On May 14, Turkey is scheduled to hold parliamentary and presidential elections, which many have called the most important votes of 2023. Most things in Turkey seem to be on hold, as everyone awaits the outcome. Yet diplomats in Turkey’s capital, Ankara, are busy, trying to figure out whether an opposition victory will produce a diplomatic “pivot.” Like many observers outside the country, European diplomats in particular want to know whether post-election Turkey will return to its NATO allies and the West or drift further towards Russia and anti-Western autocracy.
As diplomatic historians — and diplomatic historians getting paid in Turkish lira at that — we argue the answer will be determined by economics, not geopolitics. Most inhabitants of Turkey are concerned about inflation and the depreciating lira, and foreign policy is playing a subdued role in domestic conversations. An American readership may be increasingly accustomed to talking of inflation, but the scale is different here: Turks are watching prices rise on an almost daily basis, and the government is burning through foreign currency reserves as it tries to postpone the inevitable evisceration of local purchasing power. The economic realities mean that whoever wins on May 14 will be forced to maintain relations with both Western purchasers of Turkish exports and Russian and Chinese providers of key imports. For better or worse, these complementary ties will prevent a radical geopolitical realignment under either President Recep Tayyip Erdoğan or his successor.
An Economic Reckoning
The lira’s recent woes first became pronounced in August 2018, when the United States imposed sanctions on Turkish exports. That decision was political, in response to the Turkish government’s detention of an American pastor, but the markets responded to weakness in the Turkish economy. At that point, the first questions were beginning to be asked about Erdoğan’s low-interest credit policy, which had been designed to stimulate construction-oriented growth but was becoming unsustainable. Ever since, the Turkish government has kept interest rates low — invoking Islamic theology and controversial economic theory — and the Turkish economy has continued to grow. Unorthodox monetary policy has driven inflation to record highs and the lira to record lows, but the resilience of much of the Turkish economy has puzzled observers.
All stimulated growth must come to an end, and even the government’s own statistics now reveal that the current course is finally petering out. If the falling lira were truly cheap, one would expect exports to expand and imports to contract. In the first two months of 2023, the opposite happened, and the most dramatic rise in imports reveals fear: Turkish purchases of precious metals are up 600 percent on a year-to-year basis. Some of this trade is presumably connected to Russia’s increasing use of gold, but in Istanbul’s Grand Bazaar or on Ankara’s Anafartalar Street, where shopkeepers sell gold, proprietors tell the same story: Anxious Turks are buying in record amounts. The cultural element at play — gold is the gift of choice at weddings and circumcision ceremonies — cannot explain this spike. The Turkish economic cycle has reached the point where ordinary citizens are hoarding dollars under the mattress.
With less than a month until the critical elections, two main coalitions have emerged, each fielding a single candidate for Turkey’s new, winner-takes-all presidential system. The opposing coalitions’ rhetoric is polarized, and the division contributes to the sense that Turkey may not sustain its current balance between Western institutional commitments and anti-Western outbursts. Erdoğan promises, should he win, a continuation of his conservative populism. When he speaks about economics, he celebrates Turkey’s emergence as a regional power. Inflation notwithstanding, he trumpets Turkish industry’s progress towards drone, car, and battleship production. Critics claim the Central Bank’s efforts to prop up the lira cannot last much longer, that difficult choices — including increased capital controls and devaluation of the lira — loom after the elections. But, if the Turkish leader speaks of the International Monetary Fund, it is with sarcasm.
While the opposition has not made foreign policy a top priority, they have indicated that they will take a less confrontational stance with the West. Led by Kemal Kılıçdaroğlu, the Republican People’s Party has spoken of a return to monetary orthodoxy and invited prominent U.S.-based economists to justify what will, should they win, inevitably be a painful restructuring. The opposition points out that many Turks already struggle to afford onions (an ingredient as necessary to local cuisine as ketchup to an American diner), let alone drones or battleships. While the argument follows an essentially economic logic, diplomats are understandably paying more attention to the potential of improved relations with the West.
A History of Neutrality
Despite the rhetorical binary presented by Erdoğan and the opposition, Turkey’s commitment to sovereignty suggests that, even in the case of an opposition victory, Turkey might not diplomatically “pivot” in the way that some international observers might want or expect. Building on our historical research on Turkish-Russian relations, we have argued in Diplomatic History that the baseline for modern Turkish foreign policy is much closer to that of a development-oriented Third World neutral than a committed NATO member. Unqualified pro-Western alignment was the product of the early Cold War and, since the mid-1950s, while Turkish foreign-policymakers have sought to engage with the West, they have done so on their own terms.
Readers of War on the Rocks will be familiar with a similar argument from Michael Reynolds’ 2019 essay on Turkish-Russian rapprochement. Reynolds was writing in the aftermath of Turkey’s procurement of Russian-made S-400 missiles, and he pushed back against hyperbolic predictions that Erdoğan was preparing to lead Turkey out of NATO. He rejected interpretations that attributed Turkey’s choices to Erdoğan’s personality and showed that, since Mustafa Kemal Atatürk’s victory over foreign interventionists at the founding of the Republic, Ankara’s foreign-policymakers have sought an independent role in world politics.
Since February 2022, when Moscow’s brazen attempt to take Kyiv heightened the geopolitical stakes of NATO cohesion, Western allies have again raised questions about Turkey’s loyalty. Ankara has refused to join Western sanctions on Russia, and recently the Washington Post published leaked U.S. intelligence documents that purport to show Ankara prepared to sell arms to Russia’s infamous Wagner Group. Whether or not one believes these leaks, they provide further ammunition to Western critics who suggest that Ankara is pursuing narrowly defined strategic interests and an opportunistic neutrality.
The Turkish foreign ministry insists that their relations with Ukraine and Russia are not equal, and they claim that the metaphor of “balancing” is misleading — the evidence suggests that Ankara wants to see the war end as quickly as possible. In our meetings with top-ranking Turkish diplomats, they point to the official strategic partnership with Ukraine and the Turkish government’s denunciation of Russia’s annexation of Crimea as evidence that they have taken a principled stance. Compared with U.S. and U.K. support for the Ukrainian military, Turkey’s supplying of Bayraktar drones on a commercial basis does seem restrained. Yet, when compared with India, which issued a notable rebuke to Russia even as the two sides expanded trade ties, Ankara’s position seems par for the course in the Global South. Turkey’s caution has a strong economic rationale and, unlike India, Turkey is facing security crises on multiple borders — in the Caucasus, Syria and Iraq, and the eastern Mediterranean — that are all exacerbated by Russia’s war on Ukraine. With an economic crisis unfolding, restraint is imperative, and it will continue to be so for whoever wins the election.
Interdependence
Turkey maintains strong economic relations with both Western countries and their adversaries, including Russia and China, and those ties are unlikely to change in May. Turkey’s reliance upon Russia — the largest supplier of Turkish imports — is particularly striking and has raised questions about political dependency. Indeed, before February 2022, scholars described the Russian-Turkish relationship as an asymmetric interdependence, pointing to Turkey’s massive deficit in bilateral trade and Moscow’s successful leveraging of economic power after the downing of a Russian jet on the Turkish-Syrian border in 2015. Today, more than a year after the Ukraine invasion began, that interdependence has grown, but Russia’s international isolation makes the power asymmetry less pronounced. Recently, the New York Times used dramatic visuals to highlight Turkey’s increased trade with Russia in their study of Moscow’s financing of the war effort. Russia’s significance for Turkey’s economy, however, should not be overstated, as the West remains a critical component of Turkey’s economy.
Turkey’s per capita GDP tripled in the first decade after Erdoğan came to power in 2002, and that economic success was overwhelmingly dependent upon integration into European markets. While Turkey’s economic performance has been much less impressive in the second decade of Erdoğan’s rule, he continues to benefit from Turkey’s role as a site of cheap labor for manufacturers oriented towards the European market. As cliched as the platitude about Turkey being a bridge between East and West is, it helps to describe trade flows: Turkey imports energy from Russia and goods from China (Figure 1) to cover domestic demand, and local factories assemble components for Europe (Figure 2). Turkey’s greatest trade surpluses are close to home — with countries like Azerbaijan and Iraq — but it is the European market that allows Turkey to maintain an export-oriented manufacturing sector of scale.
Source: Türkiye İstatistik Kurumu (TÜİK)
Source: Türkiye İstatistik Kurumu (TÜİK)
In their study, the New York Times showed a 113 percent increase in Turkish exports to Russia over the course of the year since the war, but that was growth from a low starting point and still represents a fraction of Turkey’s total. The automotive, textile, and steel industries account for an enormous share of Turkey’s exports (Figure 3), and European consumers buy much of that production. For the past decade, Germany has consistently been the largest purchaser of Turkish exports, with the automotive and textile industries accounting for more than half of Turkish sales. Taking into account any post-election leader’s need to earn foreign currency, Europe’s role in Turkey’s post-election future is unquestionable.
Source: Türkiye İhracatçılar Meclisi
Official trade statistics, of course, tell only part of the story, but almost any sector would confirm Turkey’s ties both to the West and to the West’s competitors. U.S. officials have valid concerns about parallel exports of microchips and critical chemicals through Turkey to Russia, and yet current Turkish leadership continues to insist that it prohibits the export of materials that would aid Russia’s military. The number of Russian visitors to Turkey has increased over the past decade, but they mingle with a diverse group of foreigners. Much has been made of recent Qatari investments but, over the course of Erdoğan’s reign, the single largest source of foreign direct investment has been the Netherlands, and much of that investment has been in the ports that service Turkey’s foreign trade.
Russia’s war on Ukraine has only slightly shifted these patterns. Cash-strapped Turkey cannot afford to invest in new infrastructure and forego Russian energy, as Europe is painfully trying to do. And Turkey will still need to pay for energy imports with revenue from a manufacturing sector that is integrated into European markets. The top priority for whoever triumphs on May 14 will be the economy, and no Turkish politician will have the luxury of picking sides.
After the Elections
If Erdoğan wins the elections, a certain continuity is all but guaranteed. He has committed publicly to unorthodox monetary policy, and it would be surprising if he openly raised interest rates. Nevertheless, he will be forced to confront the costs of previous choices. Since the disastrous earthquake on Feb. 6, he has been notably less confrontational abroad — most significant is the thaw in tension with Greece. Restraint should also be expected post-election, but there will be limits on his ability to walk back some of the antagonisms that he has fed. The opposition’s undeniable popularity and the economic crisis is driving him to even more authoritarian measures, and likely post-election political repression would surely continue to strain relations with the West. Ultimately, however, it is unlikely that this tension would push Turkey towards Russia. Erdoğan will be dependent on exports to the West, and the threat of economic sanctions will remain a potent weapon.
If Kılıçdaroğlu wins, the change will be dramatic. The opposition promises to release political prisoners, return to a parliamentary system, embrace monetary orthodoxy, and mend fences with the West. These measures will, without question, begin to undo some of Erdoğan’s handiwork. That said, the opposition will have to manage Turkey’s conflicting commitments with Russia in Syria and elsewhere, and economic ties with Russia will — at most — be reduced. If the West expects too much from the opposition, pressure could well backfire. U.S. support for the Syrian-based People’s Protection Units and Fetullah Gülen have fed an anti-Americanism that will remain strong. In Syria, Kılıçdaroğlu will almost certainly look for compromise with President Bashar al-Assad: The Turkish opposition leader wrote directly to Damascus in the aftermath of the earthquake, and he has promised to facilitate Syrian refugees return within a year of his election. Real progress, however, will almost certainly be slower. Among all Turkey’s foreign policy options, Kılıçdaroğlu’s greatest promise might be that he takes Turkey back towards the rapprochement with Athens that occurred on the eve of Erdoğan’s rise to power.
The late-1990s moment, when the United States facilitated a breakthrough in E.U.-Turkish relations, offers a roadmap for Washington today. As a recent Foreign Policy Research Institute report has argued, Washington should be cautious and “seek to cooperate with Ankara where it perceives a direct benefit from doing so.” More importantly, if presented with a Kılıçdaroğlu-led government, the United States might be most effective in encouraging European diplomats’ engagement with Turkey. Few Turks believe that the earlier goal of E.U. membership is realistic, and both sides need to acknowledge this fact. Some sort of diplomatic reset is necessary. With the country desperate for export revenue and hard currency, it is hard not to think back to Volkswagen’s 2019–2020 cancellation of a $1.4 billion plant in Manisa over Ankara’s military operations in Syria. Any government after May 14 should be eager to improve economic relations with Europe, as long as that improvement is not tied to a quid pro quo break with Russia.
Onur İşçi is the author of Turkey and the Soviet Union during World War II: Diplomacy, Discord, and International Relations. His articles on Russia and Turkey have appeared in leading academic journals, including Diplomatic History and Foreign Affairs. You can follow him on Twitter: @Onur_Isci_
Samuel J. Hirst is assistant professor of international relations at Bilkent University in Ankara. He has written a forthcoming book on Soviet-Turkish relations between the world wars. You can follow him on Twitter: @SamuelJHirst
Image: President of the Republic of Turkey
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