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Turkey's ailing currency is no match for Trump's tweets

“We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!”

by Tim Hume
Aug 17 2018, 1:19pm

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Turkey’s currency took another hit Friday after Donald Trump threatened further sanctions unless Ankara releases the American pastor it is holding on terror charges.

The lira weakened by more than 6 percent against the dollar, following the president’s tweet about Andrew Brunson, an evangelical pastor who has been detained for nearly two years.

“They are now holding our wonderful Christian pastor, who I must now ask to represent our Country as a great patriot hostage,” Trump posted. “We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!”

Earlier, U.S. Treasury Secretary Steven Mnuchin had said that further U.S. sanctions against Turkey were ready to go unless Brunson was released swiftly, prompting the lira’s decline.

Washington and Ankara and been slapping tit-for-tat tariffs on each other’s goods in their dispute over the fate of the pastor, who Turkey accuses of having been involved in a failed coup attempt against President Recep Tayyip Erdogan in 2016. The bitter spat between the NATO allies has worsened the crisis for Turkey’s currency, which has lost nearly 40 percent of its value against the dollar this year, amid concerns over the health of Turkey’s economy and Erdogan's influence on monetary policy.

READ: Turkey’s currency is tanking — and Trump just made it much, much worse

Turkey accuses Brunson, who ministers to a small Presbyterian congregation in the Turkish city of Izmir and has lived in Turkey for 23 years, of having links to Fethullah Gülen — a U.S.-based Turkish cleric whose network Ankara says was behind the failed coup. He’s also accused of links to the Kurdistan Workers’ Party, a militant group that has been locked in an insurgency against the Turkish state for decades.

But the U.S. says Brunson, who denies the charges, is innocent, and that the charges against him are politically motivated.

READ MORE: Everything you need to know about the feud between Trump and Erdogan over a jailed U.S. pastor

Analysts say Turkey appears to be trying to use Brunson as a bargaining chip to push for the extradition of Erdogan’s nemesis Gülen, who lives in Pennsylvania and whom Washington has steadfastly refused to hand over. It’s also trying to persuade the U.S. to spare Turkey's state-owned Halkbank from a fine for allegedly violating sanctions on Iran.

Erdogan has accused the U.S. of trying to “bring Turkey to its knees” through its tariffs on imports of Turkish metals, and has rallied Turks to shore up the currency by not trading in dollars and euros. In response to the standoff, patriotic Turks have posted videos to social media of them smashing iPhones, chopping up dollar bills, and pouring Coke down the toilet in protest at the U.S. sanctions.

But Washington has refused to back down on Brunson’s imprisonment, which resonates strongly with Trump’s Evangelical base, fueling fears that Turkey’s currency crisis is only set to worsen. Already, there are indications that the weakness in Turkish currency markets is spreading, with other emerging market currencies such as the South African rand, Russian rouble, Indian rupee, and Mexican peso taking a hit.

“[Turkey] missed a big opportunity. This is very easy to resolve,” an administration official told Reuters Thursday. “They made a big mistake trying to tie this to other things.”

Cover image: Donald J. Trump and President of Turkey Recep Tayyip Erdogan deliver joint statements in the Roosevelt Room of the White House on May 16, 2017 in Washington, DC. (Michael Reynolds-Pool/Getty Images)