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Turkey Letter: 6 September 2016

Foreign Policy

  • At G20 meeting, Turkey pushes plan for ‘safe zone’ in Syria
  • NATO Chief to visit Turkey for 1st time since coup attempt
  • U.S. is trapped between its allies’ ambitions in Syria
  • Kurds carve out a home in Syria, testing U.S. ties with Turkey
  • Turkish offensive on Islamic State in Syria caught U.S. off guard
  • Turkish gold dealer wants N.Y. judge off his criminal case

Economy & Energy

  • Turkey downplays risks from Gülen-linked companies as new firm seized
  • Turkey eases reserves rules for third time since failed coup
  • U.S. bond investors forgive turkey risks in search of yields
  • Turkey inflation slows more than estimated in august on food
  • Russia pushes ahead with Turkey gas link as ties improve
  • Stability, of a sort: Turkey’s Islamic bonds
  • Turkish foreign visitors fall more than third after coup attempt, bombings

Domestic Politics

  • Renewed Turkey-Kurds conflict has killed nearly 2,000
  • Kurdish politicians in Turkey to protest at militant’s isolation

Foreign Policy

At G20 Meeting, Turkey Pushes Plan for ‘Safe Zone’ in Syria

Turkish President Tayyip Erdogan said on Monday he had urged world powers at a G20 meeting to set up a “safe zone” in Syria where there would be no fighting and which could help stem migrant flows from the Arab nation. Speaking in China, Erdogan said he had repeated a proposal for a “no-fly zone” in Syria during his talks with Russian President Vladimir Putin and U.S. President Barack Obama.

New York Times, At G20 Meeting, Turkey Pushes Plan for ‘Safe Zone’ in Syria, September 5, 2016


NATO Chief to Visit Turkey for 1st Time Since Coup Attempt

NATO said in a statement Tuesday that Stoltenberg will visit Ankara, the Turkish capital, on Thursday and Friday. It said he will meet with President Recep Tayyip Erdogan, Prime Minister Binali Yildirim, Foreign Minister Mevlut Cavusoglu, Defense Minister Fikri Isik and other high-level officials.

New York Times, NATO Chief to Visit Turkey for 1st Time Since Coup Attempt, September 6, 2016


U.S. is trapped between its allies’ ambitions in Syria

The Pentagon’s decision to arm a mostly Syrian Kurdish force has paid big dividends in northern Syria, where the Islamic State has been on the run in recent months. Backed by U.S. air power, Kurdish-led offensives have captured important pieces of the radical group’s “caliphate,” including the town of Manbij this month.

Washington Post, U.S. is trapped between its allies’ ambitions in Syria, August 31, 2016


Kurds Carve Out a Home in Syria, Testing U.S. Ties With Turkey

Amid the chaos of Syria’s war, the Kurds have carved out a semiautonomous region called Rojava that is home to about four million people, is as big as Belgium and stretches nearly the full length of the 565-mile border between Syria and Turkey.

Wall Street Journal, Kurds Carve Out a Home in Syria, Testing U.S. Ties With Turkey, August 31, 2016


Turkish Offensive on Islamic State in Syria Caught U.S. Off Guard

When Turkish ground forces delivered a lightning strike on Islamic State fighters in Syria last week, the Pentagon hailed what it described as close U.S.-Turkish coordination.

Wall Street Journal, Turkish Offensive on Islamic State in Syria Caught U.S. Off Guard, August 30, 2016


Turkish Gold Dealer Wants N.Y. Judge Off His Criminal Case

Turkish-Iranian gold trader Reza Zarrab wants his U.S. bank laundering case removed from the federal judge assigned to it. Based on U.S. District Judge Richard Berman’s disclosure that he participated in a legal conference in Istanbul in 2014, it would “unfortunately create an unavoidable appearance of partiality for the court to continue to oversee this matter,” Zarrab said in a filing Tuesday in Manhattan federal court. He’s asking for Berman to disqualify himself from handling the case.

Bloomberg, Turkish Gold Dealer Wants N.Y. Judge Off His Criminal Case, August 30, 2016


Economy & Energy

Turkey Downplays Risks From Gulen-Linked Companies as New Firm Seized

Turkey’s deputy prime minister said on Tuesday that companies linked to a group blamed for a failed coup posed a risk of up to 5 billion lira ($1.70 billion) to Turkish banks but that the state seizure of such firms had minimized the risks.

New York Times, Turkey Downplays Risks From Gulen-Linked Companies as New Firm Seized, September 6, 2016


Turkey Eases Reserves Rules for Third Time Since Failed Coup

Turkey’s central bank lowered reserve requirements for banks, the third time since July’s attempted coup that the regulator has acted to boost lira and foreign-exchange liquidity. Lira reserve requirement ratios were lowered by 50 basis points, the bank said in a statement on Tuesday. The bank also lowered the amount of foreign-exchange and gold that lenders must keep as collateral for their liabilities. The changes will add around 1.2 billion lira ($408 million) and $670 million of liquidity if lenders adopt the new ratios, the bank said.

Bloomberg, Turkey Eases Reserves Rules for Third Time Since Failed Coup, September 6, 2016


U.S. Bond Investors Forgive Turkey Risks in Search of Yields

More than $4 billion has flowed into the nation’s local-currency bonds this year, with $638 million arriving since the botched coup in July and most of that in the week ending Aug. 26, according to the latest central bank data. Net inflows to bond funds investing in lira and dollar-denominated Turkish securities were $281 million in August, according to data compiled by EPFR Global.

Bloomberg, U.S. Bond Investors Forgive Turkey Risks in Search of Yields, September 5, 2016


Turkey Inflation Slows More Than Estimated in August on Food

Turkey’s annual consumer inflation slowed for the first time since April as increases in food moderated. The inflation rate dropped to 8.05 percent in August from 8.79 percent a month earlier, below the median estimate of 8.4 percent in a Bloomberg survey.

Bloomberg, Turkey Inflation Slows More Than Estimated in August on Food, September 5, 2016


Stability, of a Sort: Turkey’s Islamic Bonds

Those seeking to invest in Turkey following the recent coup attempt have options other than traditional stocks and bonds, thanks to Islamic entities known as participation banks that offer bonds with potentially greater upside and more stability than standard government debt.

Wall Street Journal, Stability, of a Sort: Turkey’s Islamic Bonds, September 4, 2016


Russia pushes ahead with Turkey gas link as ties improve

Russia is on track to accomplish a major energy project aimed at cementing its ties with Turkey following a recent thaw in relations. The government in Moscow expects officials in Ankara to make necessary decisions in one to two months to proceed with a natural gas pipeline under the Black Sea that may kick off by end-2019.

Bloomberg, Russia pushes ahead with Turkey gas link as ties improve, September 3, 2016


Turkish foreign visitors fall more than third after coup attempt, bombings

The number of visitors to Turkey fell by more than a third in July, as a suspected Islamic State attack on Istanbul airport and a failed military coup battered its already fragile tourist industry.

Reuters, Turkish foreign visitors fall more than third after coup attempt, bombings, August 31, 2016


Domestic Politics

Renewed Turkey-Kurds Conflict Has Killed Nearly 2,000

Two Turkish soldiers were killed in clashes with Kurdish insurgents in the volatile southeast Monday as rights groups said nearly 2,000 people have died since fighting between the two sides resumed last year.

New York Times, Renewed Turkey-Kurds Conflict Has Killed Nearly 2,000, September 5, 2016


Kurdish politicians in Turkey to protest at militant’s isolation

A group of Kurdish politicians and activists in Turkey said on Thursday they would start a hunger strike next week to demand the right to visit the jailed the Kurdish PKK militant leader, who has been isolated since a peace process collapsed last year.

Reuters, Kurdish politicians in Turkey to protest at militant’s isolation, September 1, 2016