Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

After Trump Tariffs, Relations With Turkey Are At A Low Point


U.S. relations with Turkey have become extremely fraught. Turkey's currency plunged to record lows after President Trump announced new tariffs on Turkish steel and aluminum last week. This contributed to a deepening economic crisis for that country. And Turkey's president Recep Tayyip Erdogan said yesterday that his country would boycott U.S.-made electronic products. Amanda Sloat was a senior Obama state department official responsible for Turkey. She's now a senior fellow at the Brookings Institution. I began with an economic question for her, asking why Turkey's economic problems have been reverberating around the world?

AMANDA SLOAT: The biggest challenge is the way that the Turkish economy is structured. And primarily, that has to do with the fact that they are very dependent on foreign investment coming in. They are very dependent on their exports going out. And they are also very dependent on borrowing in dollars.

GREENE: Oh, I see, so when an economy is so tied to the outside world, when something happens in that economy, I mean, inevitably, it's going to affect elsewhere.

SLOAT: If they're leveraged in in dollars. And so what we see is that a lot of large and medium-sized companies have borrowed in dollars. And so now that there is a significant depreciation of the lira against the dollar, holding companies could end up going bankrupt. This could also have a spillover effect on banks that are now holding bad loans.

GREENE: What does the fact that Turkey is in this mess right now say about Erdogan and his style of not just economic management, but his style of leadership?

SLOAT: I mean, there's one thing that it indicates about his economic management, which is his outdated belief that having low interest rates leads to low inflation. There's also a lack of financial expertise in his cabinet. He has appointed his son-in-law as the economy minister, so there is an effort on his part to try and centralize a lot of power within the palace now in this new presidential system that has come into effect, and that includes economic power. And I think what we are seeing is that while you can exert a lot of control over political forces in your country, it is a lot harder to try and control the economy, especially given the linkages that it has with the rest of the international market.

GREENE: Hasn't this always been a reality with Erdogan, at least in recent years, that a lot of Western powers don't necessarily love him? He's not the partner they would choose, but they're sort of stuck with him because of Turkey's really important place in the world.

SLOAT: I think that's right. There was a lot of high expectations when Erdogan's party came into power in 2002. He was seen as being much more Western-oriented. He was seen as being much more liberal. Turkey was seen as a Muslim-majority democracy that could be inspiring to countries in the Arab Spring, so there was a lot of optimism initially and a belief by the West that this was somebody that they could work with. This certainly has changed over the last couple of years as Turkey has grown increasingly authoritarian, has made foreign policy decisions that Western countries don't agree with.

GREENE: You said this is a Muslim-majority democracy where there was a lot of optimism about the role that Turkey might play. In an ideal world, what sort of role is that?

SLOAT: I think there has been a lot of questions about whether or not Islam and democracy are compatible with one another. And so I think the fact that Turkey was functioning as a democracy, had a democratic government, was giving people optimism that these things are compatible. And as we had countries transitioning from more authoritarian regimes to the potential of democracy within the Arab Spring, there was the hope that Turkey would be able to serve as a model for those countries.

GREENE: Set an example for what could be.

SLOAT: Yeah. I don't think that what is happening in Turkey should necessarily be taken as a comment on the incompatibility of Islam and democracy. It's more a comment on the increasingly authoritarian nature of Erdogan's rule over the country.

GREENE: Let me just ask you broadly. I mean, if people are listening to this and they're not entirely sure what to think of Turkey and why Turkey matters, you as a veteran Turkey-watcher, what would you tell a listener right now?

SLOAT: Well, Turkey, for better or worse, is a NATO ally. And the reality is that even if we find Turkey difficult to deal with in NATO now, it's going to be even harder to deal with Turkey if it is outside NATO, so it certainly is a challenging ally. We certainly are going through a very difficult patch in our relationship. But the reality is that Turkey, given where it is located, continues to play a significant role in terms of U.S. interests in the region, not only Syria as we discussed, but also future counterterrorism challenges that are going to arise. Migration, as I mentioned, is a significant issue for the Europeans, as well as efforts to try and address other challenges that we're seeing within the Middle East.

GREENE: Thanks so much for coming in.

SLOAT: Thank you.

GREENE: That's veteran Turkey-watcher and former state department official Amanda Sloat. Transcript provided by NPR, Copyright NPR.