The Turkish government’s decision to be actively involved in the ongoing war in the northwestern Syrian province of Idlib will likely create significant pressure on the country’s already fragile economy.
Turkish President Recep Tayyip Erdoğan said on Wednesday that Turkey would strike Syrian targets anywhere if the attacks on Turkish soldiers continued in Syria’s last major rebel-held enclave.
Since last week, Turkey has deployed more than 1,000 troops in Idlib, where 13 Turkish soldiers were killed over the last week by Syrian shelling. Turkey demands Russia-backed Syrian government forces withdraw from positions beyond Turkey’s 12 observation posts in the region, built under the 2018 Sochi agreement between Ankara and Moscow.
Erdoğan chose to challenge Moscow over Idlib despite the potential economic risks of the move. When the relations between the two countries completely broke down after Ankara downed a Russian fighter plane in 2015 on its border with Syria, Turkey’s trade with Russia plummeted by nearly a third from $23.9 billion in 2015 to $16.8 billion.
The two countries started melting the ice following a failed coup attempt in Turkey in 2016 and have established even closer ties since. But given that Russian President Vladimir Putin’s target is to remove all jihadi fighters in Idlib, it seems unlikely that Russia and Turkey will reach an agreement this time.
A massive refugee influx from Idlib, which is home to 3 million people according to U.N. estimates,1.2 million of whom are thought to be refugees displaced from elsewhere in Syria, will obviously be the first consequence of increased tensions in the province. U.N. says some 700,000 people have already fled Idlib to escape from clashes between Syrian government forces and jihadi fighters, seeking to find shelter in Turkey, which already hosts some 3.6 million Syrians.
Erdoğan says the number is even higher, almost one million. In case those people start passing the border, the new refugee wave will cost Turkey at least $2-$3 billion annually. Given that Turkey has to cope with a 15 percent unemployment rate in the non-agriculture sectors and the growing anti-refugee sentiments among Turks, the overall political cost of Idlib policy cannot be tolerated by the ruling Justice and Development Party (AKP).
Of course, deteriorating relations with Russia will have a cost. Not in the energy sector, where Russia seems to have secured its interests in deals with Turkey. But Turkey’s decision to acquire Russian S-400 defence systems, which have alienated Ankara’s allies in the West, will have a price.
Turkey will need to rebalance its relations with the West, particularly with the United States. After his last visit to the White House in November, Erdoğan said Turkey could also consider purchasing U.S.-made Patriot batteries. In case such a concession would be inevitable to get U.S. support in Idlib, that will mean an extra $2-3 billion expense for the Turkish Treasury. Ankara’s policy, based on seeking strategic gains by playing with the conflicts of interest of Washington and Moscow, will have a significant price tag.
Moscow and Damascus will likely play the Kurdish card in Syria against Turkey to trim any aggressive move from Ankara. Kurdish fighters in Syria feel abandoned by the United States as they are left with the protection of only 600 American troops mainly around oil fields in northeast Syria after President Donald Trump’s decision to withdraw forces ahead of a Turkish incursion in October.
By actively engaging the Syrian Kurdish leadership in its efforts to develop a new constitution in Syria, Russia can jolt the already shaky grounds of Ankara’s policy. The Turkish government has tried to justify its military incursions into north Syria by emphasising threats to Turkey’s national security posed by the Syrian Democratic Forces, which the Turkish government says is an extension of the outlawed Kurdistan Workers Party (PKK), which has been fighting inside Turkey for self-rule for more than three decades.
Ankara has never disguised the potential economic gains of such incursions, as it stated plainly in October when outlining plans to build housing facilities for up to one million Syrian refugees in areas it aimed to control after its military operation in northeast Syria. But a deal between Syrian Kurds and President Bashar Assad can put an end to Ankara’s dreams to boost its construction industry by new projects in Syria. That will mean a few billion dollars of lost revenue for Turkey’s construction industry, which served as the main engine of Turkish growth for some 15 years until 2018.
Inevitably, the overall Turkish market will be affected from the political and military tensions and clashes in Syria. The Turkish economic management will no longer be able to keep the lira under a 6 per-dollar level, a psychological benchmark. It will be impossible for Turkey to keep interest rates at current levels, which the Turkish Treasury fights to maintain by selling securities worth billions of lira.
Gloomy days await the Turkish central bank, which has more than halved the benchmark lending rate from 24 percent since July to 11.75 percent in January. Its policy of limiting the swaps market by blocking the moves of foreign investors is not sustainable under extraordinary circumstances. The economic indicators imply that it will be impossible for the government to meet its economic growth targets for 2020. Given that the situation in Idlib will also have inflationary effects, the consequences of permanent tensions in Idlib will be more severe.
Turkey could have avoided all those risks if it had pursued a different policy towards Damascus since the start of the Syrian civil war in 2011. Now, considering the recent Turkish death toll in Idlib, Ankara seems too late to tilt its policies in that direction.