Erdogan warns Trump: Turkey does not respond to threats

Berat Albayrak

Turkish Finance Minister Berat Albayrak is to unveil the plan for Turkey's economy on Friday

Without naming any country, Erdogan said that those - who stand against Turkey for the sake of small calculations - would pay the price. "You prefer a pastor to a strategic ally of yours in North Atlantic Treaty Organisation".

Brunson, 50, was arrested in 2016 but was recently released from prison and put under house arrest. He still faces a sentence of up to 35 years if he is convicted at his ongoing trial.

"Those who can't compete with us on the ground have brought online fictional currency plots that have nothing to do with the realities of our country, production and real economy", Erdogan told a provincial meeting of his AK Party in the town of Rize on Saturday, as quoted by Reuters. U.S. President Donald Trump introduced a round of sanctions on August 1, preventing the Turkish justice an interior ministries from doing business with U.S. businesses.

The U.S. responded by slapping sanctions on Turkey and threatening more.

This prompted yet another tweet from President Trump, this time announcing the actual authorization of the doubling of tariffs on steel and aluminum for Turkey.

Reminding the world of the time when Turkey rushed to America's help whenever necessary, during the past six decades, Erdogan recounted Turkish contribution in defusing the Korean and Cuba missile crises, and sending troops to Afghanistan in the wake of the September 11 terror attacks.

The lira extended its losses to trade at 6.2 to the dollar, a loss of 11.5 percent on Friday.

But Erdogan downplayed the currency crisis, advising Turks to show solidarity by converting any stashed-away gold or foreign currency to Turkish lira in a bid to wage a "war of independence" against America.

He added: "If there are dollars under your pillow, take these out". If there are euros, take these out.

"The plunge in the lira which began in May now looks certain to push the Turkish economy into recession and it may well trigger a banking crisis", said Andrew Kenningham, chief global economist at Capital Economics. "Because this is the language they understand", he said.

The Turkish lira plunged on Friday, raising questions about the country's financial stability, as investors anxious about the president's unorthodox economic policies and a dispute with the United States that has led to sanctions.

Turkey is a major emerging market economy with $466 billion in foreign debt (about 78 percent in US dollars and about 18 percent in euros), or 52.9 percent of gross domestic product. Financial upheaval there risks further destabilising an already volatile region.

Trump is also declaring that, "Our relations with Turkey are not good at this time!".

"Our relations with Turkey are not good at this time!" hewrote".

In what appears to be a diplomatic riposte, Turkey later said Mr Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

Turkey is also ready to establish a similar system - to not use dollar in trade - with European countries, Erdogan noted. "We've stood with neighbours before, and will again now", he warned.

The ripple effects of Turkey's spiraling currency crisis was felt globally as the Dow Jones Industrial Average and the S&P 500 fell 0.8% and 0.5%, respectively, following Trump's tweet.

Turkey was one of the countries which attracted considerable foreign investor interest when a loose U.S. monetary policy unleashed waves of liquidity. In the past, Trump has threatened to impose trade barriers on countries that deliberately push down the value of their currencies, so as to make their goods cheaper for American consumers (and thus, more competitive than the wares of US manufacturers).

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