Turkey In Trouble Again, Back Below Neckline
Germany is actively working to cut funding to Turkey from the country’s state-owned KfW bank, the European Investment Bank and the European Bank for Reconstruction and Development, according to more than a dozen government and banking officials, who asked not to be identified discussing the behind-the-scenes efforts. Some German commercial banks are also reviewing their exposure to Turkey, the officials said.
While none of the institutions or banks have put in place a formal freeze on funding, they’ve all imposed tighter restrictions, the people said. The increased scrutiny especially affects financing for companies seen as being tied to or influenced by the Turkish government, they said.
The reduction in exposure to Turkey comes amid deteriorating relations between the two governments, with German Chancellor Angela Merkel announcing last week that she will seek to curtail the European Union’s pre-accession funding for Turkey.
Turkey not only won’t join the EU, it is on course to leave NATO given the current trajectory in social mood and political developments in both Turkey and Europe. The stock chart of iShares MSCI Turkey (TUR) is also back below the H&S neckline, with a target in the single digits. The latest move is driven by currency markets; the dollar gained another 1.6 percent versus the lira today.
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