citizens in these countries, but also trigger a hard blow on the aviation industry as a whole.

With the volume of international trips being dramatically downsized, the demand for petroleum-based jet fuel is sharply falling, bringing down together the price of oil across the global markets. By early November and once UK Prime Minister Boris Johnson confirmed that the country was entering again a national lockdown, the market promptly reacted and showcased the aforementioned concerns, sending the WTI price under $34 a barrel at some point during last Monday’s session (November 2). This was the lowest since early June.

Prices briefly rebounded during that week, due to the volatility that the US elections have created and also the fact that OPEC+ has started reconsidering the scheduled easing of oil production by January 2021, pushing the prices to gain some momentum, but significant worries remain.

Biden’s Election and Potential JCPOA Renegotiation

The election of Joe Biden as the 46^th President of the United States could add further pressure on the short-term outlook of the oil prices. As mentioned earlier, the race to the US elections has helped the prices to shortly rebound by mid-week; however, Biden’s win could affect the short-term performance of oil for two major reasons.

On the one hand we should anticipate that the President-elect will adopt a much stricter policy towards the COVID-19 pandemic. While Trump has followed a focused strategy, trying to mitigate as much as possible the grave consequences of the virus on the US economy, namely enforcing measures to boost the finances of the states, Biden will most probably pursue a more aggressive approach, similar to the one that many EU countries have followed, through the implementation of new lockdowns in several parts of the country and a mask mandate.

At the same time, Biden has stated that a renegotiation with the Islamic Republic of Iran around the JCPOA is definitely on the table. The Joint Comprehensive Plan of Action or “Iran Deal” has been a long-term process between Iran and P5+1 seeking to terminate parts of the Iranian nuclear program in exchange for lifting economic sanctions from Tehran and assisting the struggling economy of the country.

During the mid-2010s, Joe Biden – as the US Vice President at the time – played a pivotal role in the planning and implementation of the deal; and apparently the new President-elect still deeply believes in it. Trump, to the contrary, has fought every aspect of the deal during his Presidency, calling it the “worst deal ever negotiated”.

A potential renegotiation with Iran would not be an easy path, as Trump’s backing off from what was agreed and the likely election of a hardliner in the place of Iranian President Hassan Rouhani by the summer of 2021 could further complicate an already flawed relationship.

If Tehran comes to an agreement with Washington and the sanctions are lifted, then we should anticipate millions of barrels of Iranian oil finding their way back to the global markets daily, further deteriorating the problematic supply and demand equilibrium. Regardless of the outcome of the negotiations though – which are expected to run in the long-term anyway – the very fact that Biden is willing to restart the talks with the Islamic Republic will likely create additional concerns and push the oil prices even lower in the near future.

How Might OPEC+ React to an Oil Collapse?

Under the current circumstances, it is likely that we are due to face another perfect storm for oil prices on a global scale in the near future. In early December, OPEC is scheduled to meet and discuss the Organization’s strategies, in order to mitigate the impact of the another sharp downtrend in the demand of the petroleum products.

OPEC+ had previously implemented a supply cut of 9.7 million barrels per day to tackle the unparalleled challenges, posed by the COVID-19 crisis. This decrease – which started on May 2020 – was limited to 7.7 million barrels per day by August 2020 with an additional scheduled supply boost of two million barrels per day in January 2021; apparently the January boost has been currently paused, considering the new facts.

This step has temporarily provided some support to the fluctuating prices but would have minimal impact in the months to follow. Predicting that the new COVID-19 wave will have many similarities with the first surge of the virus, it is highly likely that we will face another oil crisis in the near future, sending WTI prices below 30 USD per barrel by early 2021.

This is the most probable scenario, unless there is a breakthrough development on the COVID-19 front – like the Pfizer/BioNTech’s latest vaccine announcement which gave an impressive 10% boost to WTI- or OPEC+ decides to proceed with radical moves, sharply cutting further the global supply in order to manipulate the oil rates; still such a move would put at risk the viability and the long-term outlook of petroleum-based economies, especially those of the rich monarchies of the Gulf and thus any such bold actions are unlikely to occur.

L'articolo Are Oil Prices About to Go into Freefall Once Again? proviene da InsideOver.

With the Turkish economy struggling, President Recep Erdogan keeps pushing through an expansionist foreign policy and using harsh rhetoric in the international scene.

The current indicators highlight that unless some of Erdogan’s fundamental policies are promptly reconsidered, Turkey could be soon facing an unprecedented systemic crisis.

Ankara’s Many Open Fronts: from Tripoli to Artsakh

It goes without saying that the increased geopolitical risk and the extended uncertainty over the security landscape of a country can have a grave impact on the economic outlook and the standing of the national currency across global markets. This is exactly the case with the Turkish economy at the moment, as Ankara is getting more and more involved in several fronts across the Mediterranean and the Caucasus regions.

Syria was the first country, where Erdogan tried to expand Turkish regional influence through consecutive operations in Idlib, Afrin and North-Eastern Syria. He did this in order to mitigate the Kurdish element in the proximity of the Turkish borders. Since early 2020 Turkey has been engaged in skirmishes with Syrian regime forces, a development that troubles Russian-Turkish relations. These bilateral relations have been further tested amidst the escalation of the Libyan civil war, where Turkey has also been heavily involved for over a year now, backing the Tripoli-based Government of National Accord; we should mention here that the forces fighting the GNA in Libya are being backed either politically or materially by a wide coalition, including France, Egypt, UAE, Russia and Greece. This proxy conflict is indirectly creating an antagonistic context between these countries and Turkey.

Finally, the latest engagement in the ongoing and ever escalating Nagorno-Karabakh conflict, where Ankara is decisively supporting Azerbaijan, which has once again put Russia and Turkey in opposing sides. The bottom line is that this unprecedented involvement concurrently in several different fronts has not only created a vast burden for the Turkish economy, but also prompted international concerns about Ankara’s rogue and unpredictable policy, while putting at stake traditional alliances like the one with Moscow.

Maritime Boundaries and Macron’s Mental Health

In the field of foreign policy and international relations, Turkey is by no means doing better, causing numerous political and diplomatic stalemates and clashes. Since July 2020, Turkish vessels have been constantly moving across parts of the Greek and Cypriot respective continental shelf and exclusive economic zone. Turkey is seeking to establish this way de facto rights in the Greek and Cypriot zones, a strategy which is seemingly successful so far. These moves have reportedly brought the two sides in the verge of an armed conflict; even though the perspective of a war is highly unlikely, a serious escalation can bring severe short-term downfalls in the country’s currency.

It should be noted that by late July during the first crisis with Greece, the Turkish lira lost almost 2% of its value against the US dollar within three days, while on August 5, during the second phase escalations, this drop increased to approximately 4.5% in just two days. The Greek and Cypriot sides are also demanding from the EU to impose sanctions on Turkey, an action that would have a devastating effect on the Turkish economy at this pivotal moment, however this scenario is rather unlikely, considering the special relation between some of the EU leading countries and Ankara.

At the same time, following the killing of French teacher Samuel Paty’s, French-Turkish relations have probably reached their lowest point ever, with Erdoğan publicly stating that the French President Emmanuel Macron, needs mental health treatment. The response from Paris was to withdraw the French Ambassador from Turkey.

The friction between France and Turkey of course lies in deeper political, economic and security antagonisms across the Middle East and Africa, so this diplomatic escalation now should come as no surprise. Shortly after Erdogan’s mental health remarks, Josep Borrell, the European Union Minister for Foreign Affairs, harshly criticized President Erdogan’s unacceptable comments, further worsening the international standing of the Turkish economy and the country itself.

Benchmark Interest Rates and Foreign Currency Reserves

Before discussing the present situation in Turkey, it’s worth having a quick look at the significance of benchmark interest rates. The benchmark interest rates are adjusted by the Central Bank of a country and are used as the base point of reference for all the financial transactions and products within the country; in a very simplified way the benchmark rates dictate the cost of lending within the country.

The benchmark rates should be modified according to the performance of an economy, so the given economy can be treated as reliable in the international system and global markets. Due to the long-standing and ever-increasing economic crisis in Turkey, President Erdogan is fiercely opposing the increase in the benchmark interest rates. Erdogan believes that low lending costs across the country could keep the economy moving in this challenging period, ignoring the fact that this approach could eventually lead to a huge credit bubble. Indeed, such a strategy could increase the country’s systemic risk and make the danger of a default more likely.

The Turkish Central Bank, under Erdogan’s close guidance, has been also persistently rejecting calls to increase its benchmark interest rates, with an exception in late September, when the rates were increased by 2% stabilizing the rate at 10.25% giving a short-lived boost to the Turkish currency. Erdogan has been struggling to keep the rates at one-digit values, prompting distrust across the global markets and plummeting the value of the Turkish lira.

At the same the in-country foreign currency reserves have been drastically reduced over the course of the last months. At the moment, the foreign currency reserves of the Central Bank of the Republic of Turkey (CBRT) have plummeted to 36.3 billion US Dollars from 75.8 billion USD in February 2020, an approximately 52% massive decrease in just a few months. As FT’s Laura Pitel has highlighted, this drastic reduction on the country’s foreign reserves could have already eliminated the defenses against a possible currency or BoP crisis.

Mid-term Outlook and Conclusions

According to the current mid-term outlook of the CBRT, the already high inflation is expected to reach 12.1% by the end of 2020 and then turn downwards to 9.4% by the end of 2021, with a 5% stabilization rate in the mid-term. However, this forecast is based upon the optimistic notion that the renewed wave of COVID-19 cases worldwide will not bring significant restrictions and will not affect the risk appetite in the international level.

We can easily understand that the CBRT projections are rather over-optimistic. Even though Turkey is trying hard to present a low rate in COVID-19 reported cases and deaths, it remains to be seen if this could be viable in the following months, as the virus’ second wave surges.

In terms of foreign policy, Erdogan should understand by now how important it is for his very political survival to adopt a clear strategy regarding Turkey’s alliances and enmities in the global scene. Turkey is currently by no means in position to follow a fully independent policy, and under no circumstances could it emerge as one of the main moving forces in the contemporary unipolar system.

Unless he is smart and agile, President Erdogan faces the risk of confronting too many enemies at once, eventually triggering a shocking devaluation of the Turkish lira and a potential collapse of the Turkish economy.

L'articolo Ankara’s Geopolitical Gambits Send Turkish Lira to Historic Lows proviene da InsideOver.