Brexit vote 'non-binding,' Turkey normalizes relations with Israel, Russia deal imminent
On Monday, Turkey and Israel announced the normalization of relations, strained since the Mavi Marmara incident over six years ago. Following a formal apology and compensation to the families of the Turkish and American victims - killed by Israel during an effort to deliver humanitarian aid to Gaza - Turkey and Israel will return respective ambassadors and diplomatic relations will pick-up where they left off. Another component of the normalization deal includes Turkey helping Gaza to rebuild its infrastructure.
While the Netanyahu government may be to blame for much of the suffering currently endured by the Palestinians, the Palestinian leadership itself is not without blame. Mahmoud Abbas, the current head of the Palestinian Authority has spent over a decade in power and is the de facto monarch of Palestine. He has said that he will forever be the head of state of Palestine yet has done virtually nothing to improve the lives of Palestinians. Both the Israelis and Palestinian governments have dragged their feet for 20 years since the Oslo accords and a "lost generation" has emerged in Palestine, disenfranchised, hopeless, deprived of opportunity, education, and any real future. History will judge both governments for their failure to improve the lives of millions of innocent civilians.
Yesterday, Deputy Prime Minister Numan Kurtulmuş revealed "an acceleration in steps to smooth relations with Russia," meaning Turkey may return to normalized relations with Russia as well. While repairing relations with Israel may be politically significant, the significance of doing the same with Russia cannot be overstated. With both neighbor countries suffering from the suspension of normalized trade, repairing these relations could not have come at a better time. Should improved Russian relations translate into suspension of Russian cooperation with the Assad regime of Syria, this may be the beginning of the end of the Syrian conflict as well. There should be no issue given a higher priority, now, by the Turkish government than to that of fast-tracking improved Russian relations.
Kurtulmuş referred to steps taken by the Kremlin that will allow Turkish employees of Russian companies to return to their posts at these companies inside of Russia. Lifting of sanctions by Russia on Turkish goods should soon be followed by prohibitions put in place by Russia on tourism to Turkey. Such moves would certainly propel the BIST-100 benchmark Turkish equity index higher as well as lend strength to the Turkish lira.
While Turkey appears to have smoothed over relations with two of its neighbors, the United Kingdom may have done the opposite. Much has been written addressing the British Exit from the European Union, or "Brexit," as it is more popularly known following the Thursday referendum. My major contention with the coverage has been that the shockwaves associated with the first country to vote to leave the union has overstated the effects that the "Brexit" will have on Britons and understated the effects that it will have on the EU.
Article 50 of the Lisbon Treaty of the European Union gives the U.K. only two years to negotiate its secession from the union. EU officials have begun publicly admonishing the U.K. and have said they need to leave the union as soon as possible. While meant to scare other member states, the EU's "we don't need you" approach may be overplaying their hand. Imagine for a moment that the U.K. does leave "Europe" altogether. This means secession from the EU, the European Customs Union, and every other body that the U.K. is party to. What then?
Immediately following any such move, the U.K. would quickly enter into trade agreements with countries it currently does trade with. Does anyone believe Germany and France would be so hurt by the U.K.'s decision to "Brexit" that they would refuse to sell them their goods? The U.K. has been granted an opportunity by the "Brexit" to, as Boris Johnson put it, "renegotiate" its membership. Johnson never intended for the U.K. to separate itself from the EU, rather renegotiate terms. Following the vote, many U.K. parliamentarians have questioned the validity of the vote in general. On Sunday, Labor parliamentarian David Lammy, said the referendum was merely "advisory" in nature and "non-binding," meaning the parliament should reject the outcome.
While this line of thinking may prevail ultimately and the U.K. may either choose to re-vote or water down the "leave" victory, what is certain is that irreparable damage has been done to the EU. Perhaps this, the weakening of the EU itself, actually strengthens the U.K. and its bargaining power and maybe was the real reason behind the "Brexit" campaign all along.