All about operation 'Peace Spring'

TURKEY - Report 13 Oct 2019 by Murat Ucer

Turkish Forces and their Syrian allies made swift progress against a weaker rival, but at considerable cost to Turkey’s international reputation. By Sunday, one of the two main targets, the town of Raz-al-Ain fell to Turkey, but 9 Kurdish individuals had reportedly been executed by the Free Syrian Army troops. Turkish military will probably stop after clearing out a 120x30 km zone waiting for the Trump-Erdogan summit. Regarding the war scene, the sudden re-emergence of ISIS is a new complication that could trigger new terror incidents at home. Otherwise, the campaign is only short of a disaster, with everyone from Palestine to EU condemning the invasion, and Arab countries, EU and US mulling sanctions.

Apropos US sanctions, pressure on Trump is piling up, as suddenly the Halkbank file is re-opened in the press. Trump is unlikely to resist Congressional pressure much longer, with a very high probability of some sanctions coming into effect after Trump-Erdogan summit on the 13th of November. At home, Peace Spring may have temporarily raised Erdogan’s approval ratings, but wait till the bill is felt by the voters. Even without the US sanctions, paying for the war will likely compound the economic hardships, accelerating AKP’s demise.

September cash budget showed the 12-month rolling deficit heading south again. We shall see the details in this week’s Ministry of Treasury and Finance data, but as we’ve been fearing all along, revenues continue to be weak, while primary spending remains hard to contain.

The August balance of payments data paints a lackluster picture – of a weak economy that is still experiencing, net/net, capital outflows. The 12-month rolling current account surplus rose to some $5.1 billion in August from $4.5 billion in July. But there were capital outflows in the month (of around $1.6 billion), which, together with another $0.8 billion or so unidentified outflows, were financed by the current account surplus of some $2.6 billion.

Cosmo says stick with the pain trade of keeping your positions, but run if Trump changes sides or the CBRT cuts rates.

Now read on...

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