The Turkish lira fell further against the U.S. Dollar on Tuesday, as the ongoing feud between Ankara and Washington continues without any signs of a resolution.
According to Reuters, the dispute between the two NATO countries has been exasperated by the imprisonment of an American Pastor, Andrew Craig Brunson, who faces terrorism charges related to the failed coup of 2016. After Turkey refused to release the pastor, President Trump ordered tariffs placed on Turkish imports, further deteriorating the relationship and driving the lira down close to 40 percent compared to the U.S. dollar.
The unpredictable fiscal policy of Turkish President Tayyip Erdogan has also added to the crisis. Erdogan recently installed his son-in-law Berat Albayrak as Financial Minister, a decision which made many experts unsure of his next move.
This financial crisis has some leaders in the Turkish government fearing that if the relationship worsens further, it may lead to instability not only domestically, but also in the Middle East. Nowhere is this fear more justified than in Syria, where Turkish-backed forces and allies are already feeling the effects of the depreciated currency.
According to Reuters, Turkish funded aid groups, police forces, educators, and even militant groups are all paid in Turkish lira. But as global investors continue to dump the currency, many are worried it will soon be useless.
“When the Turkish lira began to lose value against the Syrian pound our salaries became worthless,” said Ghassan Kinno, a 23-year-old fighter with a Free Syrian Army rebel faction in Azaz while speaking to Reuters. “The fighter receives his salary and goes to the market … and it’s barely enough for one week. This is the reality we are witnessing now. The situation is very difficult and there is no solution.”
Another man in Azaz working for a medical relief organization told Reuters that his salary is now worth 100 lire less than what it was just a few months ago. With the lira weakening, merchants using the currency have had no choice but to raise prices.
As Ankara loses influence over fighters and other important groups in Syria, some in the Turkish government are warning that additional sanctions may lead to more terrorism in the region.
“These steps taken with political motivation will not only impact the global financial system but also global trade and regional stability,” said Berat Albayrak during a press conference in Paris earlier this week, according to Reuters. “With the damage (the measures) will cause to regional stability, they will unfortunately contribute to chaotic problems that feed terrorism and also the refugee crisis.”
With several other countries representing many different interests in Syria, Turkey may soon find itself without local allies in the region if its currency continues its downward spiral.