Allies in Name Only? The U.S. and Turkey Slug It Out

(Bloomberg) -- Unprecedented sanctions imposed by the U.S. on Turkey, a NATO ally, capped a crescendo of reproaches between the two countries since an attempted coup against the government of President Recep Tayyip Erdogan two years ago. The sanctions, against Turkey’s Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu, were in response to Turkey’s refusal to release an American pastor imprisoned in 2016 who the U.S. says is unjustly detained. However, strains had been building over an array of issues. The latest flare-up sent Turkish financial markets plunging.

1. What does the coup attempt have to do with the U.S.?

For Erdogan, the failed coup of July 2016 remains a festering sore. So does Washington’s reluctance to extradite Fethullah Gulen, the Turkish cleric living in exile in Pennsylvania whom Erdogan accuses of orchestrating the botched putsch. Claiming that Gulen’s followers had set up a “deep state” by infiltrating security services, schools and courts, Erdogan initiated a purge of the civil service that’s cost about 130,000 people their jobs. American officials say Turkey’s evidence against Gulen, who moved to the U.S. two decades ago and lives in a compound in the Pocono Mountains, is insufficient to extradite him.

2. What triggered the most recent squabble?

Evangelical preacher Andrew Brunson, an American, spent two years in a Turkish jail on charges of involvement in the July 2016 coup attempt. He was released to house arrest in late July, but that wasn’t enough for the Trump administration, which demands he be freed. While Turkish officials say the Brunson case is a judicial matter and not political, Erdogan deepened U.S. suspicions that the pastor was being held as a bargaining chip when he suggested last year that Turkey could release him in exchange for Gulen. “Give a pastor, take a pastor,” he said.

3. What else is straining ties?

Other big issues are differences over the war in Syria, a Turkish banker’s conviction in the U.S. for helping Iran evade U.S. financial sanctions and Ankara’s plans to purchase a missile defense system from Russia that isn’t compatible with those used by other members of NATO. Turkey alleges the U.S. court decision against Mehmet Hakan Atilla, former head of international banking at state-owned Halkbank, relied on fabricated evidence given by followers of Gulen. The S-400 missile deal and other tensions have prompted some U.S. lawmakers to call for a halt in sales of F-35 military jets to Turkey, even though several key parts of the fighter are made there.

4. What are the divisions over Syria?

Under President Barack Obama, the U.S. decided its most reliable ally in the fight against Islamic State in Syria was a Kurdish-led militia, and gave it extensive support. That riled Turkey, which sees the militia as an affiliate of a rebel Kurdish group that’s been fighting for autonomy inside Turkey for more than three decades. Turkey called on Trump to reverse Obama’s policy, but instead he doubled down and decided to directly arm the Syrian Kurds. Turkish forces have attacked the American-backed Kurds in Syria.

5. Why are Turkey’s markets so jittery?

Turkey has a large current-account shortfall and relies heavily on short-term foreign capital inflows to plug the gap. Sanctions can slow the flow of funds into Turkey or irk investors, piling pressure on its currency. The lira is grazing a record low against the dollar after sliding more than 20 percent this year, feeding double-digit inflation and hampering companies’ ability to pay back their foreign-currency debts.

6. Is Turkey looking elsewhere for allies?

Ties are warming between Turkey and Russia, even though they supported opposing sides in the Syrian civil war and Turkey shot down a Russian warplane backing Syrian government forces, saying it entered its airspace. Now, Erdogan is on board with a Russian-Iranian truce plan for four areas in Syria, and has sent troops to assist in its execution. After meeting Russian President Vladimir Putin at a summit of leaders representing emerging economies in late July, Erdogan said their collaboration “is really making someone jealous,” Turkish media reported.

7. What could keep Turkey in the U.S.’s orbit?

Common interests have prevented past disputes from escalating into a permanent rupture, and they haven’t gone away. Turkey depends on short-term foreign investments from Americans and others who take a lead from Washington. Meanwhile, the U.S. is short of dependable allies in the Islamic Middle East, a region where Russia and its ally Iran are ascendant. Trump is promising a much tougher line against Iran, and may not want to push Turkey -- which has NATO’s second-biggest army -- too far into the opposing camp.

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