Turkey Number Ten on Eurasia group top threats for 2014

Turkey Number Ten on Eurasia group top threats for 2014.HT: Eurasia.

Important economic, security, and social risks will intensify and converge in Turkey in 2014, promoting greater volatility for business and markets. We’ve already included Turkey among our diverging markets because of the risks surrounding the upcoming electoral cycle.

But among emerging markets, stability in Turkey is especially vulnerable from a range of directions. In particular, Turkey is facing serious spillover effects from the ongoing civil war in Syria and a reemergence of the Kurdish insurgency; and Erdogan’s increasingly emotional and aggressive behavior threatens to further unhinge market and investor confidence.

In the aftermath of the Gezi Park protests last year, Erdogan refocused on mobilizing his political base and has stepped back from his earlier forward-leaning outreach to the Kurds, pushing the peace process with the Kurdistan Workers’ Party (PKK) toward collapse. There is a very high chance that the PKK cease-fire will break down after March’s local elections. If so, sustained guerrilla activity will resume over the summer.

In addition, Turkey, like Iraq, is increasingly vulnerable to a spillover of violence from Syria, in particular to potential Al Qaeda–linked attacks in border towns as Turkey continues to wind down its support for militant Sunni groups as they come under heavier extremist domination. More broadly, the intensification of sectarian identities in the region is entering Turkey’s politics. There are already mounting sectarian tensions between Sunni and Alevi populations, and Erdogan will work to shore up his nationalist/conservative base on the eve of elections, further deepening societal divisions.

Amid this setting, the risk from Erdogan’s increasingly polarizing populist rhetoric has worsened. Under pressure, he will be inclined to become aggressive, attacking foreign businesses and raising foreign conspiracy theories against the West and Israel.

The coming battle over the chairmanship of the ruling Justice and Development Party (AKP) in September will only intensify this trend, as Erdogan is likely to try to block President Abdullah Gul from taking on party leadership.

While Erdogan and the AKP are set to win the upcoming elections, intensifying fights within the party will be the real political story to watch, and the business and policy environment will become even more unpredictable.

Against a challenging economic backdrop of a large current account deficit, poor-quality financing, and the private sector’s large net foreign exchange position, Turkey will be particularly vulnerable to political and policy uncertainty this year.Read the full story here.

"State Sponsor of Terrorism?" - Protecting al-Qaeda may come with a big price tag for Turkey.

"State Sponsor of Terrorism?" - Protecting al-Qaeda may come with a big price tag for Turkey.(TZ).

Amid allegations that Turkey helped Saudi businessman Yasin al-Qadi, who is listed by the US Treasury as a “specially designated global terrorist,” to evade United Nations sanctions Turkey may have to deal with an image of a country that supports terrorism and ignores international law.

Al-Qadi has entered Turkey multiple times escorted by Prime Minister Recep Tayyip Erdoğan's protective detail without a passport or visa, although his entry into the country was banned by a Cabinet decision, the Taraf daily reported in late December.

According to Taraf, Saudi businessman al-Qadi illegally entered Turkey four times between February 2012 and October 2012.

“The interesting thing about the al-Qadi issue is that when he was first designated, his front companies were all based in Turkey … and he had quite a bit of operations on Turkish soil,” said Dr. Jonathan Schanzer, a former terrorism finance analyst at the US Department of the Treasury, who is now vice president of research at the Foundation for Defense of Democracies, according to a report by Business Insider.

"We don't know exactly what the relationship is with al-Qadi, but we know that his problems started in Turkey," Schanzer said. "It's very hard to look at this right now without remembering that and asking the question: Has he remained active in Turkey through this time?"

According to the report, members of the US Congress or the State Department or the Treasury could even be forced to consider labeling Turkey a state sponsor of terrorism.

“No one wants to do that, but the letter of the law is getting harder and harder to ignore that they might qualify,” Schanzer said, adding that “if left unchecked, this could be become a serious problem.”

Amid the allegations of Erdoğan having close relations with al-Qadi, Erdoğan has said: “Yasin al-Qadi is a Saudi businessman who loves Turkey and wants to invest in this country. He has no connection with al-Qaeda. He has been acquitted of all accusations made against him. Is it a crime to meet with this person who wants to make a huge amount of investment in Turkey?”

Erdoğan has been also quoted as saying: “I know al-Qadi. I believe in him as I believe in myself. For al-Qadi to associate with a terrorist organization, or support one, is impossible.”Hmmm....Can we now speak of "StateSponsor of Terrorism"?Read the full story here.

Related:

Obama's BFF Erdogan's Turkey Risks “Grave Consequences” Under U.S. Law for Sheltering Top Hamas Terrorist.