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Europe watches as Turkey burns
h/t Gates of Vienna[Politico] Looks like Allah is betting on the dollar. Nearly a week has passed since a livid Recep Tayyip Erdogan thundered "they have dollars, we have God" in Washington’s direction. So far, the Almighty isn’t helping. And while European officials say they would like to help (the last thing the EU needs at the moment is a destabilized Turkey) there’s little they can do but sit and watch. For one thing, there’s no political will to get involved. Erdogan’s aggressive posture toward Turkey’s European neighbors in recent years, in particular Germany, has sapped his political capital on the Continent. While some in Europe fear Turkey’s crisis could endanger the EU’s refugee deal with Ankara, that’s unlikely. The reason: Erdogan needs hard currency now more than ever. And the "refugee" deals don't work anyways. Even the exposure of several large European banks to Turkey is unlikely to change Europe’s political calculus. Despite investor angst over the liabilities, which total about €150 billion, the exposure is a fraction of the sector’s overall loan book. That’s why JPMorgan describes the Turkey risk for Europe’s banks as "significant but manageable." Europe’s trade exposure to Turkey is also limited. The country accounts for just 1.6 percent of German exports, for example. Turkey’s crisis, the result of years of loose fiscal and monetary policies, is almost entirely of Erdogan’s own making. And a big part of what makes the situation so dangerous for Turkey is that Erdogan is the only one with the power to fix things. He is unlikely to do so in the near term. Posted by: g(r)omgoru 2018-08-17 |
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