In mid-July, there was an attempted coup in Turkey. After few days of the fight, president Erdogan regained control of the situation and media found other topics to focus on but what happened in Turkey has huge geopolitical weight.
Role of Turkey on the international stage
Many people treat Turkey as just another mid-sized country. In reality, this country occupies a very strategical position as it is a link between Europe, Asia and Africa. Zbigniew Brzezinski in his work “The Grand Chessboard” highlighted this fact. Through the Bosporus Strait, Russia can access the Mediterranean Sea and control Syrian situation and other Middle Eastern countries.
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
Turkey is a NATO member with nuclear warheads stored in Incirlik base, located very close to Russian border. You can say that this is the Eastern flank of NATO. Military and surveillance missions ranging from Libya to Pakistan are carried out from this garrison.
Turkey played a key role in the destabilisation of the Middle East. Most weapons that eventually ended up in ISIS hands were shipped through Turkey. Later it was used against Assad in Syria. The single biggest beneficiary of unofficial collaboration with ISIS was Erdogan’s son. He was the middleman selling the oil from ISIS occupied territories of Syria and Iraq.
Give a terrorist organisation a solid stream of money and cooperative Turkish government and in just 12 months it will be the number one terrorist organisation in the world. This ‘external hostile’ was playing into hands of the West as it was easier to damage Syria and keep in check Iraq from where most of the US forces had left already.
Backstage dealings with ISIS gave Erdogan continuous support from the US and NATO in exchange for turning a blind eye to a huge scale of corruption, notorious human rights violations and atrocious position of Kurds. Economic problems were only getting worse while Erdogan had to face immigration problem much worse than this in Europe. Additionally, Turkey with two conflicts in their neighbouring countries – Iraq and Syria – had one inside, against Kurds.
The country gets into bigger and bigger troubles listening blindly to orders coming from Washington or rather Langley. Immigration crisis is a direct result of Turkish consent to destabilisation of the region. An attempt to dominate the Middle East through undermining competition backfired on top of losing control over ISIS. The West tried to fight them but to no avail.
After few months Russia joined the fight and the first step Putin made was to expose ISIS sources of financing and the role of Erdogan’s son during the G20 summit.
Next airstrikes on oil transports intensified to cut ISIS from money. The whole operation took a month and cost 600 million USD (mere change in terms of military budgets). The effect was to hurt both ISIS and Erdogan’s son financially.
Turkey responded quickly and in November we saw Russian aircraft being shot down with one casualty. Fortunately, we have not seen any military escalation but Russia already made a move to damage Turkey’s economy.
Russia’s authorities advised avoiding Turkish Riviera during holidays. Moscow banned any food imports from Turkey and most importantly, this move was not about Turkish food but intermediaries selling products from the EU (against sanctions). Ankara tried to match actions of the opponent and block the Bosporus Strait but with no success. To sum it up, relations between two countries are very bad. Turkey, NATO member with a nuclear arsenal and Russia stood on the edge of open military conflict.
Turkey-Russia, the reset
Subsequently, after few months a drastic change in Turkey-Russian relations happened. President Erdogan officially apologised to Russia and family of killed pilot. Surely, everything was already agreed upon by high-ranking officials before.
Russia answered with removing existing sanctions and both countries return to cooperate on Turk Stream – pipeline aiming to transport gas from Russia through Turkey to Greece. Also, talks about a nuclear power plant development were resumed.
According to Iranian sources, Ankara pulled back from Aleppo a majority of their intelligence assets working to remove Assad. Turkey refused a permanent presence of NATO fleet in the Black Sea to balance Russian forces (Crimea). For an unknown reason, we saw the Moscow-Ankara relations turning from cold to very warm and this was accompanied with isolation from NATO and the US.
And we did not wait long for a reaction.
On 15th July the world heard about the coup in Turkey. A part of the military tried to take control while Erdogan was abroad. Very quickly they pacified media outlets and internet cutting masses from any news streams. The Junta clashed with loyalists in many cities.
The turmoil lasted for hours. Finally, through Apple FaceTime and reclaimed stations, Erdogan’s speech was broadcasted in which he encouraged people to take the streets to prevent the coup. “They cannot run this country from Pennsylvania” and this sentence points out to the fact that a Turkish billionaire cleric, Gulen is behind the coup d’état. Gulen has resided in the US since 1999.
Gulen’s influence over the media and judiciary in Turkey is no secret. The effect was instantaneous. People showing support for Erdogan left their homes and rebellion was stopped. The message was manufactured very carefully and analogies to Libya, Iraq, Egypt, Syria and Ukraine where revolutions ended up in a tragedy for societies there.
In the final count, there was 180 dead, 1470 injured and over 3000 arrested. Right now a ‘purge’ in judiciary, media and army is on its way. Erdogan uses the pretext of eliminating enemy forces to gain nearly absolute power. Formal request to extradite Gulen is just a PR move without any chances of success.
An 180-degree policy change and an attempted coup are no coincident. The US and NATO have controlled Erdogan for years and he finally showed his teeth. Maybe he realised that following Western policies blindly is going to result in people rioting and requiring a regime change themselves?
What tends to support the version about the US and Gulen involvement is mass arrests in Incirlik base. The faction behind the coup openly admitted receiving help from NATO base. There are many theories on who was really behind this attempt from people directly connected with Clinton Foundation to staging the coup by Erdogan himself to remove opposition.
In my opinion, we have to focus on facts. The preparation of such operation was very poor. Without infantry, there was little chance of success. There are voices pointing to Russians giving Erdogan information about future coup and him allowing it to happen. At the end of the day he had many accomplices both in the loyalist group and in rebellion. Maybe he left the country to prevent his arrest or murder similar to Gaddafi’s and returned only when the situation was under control. We may never know those details.
The information about Erdogan asking for asylum in Germany and being denied is ridiculous to me. Why Germany (vassal of the US) and not Russia or a dozen other countries? What is very interesting is the fact of John Kerry being in Moscow during the coup. Coincidence? I do not think so. It is possible that the conflict between Langley (CIA) and Washington (Constitutionalists) is worsening.
Remarks for the future
Seeing this small revolution, I believe, Turkey will soon start treating NATO similarly to how the UK treated the EU for the last year. For some time already we see frictions inside the alliance. Notwithstanding Washington’s protest, France, Germany and Russia helped cutting ISIS from financing through airstrikes.
This can result in a decision-making paralysis of NATO. We may see the Czech Republic or Hungary starting to discuss their exit or at least a change in NATO operations.
Ultimately, I think Turkey will take NATO hostage to a vision of Ankara leaving the structures and joining the SCO (Shanghai Cooperation Organisation) – China, Russia, Kazakhstan, 3 former Soviet republics and soon also India and Pakistan.
The real game changer here is Incirlik base. NATO and the USA are going to do everything to keep it. Russia and China are in the opposite corner and Turkey will use this competition among superpowers to gain as much as possible for themselves.
Russia, China and Iran are going to tighten their economic cooperation. Turkey will, most probably, become a part of the Eurasian Economic Zone. Erdogan already stopped trying to get to the bankrupted EU.
If I am right and Russia indeed warned Erdogan about planned coup, the days of ISIS are numbered. They lost a majority of their funding from oil sales in Iraq and Syria. Unless Ankara hasn’t done it already, they are going to cut their logistic support for ISIS. The question here is: will anyone offer help to ISIS when now they made a lot of enemies in Syria, Iraq, Iran, Russia and with relations between Washington and Moscow starting to warm up?
From an investment point of view, Turkish equities are very interesting with CAPE and P/E below 10 and P/BV at 1.2. During my lectures organised by SAXO and ASBIRO University, I mentioned that I keep an open eye for Turkey but did not open my position due to anticipated Russian retaliation (after shooting aircraft down). Revenge came around but from the opposite side. Now the equity’s price is so low that I am beginning to consider opening my position. The problem I see is a big share of the financial sector and unfavourable global equity market situation.
Above article is based on sources coming from Europe, the US, Russia, Turkey and Iran. The amount of speculation is due to many self-excluding statements.