Turkey in a house of cards

From Caroline Glick, October 4, 2011:

...Turkish Prime Minister Recep Tayyip Erdogan ... was welcomed as a hero on his recent trip to Egypt, Tunisia and Libya. The Arabs embraced him as the new face of the war against Israel.

...Erdogan is probably the only world leader that conducted prolonged friendly meetings with both Iranian President Mahmoud Ahmadinejad and US President Barak Obama at the UN last month.

Then there are the Balkans. ...Erdogan's government has been lavishing aid on Bosnia for several years and is promoting itself as a neo-Ottoman guardian of the former Ottoman possessions.

EVEN ERDOGAN'S threats of war seem to be paying off. His attacks on Israel have won him respect and admiration throughout the Arab world. His threats against Cyprus's exploration of offshore natural gas fields caused Cypriot President Demetris Christofias to announce at the UN that Cyprus will share the revenues generated by its natural gas with Turkish occupied northern Cyprus....

Then there is the Turkish economy.

On the face of it, it seems that Turkey's assertive foreign policy is facilitated by its impressive economic growth.

According to Turkey's statistics agency, the Turkish economy grew by 8.8 percent in the second quarter of the year - far outperforming expectations. Last year the Turkish economy grew by 9 percent. ....But Turkey's actual situation is very different from its surface image.

... a closer analysis of its financial data indicates that Turkey's expansive growth is the result of a credit bubble that is about to burst. According to a Citicorp analyst quoted in The Wall Street Journal, domestic demand accounts for all of Turkey's economic growth.

This domestic demand in turn owes to essentially free loans the government showered on the public in the lead-up to the June elections. The loans are financed by government borrowing abroad.

Turkey's current accounts deficit stands at nearly 9 percent of GDP. Greece is engulfed in a debt crisis with a current accounts deficit of 10 percent.

Analysts project that Turkey's deficit will eclipse Greece's within the year. And whereas the EU may end up bailing Greece out of its debt crisis, Turkey has no one to bail it out of its own debt crisis. Consequently, Turkey's entire economic house of cards is likely to come crashing down very rapidly.

It is hard to understand why Erdogan is acting as he is given the poor hand he is holding. It is possible that he is

• crazy.
• ...so insulated from criticism that he is unaware of Turkey's economic realities or of the consequences of his aggressive behavior.
• ...hoping to combine a foreign policy crisis with Turkey's oncoming economic crisis in order to blame the latter on the former.
• ...believes that US backing gives him immunity to the consequences of his actions.

No matter what stands behind Turkey's actions, it is clear Ankara has overplayed its hand. Its threats against Israel and Cyprus are hollow. Its hopes to be a regional power are faltering....