Moody's unexpected and unscheduled downgrade of Turkey's credit rating despite many positive economic and political signs was attributed to the "discontent" toward Operation Olive Branch. Though the agency's statement did not openly mention the operation, it was hinted under the heading of regional risks.
However, the operation that began on Jan. 20 was viewed positively by markets. The Turkish Armed Forces (TSK) are successfully carrying out Operation Olive Branch alongside Free Syrian Army (FSA) troops to restore order in the region – already allowing thousands of displaced locals to return to their homes. As a matter of fact, around 200,000 people have returned to their homes, the refugee burden on Turkey's shoulders has decreased, and more importantly, terrorist attacks by Daesh and the PKK/People's Protection Units (YPG) have dramatically declined. The presence of Daesh elements on Turkey's border ended and they were driven further south. The PKK/YPG worked in cahoots with Daesh during the attacks against Turkey. Hence, which terrorist group held control over the territory along the Turkish border lost its importance. Regardless of what terrorist group controlled the border area, the border was used for evil purposes when Turkey was in question.
Consequently, as markets were well aware of that, both the TSK's success and the reduction of terror risk have created a positive atmosphere. We can say the same about Operation Olive Branch. Since its border area with Turkey is mountainous terrain, Afrin served as their second Qandil Mountains (the PKK's headquarter in northern Iraq) for the PKK/YPG. The PKK/YPG calculated that it could easily infiltrate the Mediterranean region via the Amanos mountain range, which is covered with dense forests. And they had done this for years. A lot of attacks were carried out via this mountain line and many soldiers, police officers and civilians were killed because of it. The terrorist organization continued to keep a few groups in the region. These terrorist groups have lost their land connection to Afrin with the TSK and FSA bringing the whole border area around it under control.
In brief, those who know a little bit about market tendencies regarding conflict risks and military operations would accept that Turkey's operation across the Syrian border (which clearly seems to be successful) has largely removed the risks to the country's economy, politics and peace and this will have positive effects on the markets. Think of it this way: would investors prefer a country where a dozen bloody terrorist groups blow up bombs and carry out assassinations every other day both along its borders and in various big cities, or would they prefer a country that can maintain its security by defending itself resolutely?
Surely the second one.
President Recep Tayyip Erdoğan frequently criticizes credit rating agencies for their political and economic manipulations regarding Turkey. Erdoğan had reacted after the previous rate downgrade as follows:
"But I have to tell the truth, we have yet to save ourselves from some credit rating agencies' ideological approaches. They maintain their ideological approaches. They are unfortunately treading water with an ideological attitude, so much so that they say Turkey ‘lacks assurance and stability' at this point. We have no other option but to make them learn this job. Because Turkey is not such a country. Turkey is one of the outstanding countries in the world with its investments and production. Neither the July 15 coup attempt nor the turmoil in our region nor the problems within the world finance system effected Turkey's economy. Given the fact that the Turkish economy tops the list of countries that registered the biggest growth rates in 2017 despite all the troubles, 2018 shall be way different. I call on all investors: The Turkish economy will continue to grow and those who invest in Turkey will continue to win."
Indeed, during the process that began with the Gezi protests in 2013, Turkey has undergone tough tests that were not experienced by any other country. The toughest of them, of course, was the coup attempt by the Gülenist Terror Group (FETÖ) on July 15, 2016. How many other countries could endure so firmly in the face of such attacks? But Turkey has. The heinous coup attempt, which started on a Friday night and ended the next morning, claimed the lives of 250 citizens. The Parliament building was attacked by F16s. President Erdoğan barely escaped assassination by FETÖ-linked soldiers while on vacation. He immediately arrived at Atatürk Airport, which was occupied by the putschists, and led the resistance against the coup.
The people of Turkey, with all the segments of society, stood up against the coup and put up the greatest democratic resistance in recent history, saving the country from drifting into chaos and maintaining the order. Hence, normalization began as of that Saturday and markets opened as usual on Monday as if nothing had happened. Let me restate important information here. Citizens converted nearly $20 billion worth of foreign currency into Turkish lira in order to save the markets from fluctuations and manipulations.
Turkey has thus overcome many disadvantageous situations under all these difficult circumstances, thanks to a firm monetary policy, strong banking system, and effective and timely measures. Furthermore, it has put credit rating agencies to shame after acquiring growth figures far beyond their expectations. Turkey topped the list in the world in 2017 in terms of growth rate. And above 7 percent growth is projected for 2018. As for the tourism industry, the crisis with Russia has been left behind. Turkey is expected to achieve phenomenal growth in tourism in 2018.
So, Moody's rate downgrade decision that came at a time when it should actually raise Turkey's credit rating is totally a political and manipulative move. It cannot be independent of the political calculations in the region. That rate downgrade stems from the same irrationality that led the U.S. to partner with the YPG, instead of its biggest NATO ally Turkey.
It appears that too much hope is laid upon the idea of dividing Syria and Iraq into three parts and creating a terror state extending to the Mediterranean shore and that there is confidence that the power at the table will be reflected on the ground, too. Otherwise, why should a big power like the U.S. sacrifice Turkey, which would continue to exist? Such a folly can be embarked on only when Turkey loses its current border integrity and military capabilities. Perhaps we should evaluate the bizarrely tough period beginning with the Gezi protests in 2013, the support provided to the PKK and FETÖ, and the inexplicable enmity and isolation faced by Turkey in light of that regional design plan.
There is that famous quote by former the prime minister and president, Süleyman Demirel, who occupies an important place in the history of Turkish politics, "Yesterday is yesterday, today is today."
After the TSK and the FSA seized control of the town of Jinderes a short while ago, it became clear that the city center of Afrin will be cleared of terrorists way earlier than expected. But the success of this operation has dispersed many perceptions. The U.S. and other Western powers will probably have to devise a new strategy in the absence of these perceptions. For yesterday is yesterday and today is today.
1. With FETÖ infiltrators being removed in the wake of the July 15 coup, the TSK has not faced a decline in its combat power, on the contrary, it has become more active since treacherous activities within it have ended.
2. The myth that the YPG is the most effective force on the ground in Syria collapsed.
3. Turkey has fought the Daesh threat more effectively and faster alone, without any assistance.
4. As the evacuation in Raqqa indicated, the PKK/YPG and Daesh militants are in collusion.
5. Turkey is among the most reliable and active members of NATO. Though it was left alone for the sake of supporting terrorist groups, it has not embarked on an adventurous policy that can endanger the alliance and maintained its composure.
6. Turkey has never collaborated with any terrorist group including Daesh; instead it has put up the most effective fight against them.
We can cite many other similar points. That truth of these evaluations will soon become evident even in the Western world, despite disinformation. Turkey has passed all the economic, political and military tests successfully.
Now it's time for Western nations to win Turkey's trust.
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