The ongoing diplomatic spat between the United States and Turkey, as well as the reactions of global financial circles during the rapid decline in the value of the Turkish lira carries important lessons in terms of the gradual dissolution of the international liberal order as we know it.
It is no secret that the U.S. has turned to a marginal interpretation of realist power politics under the Trump administration, questioning the majority of liberal global norms, traditions, values and institutions which were constructed under its watchful eyes in the post-war era.
The utter reluctance of Washington D.C. to undertake the costs associated with the maintenance of public goods such as political and economic stability, regulatory regimes and institutional frameworks for the sustenance of an integrated, liberal world economy casts doubt over the future of the extended Bretton Woods system and the international order in general.
Following a smooth rehabilitation period under Barack Obama during which the U.S. healed the wounds of the global financial crisis, called industrial producers back to home soil and maintained political compromises with both the global and emerging powers with soft public discourse, it was time for an aggressive backlash.
Donald Trump was not only an unorthodox figure who could easily disregard established international principles and norms as a short-sighted populist, but also the perfect choice to realize multiple goals of economic protectionism, trade wars, warmongering in the Middle East and domestic xenophobia with discriminatory, undiplomatic language. So the Trump presidency symbolizes the fact that the American state establishment and their allies both in the military-industrial complex and ideologically-motivated civil society, do not care much about maintaining a positive global image any more.
The days of American hegemony, to quote the pioneering work of late Robert Gilpin, based upon the maintenance of a liberal global order by providing public goods in return for acquiring sufficient social consent, are long gone. As the consent of the major policy makers and societies in the international system is not sought by the dominant power which lost its belief to multilateralism, then the stage is perfectly set by pure power politics via military, economic, psychological and cultural means.
Seen from the prism of hegemonic collapse and the emergence of a more chaotic, multipolar and conflictual global order the recent diplomatic crisis between Turkey and the U.S., as well as the ensuing speculative attacks on the Turkish lira gave strong indications concerning future global trends. In line with the sporadic and unprincipled policy behavior it developed over the course of recent months, the Trump administration rapidly escalated the diplomatic spat with Turkey over the release of evangelical pastor Brunson. The majority of observers of Turkey-U.S. relations concurred that the row surrounding the pastor was just a useful excuse to exert political and economic pressure on Turkey in the wake of serious strategic quarrels in Syria, ongoing rapprochement with Moscow and systemic resistance against the forthcoming sanctions against Iran. All these issues might be important determinants of diplomatic normalization in the long-term, but the offensive and discourteous manner in which both Trump and Pence handled the Brunson issue for domestic political gains is bound to leave lasting damages in Turkish-American relations.
The way in which the Trump administration used its leverage over Wall Street and international investors to trigger a capital flight and pressurize the Turkish lira was emblematic of the collapse of liberal financial globalization. In a perfect world of integrated and free financial flows, economic parameters per se should have determined the exchange rate of the lira vis-à-vis the U.S. dollar and all other major global currencies. Yet by encouraging the institutions to artificially aggravate the risk perceptions associated with the Turkish economy, giving open messages to deter international investors (i.e., intrusive tweets during the Turkish Finance Minister's press conference) and imposing ever new economic sanctions on a NATO ally, the U.S. administration seemed adamant to orchestrate an all-out economic war. It is crystal clear that the projected goals of the economic war are political and focus on changing the autonomous strategic posture of the leadership in Turkey.
It must be clear that Turkey certainly has the necessary financial muscle and economic fundamentals to withstand such international assaults, but in retrospect, Turkey's ongoing resistance against U.S. unilateralism will be recorded as one of the key instances that confirm the gradual dissolution of the liberal international order.
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