Skip to main content

Erdogan seeks foreign policy score amid currency crisis

Despite its currency’s meltdown, Turkey’s President has still room to maneuver in the foreign policy field.
Sanchez Erdogan

Turkey’s economy might be going through its darkest days in decades, yet foreign policy still allows Turkish President Recep Tayyip Erdogan to score points.

High-level visits by the Spanish Prime Minister and the United Arab Emirates Crown Prince to Turkey may have thrown a lifeline to Erdogan’s standing at a time when Turkish lira has tumbled to record low levels, unleashing outrage from large segments of the society.

In its Nov. 19 edition, Financial Times reported that the Turkish lira sank to an all-time low, with some analysts describing the situation as a currency crisis. “The currency has declined more than 30 per cent this year after investors lost faith in the authorities’ ability to manage the economy in the face of inflation that accelerated to almost 20 per cent in October,” the authoritative British paper on financial and economic issues asserted.

Turkey’s economic woes are the direct results of the unorthodox views of its strongman. Thus, it is a man-made crisis. The man is none other than President Recep Tayyip Erdogan.

The timeline of Turkey’s currency meltdown and the Turkish lira’s annual depreciation against the US dollar over the past years tell it unequivocally. Turkish lira has shed nearly 7% in 2017, 28% in 2018, 11%, in 2019, 20% in 2020 and 42% in 2021 so far against the greenback. 

The polls indicate dwindling support for the president, jeopardizing his reelection and political survival. Perhaps for the first time, the polls suggest that the opposition bloc and the pro-Kurdish Peoples’ Democratic Party (HDP) could have a chance against Erdogan's ruling Justice and Development Party and their de facto nationalist allies. The opposition is now pushing harder for early elections which are scheduled for June 2023. Erdogan has categorically ruled out the possibility of early elections.

Less than a week after Turkey’s central bank cut interest rates by 100 basis points to 15% on Nov. 18, Turkish lira tumbled to as low as 13 to the dollar on Nov. 23. The plunge, which was the biggest drop since August 2018, came after Erdogan declared that the country was waging “an economic war of independence,” and with "the help of God" would emerge victorious.

To wage a "war" against invisible enemies like foreign exchange rates may sound like Don Quixote fighting against the windmills. Nonetheless Erdogan has reasons, especially in foreign policy, to believe disaster may not be imminent, contrary to his opponents' opinions.

Noteworthy in this respect is Spain's Prime Minister Pedro Sanchez's visit to Ankara a week ago. During their meeting, Sanchez and Erdogan "sealed a new 'comprehensive association' between Spain and Turkey, despite acknowledging that 'legitimate' differences remain in their points of view on various questions," the Spanish news agency EFE reported.

Spain’s socialist prime minister even went as far as to describe Turkey under Erdogan’s autocratic rule as “an indispensable ally for the European Union. … Thus Spain supports the European view of Turkey, and we encourage our Turkish friends to persevere in the effort to move closer progressively,” he said, using supportive language unheard of from any EU leader in recent times.

The reasons were not difficult to find when read together with Erdogan’s words. He said Turkey hoped to increase defense cooperation with its NATO ally by purchasing a second aircraft carrier and possibly a submarine from Spain. 

“The first aircraft carrier was not a large-scale one. We have agreed on constructing a large scale [carrier], and perhaps, we will also enter [cooperation] for a submarine,” Erdogan said during the joint press conference. “There is so much we can do in the defense industry, including armed and unarmed, unmanned aerial vehicles,” he added. 

Turkey and Spain are strange bedfellows on the Mediterranean. Yet their military cooperation will counterbalance a similar partnership between Greece and France. Recent lavish deals between the two could tip the balance of naval power in favor of Greece in the Eastern Mediterranean. “Comprehensive association” between Ankara and Madrid can be considered Turkey’s response to Greece and Spain’s response to France.

On another front, Erdogan assumed the chair of the Organization of Turkic States on Nov. 12, a title that he will hold for at least a year. The international body comprising a population of almost 170 million brings together Turkey, Azerbaijan, Kazakhstan, Kyrgyzstan and Uzbekistan as full members of the organization. Turkmenistan and Hungary hold observer status.

Another critical foreign policy issue that provides certain leverage for Erdogan is Libya. Before the end of November, eight lawmakers from the House of Representatives in Tobruk are expected to travel to Turkey, including influential people close to Aguila Saleh and Khalifa Hifter, whose capture of Tripoli was prevented by Turkish-backed groups. 

Moreover, Ankara still has very close economic, political, and military ties with Libya’s Prime Minister Abdulhamid Dbeibeh, who is considered a frontrunner in the country’s upcoming presidential elections on Dec. 24. 

Factions that were fighting the Turkish-backed groups in Libya are now keen to reach out to Ankara. Hifter’s people have been actively working to reestablish lines of communication with Turkey. There are rumors that Hifter’s sons have recently traveled to Turkey several times.

UAE Crown Prince Muhammed bin Zayed's visit to Ankara on Nov. 24 could also spell the end of the animosity between Ankara and Abu Dhabi, particularly in Libya, where two capitals are supporting rival factions.

Turkey used to accuse the UAE of perpetrating the botched coup in 2016. The UAE, in turn, was against Turkey almost on every front, from the Gulf to North Africa to Eastern Mediterranean.

The most important result of the visit could be the large UAE investments in Turkey. The Middle East Eye reported that the Crown Prince told Erdogan in a phone call earlier this year that he was ready to invest as much as $100 billion in Turkey, citing a "well-placed source."

Turkey is in bad shape economically, and Erdogan seems to be crumbling politically. However, it may still be too early to write him off, thanks to foreign developments.

Join hundreds of Middle East professionals with Al-Monitor PRO.

Business and policy professionals use PRO to monitor the regional economy and improve their reports, memos and presentations. Try it for free and cancel anytime.

Already a Member? Sign in


The Middle East's Best Newsletters

Join over 50,000 readers who access our journalists dedicated newsletters, covering the top political, security, business and tech issues across the region each week.
Delivered straight to your inbox.


What's included:
Our Expertise

Free newsletters available:

  • The Takeaway & Week in Review
  • Middle East Minute (AM)
  • Daily Briefing (PM)
  • Business & Tech Briefing
  • Security Briefing
  • Gulf Briefing
  • Israel Briefing
  • Palestine Briefing
  • Turkey Briefing
  • Iraq Briefing

Premium Membership

Join the Middle East's most notable experts for premium memos, trend reports, live video Q&A, and intimate in-person events, each detailing exclusive insights on business and geopolitical trends shaping the region.

$25.00 / month
billed annually

Become Member Start with 1-week free trial
What's included:
Our Expertise AI-driven

Memos - premium analytical writing: actionable insights on markets and geopolitics.

Live Video Q&A - Hear from our top journalists and regional experts.

Special Events - Intimate in-person events with business & political VIPs.

Trend Reports - Deep dive analysis on market updates.

Text Alerts - Be the first to get breaking news, exclusives, and PRO content.

All premium Industry Newsletters - Monitor the Middle East's most important industries. Prioritize your target industries for weekly review:

  • Capital Markets & Private Equity
  • Venture Capital & Startups
  • Green Energy
  • Supply Chain
  • Sustainable Development
  • Leading Edge Technology
  • Oil & Gas
  • Real Estate & Construction
  • Banking

We also offer team plans. Please send an email to and we'll onboard your team.

Already a Member? Sign in

Start your PRO membership today.

Join the Middle East's top business and policy professionals to access exclusive PRO insights today.

Join Al-Monitor PRO Start with 1-week free trial