Turkey Skirts Escalation as Erdogan Softens on Envoy Expulsions
(Bloomberg) -- President Recep Tayyip Erdogan signaled Monday that he would deescalate a diplomatic row that had shaken the lira and was set to bring Turkey’s ties with key Western partners, including the U.S., to the brink of collapse.
The latest disagreement flared after 10 Western ambassadors demanded the release of a government critic who has been jailed for four years, spurring calls from the Turkish president for their expulsion.
In the first direct indication Erdogan was softening his stance, Turkish state media reported that he’d interpreted “positively” a message posted by the American embassy on Twitter affirming that it complies with international conventions barring envoys from interfering in the domestic affairs of host countries. Other embassies, including those of Canada and the Netherlands, posted similar messages.
The row had alarmed Turkish administration officials who’ve scrambled to convince Erdogan to back down, according to officials with direct knowledge of the matter. Senior advisers briefed the presidency on the possible economic fallout of a new diplomatic row, recommending that the government not take any steps that would effectively force the envoys to leave, the officials said.
The lira, which reached record lows against the dollar earlier on Monday, briefly erased all losses and was 0.1% lower at 9.6138 per dollar at 4:40 p.m. in Istanbul.
The Borsa Istanbul Banks Index also erased earlier declines of as much as 1.2% to trade 0.2% higher, and the yield on 10-year government bonds trimmed its advance to three basis points.
“President Erdogan must be fully aware that expelling 10 ambassadors would likely have serious negative consequences,” said Piotr Matys, a senior currency analyst at InTouch Capital in London. “Therefore, before this nuclear option is potentially used, the Turkish Foreign Ministry may issue a carefully worded statement that will transform Erdogan’s instruction to expel Western diplomats into a warning that interference in domestic issues will not be tolerated by Turkey.”
On Saturday, Erdogan said a joint statement by the ambassadors demanding that imprisoned businessman Osman Kavala be released was direct meddling in national affairs and the judiciary.
“I gave the necessary orders and told our Foreign Ministry to quickly take care of declaring these 10 ambassadors personae non gratae,” he said in a televised speech.
The Foreign Ministry has yet to comment on the case, however. The absence of a formal decision has left the U.S., Germany, Denmark, Finland, France, the Netherlands, Sweden, Canada, Norway and New Zealand in the dark over the fate of their ambassadors in Ankara, Turkey’s capital.
The latest spat puts Erdogan in an awkward position just days before a Group of 20 nations summit takes place in Rome, where the Turkish president is hoping to talk with U.S. President Joe Biden. No meeting has been confirmed yet.
Erdogan wants to persuade Biden to sell Turkey dozens of American warplanes. The U.S. has resisted major arms deals with Ankara since its controversial purchase of Russian air defenses.
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