U.S. sanctions on NATO-join Turkey might deter future arms deals with the likes of Moscow. However, it could also play into Russian President Vladimir Putin’s hands, and analysts have told by the news.
Turkish dollar-denominated bonds and the lira have both fallen in recent days amid economic and geopolitical turmoil for Turkey, with investors concerned about its credibility and the potential for U.S. sanctions over a Russian weapons deal.
President Recep Tayyip Erdogan sacked the country’s central bank governor earlier this month, prompting fresh criticism regarding the institution’s independence and leading rating agency Fitch to downgrade Turkey’s investment rating to “BB-.”
However, trying forward, market watchers at the moment are apprehensive about the American response to what continues to be a significant headache for NATO: Ankara has officially began receiving parts for the Russian S-400 air defense missile system, the result of a weapons deal that Washington has long lobbied exhausting.
Senators are now urging President Donald Trump to slap sanctions on Turkey. Erdogan “has chosen a perilous partnership with (Putin) at the expense of Turkey’s security, economic prosperity and the integrity of the NATO alliance,” four senators, including chairmen of the Senate Armed Services Committee and the Senate International Relations Committee, said in a bipartisan statement last week.
Trump, by contrast, has been far less confrontational on the issue.
Amid Turkey’s tense geopolitical climate, some country experts believe sanctions and an additional rating downgrade for the country are on the horizon. But Erdogan on Sunday insisted that Trump could waive any potential penalties, suggesting confidence that he may be able to pull off the Russian deal in spite of everything.