Last month Turkey made it into the grey list of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog headquartered in Paris. Turkey now joins its close ally Pakistan in FATF’s crosshairs. Surprisingly Turkey becomes the largest economy to be included in this list. The FATF listing for Ankara comes on the back of a shaking economy being jolted by the Covid-19 pandemic. And also when Turkey’s geopolitical stature being weakened further by pursuing a ‘punch-above-the-weight’ foreign policy.
Where President Erdogan wishes to expand Turkish economic, political, and military influence into the former regions of the Ottoman empire. Erdogan’s dream of reviving the Ottoman caliphate stems from an idealistic outlook on the splendor of the Ottoman Empire and its extensive capability to influence the political dynamics of two continents i.e. Europe and Asia. Therefore, he wishes to restore the former Ottoman Empire’s hegemony, to achieve greater political influence not just in today’s Turkish state but also in the countries and territories formerly part of the Ottoman Empire in the Middle East and Europe. To achieve this over-ambitious dream Turkish president is undertaking huge geopolitical risks. As a result of going ahead with this neo-ottoman approach. Turkey has alienated the USA, France, other European powers, and major Arab countries like Saudi Arabia, UAE, and Egypt. Hence now Turks are more or less isolated, without many friends.
As of last year, the Erdogan government’s financial mismanagement had already prompted the biggest funds outflows from Turkey’s debt and equity markets in more than a decade. And has also dried up foreign direct investment (FDI) from Ankara’s traditional economic partners in the West. For Erdogan, who has wielded dictatorial control over Turkey’s finances for almost two decades, Turkey’s inclusion in the grey list of FATF is deeply embarrassing.
Despite the fact that Turkey failed to comply with FATF’s advice to check money laundering and terror funding, arguably it is its aggressive foreign policy that is at center stage regarding the FATF listing. Under Erdogan, Turkey has embarked on an expansive quest to position itself as a global Islamic power, and a regional superpower in the Middle East. To achieve this, Ankara has ended up opening multiple fronts instead of wholesomely managing regional geopolitics in a realistic and reasonable manner. While attempting to position itself as a parallel to the UAE-Saudi power block in the Sunni Islamic world, with political Islam at the core of this approach. President Erdogan has also severely damaged his relations with the US despite being a major NATO ally while also developing multiple points of friction with Russia over the crisis in Syria and Libya.
On the other geographic front, Turkey also had run-ins with Greece and the extended European interests over access to hydrocarbons in the Mediterranean. Also, involvement in the Syrian and Azerbaijan-Armenia wars has also not helped Turks much. Rather Turkey got punched back for attempting to punch above its weight.
Because of all these disastrous blunders of President Erdogan, common people of Turkey are paying a very high price. The Turkish economy over the years has faced severe challenges led by economic overheating, a currency crisis, shaky morale of foreign investors, and lack of transparency and autonomy. Amid high inflation, widespread youth unemployment, and deepening poverty, the country’s economic situation is looking increasingly grim. On the other hand, the continuous fall of the Turkish lira is also fuelling the current economic crisis. The lira has lost 20% of its value against the US dollar since the start of this year. Even some experts believe that the country is on the verge of a potentially devastating recession.
Aykan Erdemir, senior director of the Turkey program at the Foundation for Defense of Democracies, a Washington-based think tank says “FATF’s grey listing of Turkey will further tarnish the country’s image as a permissive jurisdiction for illicit financial activity”. Also speaking to Al-Monitor Erdemir says that “This decision will exacerbate capital flight from an economy that has experienced net capital outflows over the last few years”. In addition to this, the World Bank estimates more than 1.5 million Turks fell below the poverty line last year. For Turkish citizens, the prices of essential commodities keep rising. Inflation neared 20% in September. According to Turkey’s largest trade union, more than 7 million minimum wage earners face food insecurity. Polls show that almost two-thirds of the Turkish public is struggling to make ends meet.
With each passing day, Turkish people are realizing that these economic hardships are not only happening because of economic mismanagement but also due to the exorbitant cost of the expansionist policies of the current government. President Erdogan’s early years in power were marked by solid growth and a development boom. But now he is becoming an economic disaster caused by his interference in economic policy and liability for the country. The nation will lose a great deal if it allows Erdogan to carry on with his misadventures and destroy the military, political and economic links of Turkey.