Should the Turkish currency crisis worry Europe?

Even if holidays in Turkey are cheaper now we shouldn't go there, the Tages-Anzeiger admonishes:

“Many of those who are already there or are due to travel there in the coming weeks will keep a close eye on the dramatic fall of the lira: their holidays will be considerably cheaper now. ... But you can't just go back to normality, shrugging at the loss of the rule of law - and at the same time accepting the gift of a flight subsidised by the Turkish state. And then crow with delight over what a great bargain you got. We wouldn't be doing the imprisoned critics of the regime, freedom of expression or the last remnants of democracy any favours with that. The only possibility holidaymakers have to influence the politics of a country is to deprive it of their money. Which isn't necessarily the same as depriving it of their love.”

In view of the Turkish currency crisis Tom Vennink, De Volkskrant's Russia correspondent, takes a look at the Russian rouble:

“Investors are now withdrawing from the economies of the emerging countries and opting for more stable currencies like the dollar. ... Since 2014 Russia has been trying to reduce its dependence on the US currency. Western sanctions after the annexation of Crimea led to a decline in the rouble's value. ... But national economic problems have also put the rouble under pressure. The upcoming pension reform, the increase in value-added tax and the tax hike in the metal industry are signs that the Russian state is hard up. ... Just like Russians at the supermarkets, Putin's friends [the oligarchs] are now also affected”

Any satisfaction over the crisis in Turkey is misplaced, De Morgen warns:

“No matter how little we may care for a guy like Erdoğan, the question is always: what would happen if the president is ousted or becomes even more radical? What happens if Russia's President Putin really does embrace Nato member Turkey? What happens if the buffer against the migration flow, frequently cursed for moral reasons, collapses? Should we find it reassuring that US President Trump can destabilise an entire region economically with just a few tweets and threats? ... The Turkish crisis once again lays bare the European Union's geopolitical vulnerability as a project of peaceful coexistence. Gloating is a luxury we can no longer afford.”

An economic collapse in Turkey would have tangible repercussions for Europe too, Die Presse warns:

“The country is the EU's fifth most important trading partner after the US, China, Switzerland and Russia. ... However, it would be even more dangerous if Turkish firms and banks could no longer service the loans they have from European institutes. Banks - mainly from Spain, Italy and France - have over 140 billion euros at stake in the country. ... Moreover, an economic collapse could mess up the political situation in Turkey. Normally the autocratic AKP losing power wouldn't be something people in Europe would cry about. But a sudden power vacuum in important areas - keyword: the refugee deal - could cause new problems.”

The US president's measures carry the risk of creating an unholy alliance consisting of Turkey, Iran, Russia and China, The Daily Telegraph warns:

“Donald Trump's scatter-gun approach to sanctioning rogue rivals risks creating an axis of the sanctioned. Taken individually, Iran, Turkey, Russia and even China are vulnerable to American pressure. But if these countries are pushed together, their mutual support and capacity to cause turmoil could make US measures counterproductive. Maybe a coalescing of Iran and Turkey could be dismissed as no more viable than two drunks leaning on each other under the illusion that they've found a lamppost for support. But add Russia and China, and they suddenly have a new geopolitical hinterland.”

Turkey's economic collapse would have disastrous consequences far beyond the country's borders, the Financial Times warns:

“The collapse of the Turkish economy would carry substantial risks of contagion in Asia and Europe, where equity prices of banks exposed to Turkish debt tumbled too on Friday. The lira's meltdown is already hitting emerging market currencies across the board. The geostrategic risks of this crisis, portrayed by Mr Erdogan as the work of western conspirators, are no less considerable. Turkey is shoring up political stability in Europe by harbouring millions of Syrian refugees.”

For Erdoğan the current developments must be reviving some nasty memories, Tages-Anzeiger explains:

“Erdoğan's big promise was that the Turks would live in prosperity as long as they worked hard and let him get on with governing the country. For a long time he kept this promise and incomes rose steadily. Now, however, the escalator is no longer going upwards, it's going downwards. Memories of 2001 are being revived. Back then the inflation rate skyrocketed to almost 70 percent. Things are nowhere near that bad yet. However the crisis in 2001 was also not just the result of economic factors, it reflected the failure of the political system. And in the end that brought Erdoğan to power. That's why he won't like these memories.”

The Frankfurter Allgemeine Zeitung sees a positive side to the crisis:

“Autocratic rulers and those who like to cast themselves as such can't indefinitely suspend economic realities. ... Faced with economic logic, Erdoğan has been taken down a size or two. The would-be sultan's confused statements about the economic war in which Turkey finds itself have only exacerbated the crisis. And instead of exchanging their dollars or euros for lira and depositing them in the bank, as Erdoğan would like them to do, the people are taking the opposite route and exchanging their local money into dollars and euros. The autocrat's power ends at the people's wallets.”

Trump will hardly be able to weaken Erdoğan with the sanctions, Hürriyet Daily News believes:

“Trump and [US Vice President] Pence think that when they threaten Erdoğan with economic and military sanctions they could instigate a popular uprising against him, that means they and their advisers do not even have a clue about the psyche of societies in the old world, including Turkey. It is more likely to serve a rally-around-the-flag factor in this part of the world. There is not only one opposition party slamming Erdoğan for challenging Trump.”

The economy is Erdoğan's weak point, Dagens Nyheter explains:

“Inflation is at over 15 percent but the president is putting pressure on the central bank not to increase the interest rates. Investors are fleeing. The fact that Erdoğan appointed his son-in-law as finance minister has not inspired confidence. The newly activated US sanctions against Iran are another risk factor, because half of Turkish oil imports come from there. Then there's the Brunson affair. It is neither in the EU's interests nor those of the US that Turkey turns its back on them. But Erdoğan has laid an authoritarian blanket over the country. ... The Western world cannot dispense with democratic principles for the sake of keeping the sultan.”