A nervous Turkey

The dramatic flight of capital from Turkey, to the tune of $5.5 billion over the past couple of weeks, should concern not only the National Bank of Greece, which recently took over Turkey’s Finansbank at a hefty price, but also the Greek government as growing fear among foreign investors reflects a lack of confidence in Turkey’s future. It would be naive to assume the Turkish political leadership has not sensed the clouds gathering over Ankara’s path to Europe. Its increasing aggression toward Greece and Cyprus is merely a defensive reflex. Recent comments by Turkish government officials regarding the Muslim minority in Thrace, and their reaction to the memorial erected in Thessaloniki for Pontic Greeks, are but the latest examples of Ankara’s tactics, along with its usual claims in the Aegean. The Greek government does not wish to become embroiled in this line of thinking, but the question is whether its failure to respond will further fuel Turkish assertiveness. On the European front, Turkey has linked implementation of its commitments toward Cyprus with Nicosia making concessions to the breakaway north. Turkish Prime Minister Recep Tayyip Erdogan said yesterday that the accession protocol with the EU’s 10 newcomers will not be brought up for ratification in the Turkish assembly unless the isolation of Turkish Cypriots is eased. Erdogan is obviously trying to get EU member states to increase their pressure on Nicosia in order to pre-empt a Cypriot veto should Turkey fail to meet its EU obligations. The Turkish premier seems unable to come to terms with Europe’s reluctance to have Turkey in the EU and has chosen to lay the blame for its potential failure on Greece and Cyprus. More savvy foreign investors, however, are abandoning Turkey and will only return when prospects for turning a profit improve.