A Bad Year for Turkey, But Could 2017 Be Worse?
One of my few forecasts for this year was 2016 Will Be A Bad Year for Turkey and 2016 Forecast: Turkey Collapses. Shares started the year heading lower, but then rebounded with global markets. A coup in July delivered the expected geopolitical shake-up, and the chart again broke down this week after the lira tumbled.
The thesis was based a post a few months earlier, Geopolitical Forecasting Through Technical Analysis: Is Turkey About to Destabilize the Middle East?
Given the events of the past month and potential changes in Europe, things could get a lot worse for the country. Already, Turkey’s accession to the EU is all but dead.
To be sure, this is not the first such gambit by Erdogan, who has previously warned that he could put refugees “on buses” to Europe. However, in the past Europe had never escalated to the point where the vast majority of the EP made it clear that unless Erdogan backs off his authoritarian ambitions, the key negotiation in progress with Turkey would end. As such, it puts Erdogan in a tight spot: concede domestically, and be seen weak, or push on hoping that his threat will force Europe to de-escalate.
Earlier in 2016, in exchange for a series of promises, including accelerated membership talks and steps towards visa-free travel for Turkish citizens to the EU’s Schengen zone and billions in promptly embezzled funds, Turkey agreed to crack down on smugglers and to accept migrants and refugees returned from Greece. The agreement and other measures have dramatically reduced the numbers crossing the Mediterranean, but it has been complicated by growing anti-EU sentiment in Turkey and fears of increasing authoritarianism that have only deepened since July’s aborted coup attempt.
The pain for Turkey is not over. The chart says it is just getting started.