Turkey began to address its mistakes, as Turkish President Recep Tayyip Erdogan agreed to change his policy under the current Finance Minister Mehmet Simsik and the new Central Bank Governor Hafiza Gay Erkan. Türkiye now appears to be engaged in a geopolitical maneuver.
Despite the seemingly strong relations with Russia, Ankara first handed over the leaders of the Azov Brigade to Ukraine and then agreed to accept Sweden into NATO, and the least that can be said is that Russia was not enthusiastic about this step.
The head of the Defense Council and the Russian Federal Security Committee, Viktor Bondarov, said that Turkey is turning from a neutral country into an unfriendly country. The Russian media discourse has also become more aggressive.
What influenced Erdogan’s decision?
First, Ankara needed to show solidarity with its NATO partners ahead of the alliance’s summit meeting in Vilnius on July 11. And second, Turkey may have sent a signal emphasizing the importance of agreements that take into account Moscow’s refusal to extend the agreement that allows Ukraine to safely export grain and other food products across the Black Sea. Unfortunately, it seems that Russia picked up on this signal and announced the cancellation of the agreements.
It is fair to say that this decision was expected. Last June, Dmitry Peskov, a spokesman for Russian President Vladimir Putin, indicated that the chances of extending the grain deal did not exist in reality.
Peskov outlined the conditions set by the Russian side, which included allowing the Russian Agricultural Bank to participate in the SWIFT system for global financial transfers. Although the European Union expressed its willingness to study this step, no practical step was taken.
What should be done now?
Russia faces a huge loss of access to additional revenues. In addition, strained relations with Turkey could deteriorate further, which will lead to the loss of another ally and the disruption of the existing supply chain.
In terms of the global economy, Chicago wheat futures rose 3.5% after wheat deals were halted. However, catastrophic results are not expected, given that the export of Russian wheat will not be affected and thus avoid any large deficit. In addition, the market has taken into account the decline in exports of Ukraine. Conversely, the biggest concern is the potential impact of El Niño on farms and the US Federal Reserve’s rhetoric.
With regard to the Federal Reserve, if the fiscal tightening policy continues, the possibility of a recession will rise, which will affect the prices of oil and wheat.
Igor Coachman ■ Financial advisor
#Türkiye #turns #face #West
2023-07-21 22:05:56
