Societal Debt, Refugees, ISIS & the European Union

The startling fact that oil is now cheaper than water in Turkey, with the price under thirty dollars a barrel and it may fall to twenty dollars, the world economy is doing no favours to Turkey. Turkey is an importer of oil but petroleum companies will soon be going broke and investment rates in the country may hit an all time low. The latest terrorist attack in Istanbul’s Sultanahmet district, will hit tourism, which is the backbone of the Turkish economy. It is thought that this was ISIS’s intent in killing foreign tourists inside the Turkey’s largest city. ISIS will from now be referred to as Daesh; Daesh is an acronym for the Arabic phrase al-Dawla al-Islamiya al-Iraq al-Sham (Islamic State of Iraq and the Levant).

Daesh clearly hopes to undermine Turkey and the country’s relationship with the US, through targeting its economy and the lives of foreign tourists. Washington has criticised Turkey for allowing local elements of Daesh to operate within the country and for not focusing their security force efforts on this organisation. They expressed their concerns that Turkish security forces were too focused on the Kurdish PKK. The PKK are fighting as terrorists for Kurdish sovereignty in eastern Turkey.

The European Union has criticised Turkey for the number of Syrian refugees flowing into Greece at a rate of some two to three thousand a day. EU leaders have pledged three billion euros to Turkey for aid for the more than two point two million Syrian refugees taking shelter in Turkey. Many refugees are dying at sea whilst trying to make the dangerous crossing from Turkey to Greece in unsuitable rubber boats. The refugee crisis has engulfed the whole of Europe as Syrian’s try and make new homes elsewhere away from the danger in their own war torn country.

Societal or public debt is around forty percent in Turkey and things are not looking much better for 2016. If long term tourism is seriously damaged by the latest Daesh bombing then Turkey’s problems could exacerbate quickly. Debt management will become an even bigger issue and with inflation at just under nine percent monetary policy by the central bank will remain tight. At least there are no major elections to be held in 2016, which should provide some internal political stability in a region challenged by severe social unrest on its borders. Turkey’s strong relationship with the west should mean that it will come through this period relatively unscathed.