Posts Tagged ‘Andrew Brunson’

“It is an honor to suffer for Jesus Christ” — Andrew Brunson

October 17, 2018

In October of 2016, as part of the paranoia following a failed coup attempt, the Turkish government arrested American pastor Andrew Brunson and charged him with espionage and aiding Turkey’s enemies. Pastor Brunson, a Presbyterian minister and Wheaton College graduate, had led a Christian congregation in the overwhelmingly Islamic nation for more than 20 years.

To say the charges were bogus is to understate what was obvious to just about everyone except Turkish authorities. In reality, Brunson became a hostage in Turkey’s steady march toward a more radical Islamism. Not only was he threatened with life imprisonment, but was used as a political pawn. Turkey demanded that in exchange for Brunson, the U.S. extradite Fethullah Gulen, a Muslim cleric who now lives in Pennsylvania, and whom Turkish President Erdogan claims was behind the failed military coup in 2016.

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US pastor Andrew Brunson prays for US President Donald Trump as they meet in the Oval Office of the White House in Washington, DC, October 13, 2018. (Photo by ROBERTO SCHMIDT/AFP/Getty Images)

“We pray for you often, as a family,” Brunson told the president as he asked if he and his wife, Norine, could pray with him. “My wife and I pray for you.”

But President Trump and his administration weren’t interested in bargaining. Instead, the U.S. slapped sanctions on Turkey, a member of NATO, which was a move the BBC called “unprecedented.” As Turkish-U.S. relations soured, again, as the BBC reports, the sanctions and looming tariffs took their toll on the Turkish lira, stoked inflation, and brought the Turkish economy to the brink of an economic crisis.

Realizing that improved relations with the U.S. might be a good thing, Turkey released Pastor Brunson from confinement on Friday, citing “good behavior” and time served as an excuse to let him go without finding him “not guilty.”

Throughout the ordeal, Pastor Brunson maintained his innocence. “Let it be clear,” he wrote, “I am in prison not for anything I have done wrong, but because of who I am—a Christian pastor.”

“I desperately miss my wife and children. Yet I believe this to be true: It is an honor to suffer for Jesus Christ, as many have before me. My deepest thanks for all those around the world who are standing with and praying for me.”

Thanks be to God, who has heard the prayers of His people.

This is another way in which President Trump has been delivering on a promise to promote religious freedom abroad and here at home.

As Ed and I mentioned, we were initially skeptical back in 2017 when the president issued his first executive order on religious freedom. Short on specifics, it seemed like what many called “a nothing burger” at the time. But it’s clear now that it was a small first step in promoting religious freedom.

At the very least, we can say that this administration has very different domestic and foreign policy priorities than the previous administration did. From the HHS mandate to the elevation of LGBT rights as a top foreign policy priority, to the ordeal of Christian Pastor Saeed in Iran, it’s clear that religious freedom was not a top priority for the previous administration.

On the other hand, the appointment of Sam Brownback as U.S. Ambassador at Large for International Religious Freedom, the creation of the Conscience and Religious Freedom Division at HHS, the State Department’s first-ever Ministerial to Advance Religious Freedom, and now clear and courageous action when other nations—even military allies—blatantly violate human rights… show that this administration is compiling quite a track record on religious freedom.

Of course, things change swiftly in Washington. Administrations come, and administrations go. We must remember that our freedom depends solely on the Giver of freedom, and that our call may one day be to face discrimination, suffering, and even persecution. If that is our lot, may we face it with the sort of courage and conviction as did Pastor Brunson.

Of course, Christians around the globe are facing persecution like never before. And so, we rejoice that Pastor Brunson’s suffering is now ended. Thanks be to God.

Originally posted at breakpoint.org

https://www.christianpost.com/voice/pastor-andrew-brunson-is-home.html

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Pastor Brunson: “I began to see there was value in my suffering”

October 17, 2018

Brunson tells Fox News’ Sean Hannity that he realized the Lord was ‘going to do something with my suffering’

As the months dragged on while Turkey kept American pastor Andrew Brunson in a jail cell, his thoughts started drifting to a dark place.

Brunson, who recently returned to the United States after two years of incarceration, described his efforts to maintain his sanity.

“It seemed that there was no way out,” he told Fox News host Sean Hannity on Tuesday evening. “And I lost a lot of hope. And what helped me — I began to see there was value in my suffering, especially as time went on. I saw that many people around the world began praying for me.”

It was his wife and God who got him through the ordeal, Brunson said.

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President Donald Trump meets with American pastor Andrew Brunson, left, in the Oval Office of the White House, Saturday Oct. 13, 2018, in Washington.

The evangelical pastor said his wife was his only contact with the outside world. Turkish authorities allowed her to see her husband through glass for half an hour each week.

“She would bring encouragement to me and tell me that people are praying for me,” he said. “And as I learned that, I began to see that God was involved in this and that God was going to do something with my suffering.”

“I began to see that God was involved in this and that God was going to do something with my suffering.”

Brunson found himself in the wrong place at the wrong time after Turkish strongman Recep Tayyip Erdoğan survived a coup attempt in 2016.

Suddenly, Brunson (pictured above) was in custody, charged with terrorism and aiding the overthrow of the government. The charges were false, Brunson said, and a bit disorienting.

“The truth is, we had been preaching Jesus Christ, sir. That’s why we were in Turkey for 23 years, up until that time — to share the Gospel of Jesus Christ with Turks,” he said. “We’d done that openly and never had a problem. So it was very shocking to be accused of terrorism.”

Brunson told Hannity it was difficult being the only Christian in the jail. But he said his fellow prisoners treated him well.

Related: Freed American Pastor Andrew Brunson Prays with President Trump in the Oval Office

Image result for Pastor Brunson, Oval Office, photos

Pastor Brunson Prays for President Trump in the Oval Office

“Part of that time, it was a very crowded cell. And part of the time, I was also in isolation,” he said. “So it was a very difficult time, and I was surprised, because I had never really considered prison as a possibility.”

Brunson’s detention became a sore spot in increasingly deteriorating relations between the United States and its North Atlantic Treaty Organization (NATO) ally. Evangelical leaders took up his cause.

Erdoğan tried and failed to broker a deal exchanging Brunson for Fethullah Gülen, an Islamic preacher accused of supporting the coup attempt. He has been living in exile in the United States.

President Donald Trump’s administration imposed sanctions on Turkey in August.

A Turkish court last week convicted Brunson of aiding terrorism but sentenced him to time served and released him.

A grateful Brunson returned home and this past weekend prayed over Trump at the White House.

Brunson’s explanation of his motivation was simple: “Our president needs prayer,” he said.

Includes video:

https://www.lifezette.com/2018/10/freed-pastor-says-god-wife-got-him-through-turkish-captivity/

See also:

Pastor Brunson Prays for President Trump in the Oval Office

https://www1.cbn.com/cbnnews/us/2018/october/pastor-brunson-prays-for-president-trump-in-the-oval-office-nbsp

Pastor freed from Turkey to meet with Trump in the Oval Office

October 13, 2018

The American pastor who has been freed from Turkey after two years in detention is expected to meet with President Trump in the Oval Office on Saturday.

Pastor Andrew Brunson, 50, is scheduled to land at Joint Base Andrews near Washington at noon on Saturday, following a stopover in Germany for a medical checkup.

“He suffered greatly, but we’re very appreciative to a lot of people,” Trump told reporters before his rally in Ohio Friday evening.

“I hear he’s in good shape.”

The North Carolina pastor, who lived in Turkey for over 22 years, was detained in October 2016 for what the Trump administration said were bogus terror and espionage charges.

Brunson was imprisoned for two years and then placed on house arrest for health reasons. He was finally ordered freed on Friday and was sentenced to time served.

Though the Trump administration demanded in July that President Recep Erdoğan release Brunson, vowing to sanction Turkey if it didn’t, Trump said on Friday that “there was no deal made” to free the pastor.

“He went through a system and we got him out. They’ve been trying to get him out for a long time,” Trump said.

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https://nypost.com/2018/10/12/pastor-freed-from-turkey-to-meet-with-trump-in-the-oval-office/

US pastor back on trial in Turkey as calls grow for release

October 12, 2018

US pastor Andrew Brunson, whose two-year detention in Turkey sparked a crisis with the United States, returns to court on Friday with pressure growing for him to be released and allowed home.

Brunson’s detention caused not just one of the worst diplomatic rows of recent times between the NATO allies, but also led to a crash in the Turkish lira, which exposed Turkey’s economic fragility.

While the Turkish judicial authorities have repeatedly denied requests for Brunson to be released, observers see growing indications that he may, finally, be allowed to go free on Friday.

© AFP/File | The detention of US pastor Andrew Craig Brunson has sparked a crisis between Turkey and its NATO ally the United States

But if the court forces him to stay in detention, the backlash from Washington and also financial markets could prove bruising for Turkey.

“Everyone who deals with Turkey in Washington has been impatiently waiting for the October 12 hearing,” wrote Turkey’s Hurriyet daily US correspondent Cansu Camlibel.

“Is a face-saving in the making for Turkey?”

The resumption of the trial comes at a sensitive time for the Turkish leadership, which is under global scrutiny over how it handles the case of Saudi journalist Jamal Khashoggi who disappeared at the kingdom’s consulate in Istanbul.

Both Turkish President Recep Tayyip Erdogan and US President  Donald Trump have pressed Saudi Arabia to explain what happened to Khashoggi.

– ‘Anxious wait’ –

Erdogan, who has in the past taken aim at Brunson, appeared to distance himself from the case in his latest comments, saying he could not interfere in judicial affairs.

“Whatever decision the judiciary makes, I am obliged to obey it,” he told Turkish reporters.

Brunson, who runs a small evangelical Protestant church in the western port city of Izmir, has since late July been held under house arrest but is banned from leaving the country.

The hearing is due to begin at 0700 GMT at the court in Aliaga, north of Izmir.

His case has become a cause celebre for conservative US Christians — a core base of support for Trump. Vice President Mike Pence, like Brunson an evangelical Christian, has repeatedly raised the issue.

Trump, who slapped sanctions on Turkey that caused the lira to plunge, has lauded Brunson as a “great patriot” who was being held “hostage.”

Brunson was first detained in October 2016 on allegations of assisting groups branded as terrorists as part of a crackdown by the Turkish government following a failed coup earlier that year.

If convicted, he faces 35 years in jail on charges of aiding terror groups and espionage. Brunson and US officials insist he is innocent of all charges.

“We demand that the judicial restrictions — including house arrest and the overseas travel ban — are lifted,” his lawyer Cem Halavurt told AFP.

Brunson is in good health, but anxious over the wait, said Halavurt, who visited his client last week.

“We believe that since the beginning there has not been any strong criminal suspicion. There is no evidence in the case against him,” the lawyer said.

Halavurt has lodged an appeal at Turkey’s top Constitutional Court for the pastor’s release but said this track could take months.

– Growing expectations –

Still, there have been signs of easing tensions after US Secretary of State Mike Pompeo said he was hopeful Turkey would release the pastor while Erdogan said he hoped Ankara could rebuild relations with its NATO ally.

Abdulkadir Selvi, a pro-government columnist in Hurriyet whose columns are closely watched for indications of the Erdogan administration’s thinking, also wrote the pastor could walk free.

“If Brunson is released as expected, the political part of the Trump crisis that started on August 10 (when the sanctions were imposed and currency crashed) will have been solved,” he wrote on Monday.

“I believe that the court case over Brunson will be finalised and the priest will be released, taking into account the time he has stayed in prison.”

Erdogan, who had a brief handshake with Trump on the sidelines of the annual UN General Assembly meetings in September, has said he hoped to rebuild relations with Washington with the “spirit of strategic partnership.”

AFP

Erdogan says Turkey-U.S. deal on Syria’s Manbij ‘not dead’ — U.S. evangelical pastor Andrew Brunson?

October 11, 2018

The deal between Turkey and the United States regarding the northern Syrian town of Manbij is delayed “but not completely dead”, President Tayyip Erdogan was quoted as saying by Hurriyet newspaper on Thursday.

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Turkish President Tayyip Erdogan (R) and General Hulusi Akar

Turkey and the United States reached a deal in May over Manbij after months of disagreement. Under the deal, the Kurdish YPG militia would withdraw from Manbij and Turkish and U.S. forces would maintain security and stability around the town.

Erdogan told reporters on Tuesday during his flight back from a visit to Hungary that the implementation of the deal had been delayed.

“There is a delay but (the deal) is not completely dead. U.S. Secretary of State Pompeo and Defense Secretary Mattis say they will take concrete steps,” Erdogan was quoted as saying by Hurriyet.

The NATO allies have been carrying out coordinated but independent patrols in the region as part of the deal.

On Tuesday, Turkish Defence Minister Hulusi Akar was quoted by state-run Anadolu news agency as saying that joint training of U.S. and Turkish soldiers for patrols in Manbij had begun.

Washington’s support for the YPG militia in the fight against the Islamic State group has infuriated Ankara, which sees the YPG as an extension of the outlawed Kurdistan Workers Party (PKK).

The PKK, considered a terrorist group by the United States, the European Union and Turkey, has waged a three-decade insurgency in Turkey’s mainly Kurdish southeast.

Ankara fears advances by the YPG in Syria will embolden Kurdish militants at home.

Relations between Turkey and the United States were further strained over the past few months by the trial of U.S. evangelical pastor Andrew Brunson in Turkey on terrorism charges, which he denies.

Asked about Brunson’s trial, Erdogan said he was not in a position to interfere with the judiciary.

“Whatever the judiciary decides on, I have to abide by that decision. Those who are involved with this also need to abide by the judiciary’s decision,” Erdogan was quoted as saying by Hurriyet.

The next session in Brunson’s trial will be held on Friday. The trial sparked a row between Ankara and Washington that helped send the lira down around 40 percent against the dollar this year.

Reporting by Ali Kucukgocmen; Editing by Paul Tait

Reuters

Turkey’s Erdogan hopes to rebuild US ties despite pastor row

October 1, 2018

President Recep Tayyip Erdogan on Monday said Turkey hoped to rebuild relations with its NATO ally the United States following a bitter standoff over the detention of an American pastor.

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“God willing, we hope to solve the problems with America within the shortest time and redevelop relations in the political and economic fields with the spirit of strategic partnership,” Erdogan said in an address to the opening of parliament.

The President of Turkey, Recep Tayyip Erdogan greets Turkish members of the parliament during the opening of the second legislative year of the 27th Term of Grand National Assembly of Turkey (TBMM) in Ankara on October 1, 2018. (AFP)

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The dispute has centered on the almost two-year detention of evangelical pastor Andrew Brunson on terror-related and espionage charges, and caused the Turkish lira to take a beating.

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President Donald Trump said he had doubled tariffs on Turkish aluminum and steel over Brunson’s detention, with Ankara responding in kind.

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“We are determined to fight — within the boundaries of diplomacy and law — against this distorted approach which imposes sanctions on our country by using as a pretext a priest who is on trial for his murky relations with terror groups,” Erdogan said.

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Erdogan accused Washington of going down the “wrong path of seeking to solve political and legal problems through threats and blackmail rather than dialogue.”

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This would “actually cause the biggest harm to the United States in the medium and long term,” he added.

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Brunson, who has lived in Turkey for a quarter-century, runs a small evangelical Protestant church in the western city of Izmir. He is currently under house arrest.

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He was detained on allegations of assisting groups branded as terrorist as part of a crackdown by the Turkish government following a failed coup in 2016.

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Last month, US Secretary of State Mike Pompeo expressed hope Turkey would release the pastor, whose next hearing is scheduled for October 12.

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Abdulkadir Selvi, a pro-government columnist in the Hurriyet daily, wrote that the court might rule on the lifting of Brunson’s house arrest and travel ban, allowing him to return home.

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“In this case, we might see Brunson walking down the stairs of the plane in the United States on October 13,” he wrote.

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Erdogan went to New York last week to attend the annual UN general assembly meetings and had a brief handshake with Trump on the sidelines.

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That helped further boost the Turkish lira — which crashed to lows of 7 to the dollar at the peak of the crisis. It gained 2 percent Monday to trade at 5.95 to the dollar.

AFP

Hopes Rise for Release of U.S. Pastor Being Held in Turkey

September 24, 2018

Andrew Brunson appears in court on Oct. 12, where a judge could decide to free him

Andrew Brunson has been put under house arrest in Turkey as his trial continues on terrorism charges.
Andrew Brunson has been put under house arrest in Turkey as his trial continues on terrorism charges. PHOTO: ASSOCIATED PRESS
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Turkish authorities are sending signals that an American pastor facing terrorism charges could be released next month, raising fresh hopes in the U.S. that the polarizing dispute will soon be resolved.

A Turkish judge could free Pastor Andrew Brunson when he appears in court on Oct. 12—but only if the U.S. stops putting pressure on the country to send the American back to the U.S., according to Turkish officials.

“It’s a possible outcome,” one official said.

U.S. officials said that the Trump administration, which demanded the pastor be released immediately this summer, decided to ease off its pressure campaign amid fear that Turkey’s economic difficulties could spread to other emerging markets.

“The best strategy is, right before this October hearing, to be a little bit calm because they are recognizing finally now that we’re willing to act,” said one U.S. official familiar with the debate. “Come October, if we’re in the same place, our side is going to unload on the Turks. . . Right now it’s a critical time where you don’t want to put them in a bind.”

Release of the pastor wouldn’t just remove a major impediment to relations between the two North Atlantic Treaty Organization allies, it would be a boon for President Trump and the Republican party as they try to hold off a Democratic surge and retain control of Congress.

Mr. Trump and Vice President Mike Pence have both made securing Mr. Brunson’s freedom a priority, and his case has become a cause for evangelical Christians whose votes could be pivotal to Republicans retaining their legislative majority.

Mr. Trump and Turkish President Recep Tayyip Erdogan will both be in New York this week to attend the United Nations General Assembly, but no meeting has been scheduled, according to U.S. and Turkish officials.

Turkey's President Recep Tayyip Erdogan waves as he attends the Teknofest aviation, space and technology fair at the new airport in Istanbul on Saturday.
Turkey’s President Recep Tayyip Erdogan waves as he attends the Teknofest aviation, space and technology fair at the new airport in Istanbul on Saturday. PHOTO: ASSOCIATED PRESS
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U.S. officials warned against any premature celebration, saying the issue was in the hands of the two leaders and that previous efforts to release him had collapsed at the last minute.

“Erdogan, just like Trump, is known to change his mind frequently and at the last minute,” the U.S. official said.

Mr. Brunson, a 50-year-old evangelical North Carolina pastor who was detained in Turkey in the wake of the 2016 failed coup, has been accused by Turkey of aiding terrorist groups. He has denied the charges and the U.S. government has characterized them as baseless.

U.S. officials said they saw positive signs in recent actions by Turkey, including a decision last week by a judge to reduce charges against Serkan Golge, a Turkish-American NASA scientist serving prison time on terrorism charges that the U.S. also characterizes as unfounded.

Mr. Golge’s sentence was cut from seven-and-a-half years to five years after the court overturned a conviction for being a member of a terrorist group and concluded that he aided the banned organization.

Selman Ogut, a Turkish attorney with close ties to Mr. Erdogan’s administration, said the judge could follow a similar route next month in Mr. Brunson’s case.

“He could be released in the upcoming month because charges aren’t of being member (of a terrorist organization),” said Mr. Ogut, who teaches law at Istanbul’s Medipol university. “We are talking about assistance.”

But Mr. Ogut said there was an important pre-condition to the pastor’s release.

“They must lean back and relax, otherwise it is a vicious circle,” he said. “If I were the judge, I could not accept to receive orders—do that, do that. America isn’t my boss.”

U.S. officials were so convinced they had a deal to secure the pastor’s freedom in July when he last appeared in court that they kept a plane on standby at an airbase in Germany to fly him out of Turkey at short notice. But Mr. Brunson was sent back to jail.

Turkey quickly moved Mr. Brunson to house arrest after Mr. Trump tweeted a denunciation of the court action as a “total disgrace.” Further negotiations failed to secure Mr. Brunson’s freedom.

Last month, the Trump administration imposed sanctions on two top Turkish officials over Mr. Brunson’s case, a move that exacerbated an economic crisis in Turkey that pushed the lira to historic lows.

Mr. Erdogan denounced the action as an “economic war,” but he privately sought ways to resolve the standoff, according to the Turkish officials.

Mr. Brunson, who ran a small Presbyterian church in the Turkish coastal city of Izmir at the time of his arrest in October 2016, was transferred to his home on July 25 after a court ruled to ease the conditions of his detention, citing health concerns.

He now lives secluded in Izmir, monitored by an electronic bracelet attached to his ankle, according to his lawyer, Ismail Cem Halavurt.

“His mood is much better because while in jail, he had some memory lapses and was on anti-depressants,” the lawyer said.

In preparation for the Oct. 12 hearing, the lawyer said he has received memos containing new accusations levelled by secret witnesses codenamed Sword and Dagger. One of them alleges that Mr. Brunson transported bags of cash by boat into Syria. Like previous secret witnesses, the person is expected to appear through video link, with the face blurred and voice altered.

“I have yet to tell” Mr. Brunson, the lawyer said. “He is bewildered by such nonsense.”

Even if Mr. Brunson were released the two governments would still face a host of issues, from divergence over how to restore peace in Syria to Turkey’s proposed purchase of an advanced missile defense system from Russia.

U.S. and Turkish officials said they were nervous that a single tweet could ruin hopes to resolve the Brunson case.

On Thursday, Turkish Finance Minister Berat Albayrak—the son-in-law of Mr. Erdogan—who had seen his first economic speech in August tarnished by a flurry of Mr. Trump’s angry tweets—made another presentation.

As he took the floor, he asked the audience: “Everything OK on Twitter ?”

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com and Dion Nissenbaum at dion.nissenbaum@wsj.com

Turkey’s battered lira down again on gloomy outlook for government action — Growth forecast for Turkey in 2019 cut to just 1.1 percent

August 27, 2018

The Turkish lira on Monday lost over three percent in value against the dollar as the same concerns that have propelled the embattled currency to record lows failed to dissipate after a summer break.

The lira has lost just under a third in value against the dollar over the last month, as anxiety over the coherence of domestic economic policy coupled with sanctions announced by the United States generated market panic.

© AFP | The lira has lost just under a third in value against the dollar over the last month

The currency was trading at 6.2 to the dollar, a loss of 3.1 percent on the day. It lost similar ground against the euro to trade at 7.2.

Turkish markets reopened on Monday after a week off for public holidays and the coming week will be crucial for the lira as European markets become more active after the summer break.

Analysts said that the same factors that at one point drove the lira above 7 to the dollar for the first time in history remain in place.

The government has yet to convince markets with a comprehensive economic strategy to fight inflation of almost 16 percent and a widening current account deficit.

The central bank is unwilling to raise interest rates in the face of stringent opposition from President Recep Tayyip Erdogan, raising concerns over its independence.

And the crisis with the United States is far from being resolved. Turkey is still holding American pastor Andrew Brunson under house arrest, one of the key factors behind the troubled ties between Ankara and Washington.

Jameel Ahmad, global head of currency strategy and market research at FXTM, predicted the lira would “remain under pressure for some time as the same structural concerns that terrified traders away from Turkish assets still remain unchanged.”

Market sentiment was further clouded by economists at JPMorgan Chase slashing their growth forecast for Turkey in 2019 to just 1.1 percent.

Treasury and Finance Minister Berat Albayrak, who is Erdogan’s son-in-law and his top pointman on the economy, was meanwhile holding talks in Paris with French counterpart Bruno Le Maire, his office said.

AFP

Turkish lira firms as markets reopen with eye on US row, Erdogan’s grip on monetary policy

August 27, 2018

The Turkish lira gained slightly against the dollar on Monday as markets reopened after last week’s holiday, with investors set to refocus on a bitter dispute between Ankara and Washington over an American pastor being tried in Turkey.

The lira, which has weakened 37 percent against the US currency this year, firmed to 5.9905 from Friday’s close of 6.00. (AFP/File)

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The lira, which has weakened 37 percent against the US currency this year, firmed to 5.9905 from Friday’s close of 6.00 — the same level at which it stood a week ago when Turkish markets closed for the Muslim festival of Eid Al-Adha.

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The slide has been driven by investor concerns over President Tayyip Erdogan’s grip on monetary policy and the standoff with Washington over the fate of pastor Andrew Brunson, being tried in Turkey on terrorism charges that he denies.

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In his first comments on the currency crisis since before the holiday, Erdogan said on Saturday the commitment and determination of Turks was the guarantee needed to combat attacks on Turkey’s economy.

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Erdogan has cast the lira slide as the result of an “economic war” against Turkey, a comment echoed by his spokesman last week when US President Donald Trump ruled out concessions to Ankara in return for Brunson’s release.

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Trump’s national security adviser, John Bolton, subsequently said Ankara had made a “big mistake” by not freeing Brunson and voiced skepticism about Qatar’s offer of $15 billion in investment support for Turkey.

Reuters

http://www.arabnews.com/node/1362451/business-economy

Could Turkey trigger the next global financial crisis?

August 23, 2018

Image may contain: 1 person, standing

All eyes are on the Turkish lira. Its decline has been precipitous – it has already lost more than 40%  of its value against the US dollar this year. For Turkey, which has relied on the inflow of foreign credit, this poses terrible risks.

Enormous debt coupled with a vicious attack for political reasons on the Turkish economy by the US government has pushed Turkey toward the precipice. Will Turkey’s descent take Europe with it and then, certainly, other middle-income countries? Is this the harbinger of a new global financial crisis that would be far more dangerous than the one in 2007-08?

Financial instability

The credit crisis of 2007-08 has not really ended. The problems posed by the collapse of the US housing market and the subsequent debt problems in world banking have not been fixed.

Sober recommendations from the Basel Committee on Banking Supervision as well as from the International Organization of Securities Commissions and the International Association of Insurance Supervisors have been substantially set aside. Instead of genuine reform to the financial sector, the United States government held its interest rate near zero and flushed the financial system with US dollars. The solution to a housing bubble in the United States has been to create a massive debt burden in the middle-income countries.

By VIJAY PRASHAD
Commentary

In countries such as Turkey, recently private companies started to take out more dollar-denominated loans from international financial institutions to fund their operations and even speculative investments. A flood of dollars crashed into these countries. Foreign speculators used this money to invest in their local currencies (including in lira-denominated public-sector securities in Turkey).

The Institute of International Finance showed that this wave continued to crest as recently as the past few years. At the end of 2011, the 30 largest emerging markets were indebted to the tune of 163% of their gross domestic product; in the first quarter of this year, that figure increased to 211% of GDP, an increase of $40 trillion in these countries’ debt. The exit from the 2007-08 financial crisis was through debt-financed economic growth, with a massive balloon of various kinds of debt inflated over the past decade.

Image result for Berat Albayrak, sweating, photos, Turkey

Berat Albayrak, Turkey’s finance minister, is Erdogan’s son in law.

Total global debt is estimated to be $247 trillion. That is a figure that should give us pause. Much of this debt, furthermore, went to fund the expansion of the financial sector rather than ti develop the productive and socially beneficial sectors. It is a model of economic growth that demands more debt to finance itself.

There are few other avenues for this unsustainable model. The trigger that might explode this bubble fully comes in the months ahead as countries such as Argentina, Brazil, South Africa and Turkey will confront the maturation of their $1 trillion of dollar-denominated debt. Will they be able to replace these existing loans with fresh loans? Who will be in line to lend money to countries that seem to be at the end of their rope?

Turkey’s flu

Financial crises are not new to Turkey. Major crises struck this country of 80 million in April 1994 and February 2001. In both cases, the country lost a large part of its GDP and its foreign-exchange reserves as interest rates skyrocketed (in 1994, overnight interest rates went from 75% to 700%, while in 2001 they went from 40% to 4,000%).

Recovery came through a variety of means, namely through an IMF-induced “Transition to a Strong Economy” program. The International Monetary Fund program pushed Turkey to “capital-account liberalization,” a fancy way of saying that its banks were encouraged to borrow in dollars from international capital markets and lend in liras to domestic investors.

The entire economy was restructured to rely on lower wages to encourage exports and by the inflow of short-term capital. As this volatile short-term capital rushed into Turkey, the current AKP (Justice and Development Party) government used it to fund extravagant, unproductive projects.

There was no possibility that Turkey could export enough to finance its significant foreign debt. Massive current-account deficits have been vulnerable to the withdrawal of the short-term foreign capital – what is rightly called “hot money.”

In 2011, everything seemed manageable. Turkey was on the threshold of entering the European Union, relations with the United States were on a high, and Anatolian businessmen saw their own manufacturing benefit in markets from Lebanon and Syria to the Persian Gulf to North Africa. Then the war in Syria threw the entire political situation into turmoil. Exports to the Arab world declined, the refugee crisis put pressure on Turkey, and its own political stability ended with the government opening up a new war on the Kurds.

Turkey’s ambitions in Syria ended and the AKP government tried to bring stability by ruthlessly purging any dissenters in the country. Political favors brought incompetent people to take over from those who had been purged. All this brought internal stress into the Turkish economy.

And then came Donald Trump. The tariff policy of the United States – particularly in this case on Turkish steel and aluminum – sent a tremor through the bankers who had lent Turkey money. Higher interest rates in the United States drew money out of places such as Turkey (and other middle-income countries) to rush back to the US, where the dollar is “good as gold.”

All this hit the lira hard. It did not help that the United States and Turkey are in the midst of a political fight over an American pastor who is jailed in Turkey and over a Turkish cleric who lives in the US. Since the attempted coup in Turkey in 2016, tension has existed between the two countries. Now, the US administration has made it clear that even the release of the pastor will not be enough.

“The tariffs that are in place on steel would not be removed with the release of Pastor Brunson,” President Trump’s spokeswoman Sarah Sanders said. “The tariffs are specific to national security.” What that chilling phrase means is not clear.

It is an advantage to Trump that the banks with the largest exposure to the Turkish lira are all European – France’s BNP Paribas, Italy’s UniCredit and Spain’s BBVA. The European Central Bank has already indicated its concern despite the fact that these banks say they are prepared for the worst scenario.

The amounts are not small. Turkish borrowers owe Spanish banks in excess of $82 billion, while French banks are owed $38.4 billion and Italian banks are owed $17 billion. Turkey’s private-sector debt is substantial – within a year it must pay $220 billion to service this debt.

An inability to make these payments as well as a further collapse of the lira could set off a crisis in Europe, which would then have an impact on the global financial markets. Turkey, this time, could be what the US housing market was in 2007.

Options

Turkish Finance Minister Berat Albayrak, who happens to be the son-in-law of President Recep Tayyip Erdoğan, has said that his country has opened discussions with the IMF. He pledged not to put capital controls in place. Capital controls might well be the only option truly to protect Turkey from economic collapse. The AK Party is averse to any radical solution. It will likely conform to IMF policies without going formally to the IMF – to preserve Erdoğan’s façade about being anti-Western. The AKP is now governed by anti-Western rhetoric, but pro-Western policies.

On August 15, the Turkish government approached the World Trade Organization with a formal complaint about the United States’ tariff policy. The complaint says that the US tariffs are against the General Agreement on Trade and Tariffs (1994), the bedrock framework for the WTO, and that even US law (Trade Expansion Act of 1962) violates the 1994 GATT agreement. Five days later, the WTO circulated this complaint among its members. There will now be a serious discussion based on this document.

Meanwhile, across Turkey’s border, Iran has suffered as well from the return of US sanctions. China has provided some short-term succor for Iran. Will it offer such protection to Turkey? When Boeing pulled out of its contract to sell aircraft to Iran, the Russian company Sukhoi offered to do so. Will Russia now make similar concessions to Turkey? Will there be an Asian solution to the Turkish crisis? But can China and Russia, themselves vulnerable to the turbulence of global finance, bail these countries out indefinitely?

Other solutions are necessary, more radical ones.

This article was co-authored with E Ahmet Tonak, who along with Vijay Prashad works at the Tricontinental: Institute for Social ResearchThe article was produced by Globetrottera project of the Independent Media Institute.

http://www.atimes.com/could-turkey-trigger-the-next-global-financial-crisis/

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