by Daniel Carter
The 70+ year alliance between the US and Turkey has finally come to a dramatic end. But this turn of events was nowhere near unforeseen. In fact, I have been writing about the progression of this calamity for over a year. In April, I even wrote that Turkey was getting ready for economic warfare by repatriating its gold from the Federal Reserve. Well, now we are here.
As the US rolled out economic sanctions against Turkey in recent days, the Turkish currency (lira) lost 35% of its value against the US dollar. This has caused inflation to skyrocket, which is putting a tremendous burden on Turkish citizens. Everything from the cost of bread to the cost of iPhones has gone up. There are now videos of Turkish people smashing iPhones to show their hate for the US.
The Turkish government has responded by doubling tariffs on US imports, such as passenger cars, alcohol and tobacco. The Turkish government has also promised to provide the nation’s banks with all the liquidity they need. However, even with the measures taken by the Turkish government, the US is in control and causing a great deal of damage.
The United States’ stated reason for this economic warfare is because Turkey is holding a US pastor captive. But as I have been detailing for over a year, the souring relationship between these two countries is far more complicated.
The real reason behind the dispute is Turkey’s move toward the Eastern powers (Russia and China) over the past few years. Turkey has recently finalized a deal to buy Russian weapons, instead of buying weapons from NATO countries.
Perhaps the most hostile act toward the Western alliance, however, is Turkey’s assistance in destroying the US dollar hegemony (Petrodollar). Turkey’s president, Erdogan, has gone on a gold-buying spree in recent years and is now suggesting that international loans should be made in gold instead of US dollars. Here are his exact words:
“I made a suggestion at a G20 meeting. I asked, ‘Why do we make all loans in dollars? Let’s use another currency.’ I suggest that the loans should be made based on gold… With the dollar, the world is always under exchange rate pressure. We should save states and nations from this exchange rate pressure. Gold has never been a tool of oppression throughout history.”
But actions speak louder than words, and Turkey has begun to act as well. Turkey will issue its first yuan-denominated (Chinese currency) bond this year. Now they are being proactive in diminishing the US’s economic hegemony.
So, the US will sell the idea that this economic warfare is about a pastor, but this is a conflict that has been a long time in the making. Turkey is continuing to pull away from the US and now the US is responding in a harsh manner. This is just the beginning, but these developments could eventually shift the world order in a significant way.