Turkey's Erdogan pledges boycott on U.S. electronics

Galtero Lara
Agosto 15, 2018

President Recep Tayyip Erdogan on Tuesday said Turkey would boycott USA electronic goods in retaliation for punitive sanctions by Washington against Ankara over the detention of an American pastor. Behind the scenes, however, diplomats resumed contact to ease tensions.

Addressing a conference of his ruling party faithful in the capital, Recep Tayyip Erdogan added fuel to the spat with the U.S., even as local business groups called on his government to settle it.

"We expect a $32bn foreign currency inflow", Firuz Baglikaya, head of the Association of Turkish Travel Agencies, told the state-run Anadolu news agency.

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.

It's unclear how such a boycott would work, and the State Department said it couldn't confirm "that that is actually going to happen", according to spokesperson Heather Nauert.

The call for a boycott appears to be Erdogan's answer to the US decision to double tariffs on Turkish steel and aluminum imports.

Behind the scenes, however, diplomatic dialogue appears to have resumed.

The Turkish Central Bank has attempted to shore up the lira by promising to provide the necessary liquidity to banks and to maintain financial stability.

Erdogan again urged Turks to convert their US dollars into the Turkish currency - the lira - to give it a boost as it continues to drop in value.

Erdogan made the comments in retaliation against United States sanctions, which have helped worsen an economic crisis in the country.

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After travelling to Turkey, Mr Lavrov said: "I am confident that the grave abuse of the role of the United States dollar as a global reserve currency will result over time in the weakening and demise of its role".

Experts have blamed the sharp slide in the lira on fears the country is descending into an economic crisis.

The country's finance minister - who is also Mr Erdogan's son-in-law - will seek to reassure around 1000 global investors in a teleconference scheduled for Thursday.

Traders said news that Finance Minister Berat Albayrak will hold a conference call with up to 1,000 investors to discuss the economy might also have helped support the currency.

Andrew Brunson has been at the heart of the ongoing fight after the USA sanctioned two top Turkish officials for his continued detention, and Turkey's vow to retaliate, even as its currency plummets. It was not clear when the court would consider the appeal. Arrested in 2016, Brunson faces terror and espionage charges.

A bigger danger is that Turkey's crisis will spill over into other emerging market economies and there were signs on Monday that other countries seen as vulnerable were coming under speculative attack.

But Bloomberg analysts have cautioned Turkey's economic conflict with the USA could prompt Mr Erdogan to start looking for new allies.

The lira was around 6.55 to the dollar on Tuesday, up 6% on the previous day after the central bank freed up cash for banks, and a slight recovery from a record low of 7.23 on Sunday.

Independent economists caution it would be hard to unseat the dollar as the top reserve currency as it is used widely in the global economy, for example to trade in oil and for commercial deals.

"In the end, it doesn't make economic sense for him, it doesn't make political sense for him, to deny his people the best products that they're used to", Rao said. "Such policy can't be a basis for normal dialogue and it can't last long".

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