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Has Turkey’s Financial Reputation Hit The Point of No Return?

Erdogan. Image Credit: Creative Commons.
Erdogan. Image Credit: Creative Commons.

The Financial Action Task Force (FATF), the international body charged with combatting money laundering and terror finance, today voted to put Turkey on its “grey list,” putting the NATO member in the same category of problem countries as Pakistan, Yemen, Syria, Burma, and Haiti, and only one tier below states like Iran and North Korea.

For Recep Tayyip Erdoğan, who has wielded dictatorial control over Turkey’s finances for almost two decades, the move is deeply embarrassing. It is an open acknowledgment, despite the denials of Turkish diplomats and those in the West who have long done business in or carried water for Turkey about both the murkiness of Turkey’s financial system and also Turkey’s financial interplay with groups like the Islamic State.

At a time when Turkey’s currency is in freefall, it will make it difficult for Erdoğan to attract the foreign investment that Turkey so desperately needs.

The real danger for Erdoğan, however, may be greater. While Turkey’s luster has dimmed among those destined to live along its borders, Turkey has retained remarkable immunity for its behavior in international organizations. NATO’s leader, for example, regularly offers paeans about Turkey’s role and potential; however uncalibrated they are to Turkey’s behavior.

The World Bank and International Monetary Fund treat Turkey with kid gloves, the Erdoğan regime’s deep-rooted corruption.

Likewise, the State Department has long ignored Turkey’s terror sponsorship and refused to address objectively evidence that should put Turkey on the State Sponsors of Terrorism list.

With the FATF ruling, Turkey may be past the tipping point on accountability. No longer does the international community believe Turkey is so important that it can massage its umbers and deny the reality of its actions. Nor does the Turkish Foreign Ministry in Ankara any longer have the respect of its peers in a way where they could intercede on Turkey’s behalf the way that China does on Pakistan’s behalf (to keep that state off the blacklist). The FATF ruling, of course, is not alone.

While the international community has yet to hold Turkey accountable diplomatically or financially for its support and sponsorship of the Islamic State, that Congress has targeted the Grey Wolves over the objections of the State Department is another sign that patience with Ankara has worn thin. The paramilitary SADAT may not be far behind.

Erdoğan and the state media he controls might downplay the FATF ruling, but there is no hiding the fact that not only will Turkey fall short of its investment expectations, but that it is also one step closer to being held accountable by other international and diplomatic groupings for its behavior. Perhaps it is time for Erdoğan to realize the world is no longer frightened of his outbursts; they instead pity the Turks who must put up with him.

With Turkey’s diplomatic immunity disappearing, responsible leadership would recognize there are no shortcuts to real, serious reforms in Turkey’s behavior.

Now a 1945 Contributing Editor, Michael Rubin is a Senior Fellow at the American Enterprise Institute (AEI).

Written By

Now a 1945 Contributing Editor, Dr. Michael Rubin is a Senior Fellow at the American Enterprise Institute (AEI). Dr. Rubin is the author, coauthor, and coeditor of several books exploring diplomacy, Iranian history, Arab culture, Kurdish studies, and Shi’ite politics, including “Seven Pillars: What Really Causes Instability in the Middle East?” (AEI Press, 2019); “Kurdistan Rising” (AEI Press, 2016); “Dancing with the Devil: The Perils of Engaging Rogue Regimes” (Encounter Books, 2014); and “Eternal Iran: Continuity and Chaos” (Palgrave, 2005).