Tag Archives: Turkey

Welcome to the Next Middle East War

Well, it’s already started. The many wars in Syria, Lebanon, Iraq, Iran are beginning to come together into one single, bigger conflict. We are on the road to another war.

The shadow war, which has been going on between Iran and its sworn enemies, Israel and America, ever since Iran’s 1979 Islamic Revolution now looks like escalating. In the last few weeks there have been ominous military, naval, diplomatic and psychological-warfare developments on all fronts. The omens are not good; we seem to be heading for a major bust-up not very far from here.

Intelligence officers use a system called an ‘Indicators and Warnings board’ to monitor events and assess where they are heading. Essentially it is a list of key questions, listing the critical information requirements. Examples might be:

• Are the potential enemy’s warplanes bombed-up and armed?
• Are the pilots on weekend leave?
• Is radio traffic normal?
• Have reservists been called up?

The answers are traffic-light coded – green for normal, amber for abnormal activity and red spelling danger.

Today, the I&W board for the Middle East is not looking encouraging. From Tehran to Tobruk the war drums are beating. Iran, as ever, is at the heart of the problem.

Should another red star be added to the Strait of Hormuz in the Persian Gulf?

The narrow Strait of Hormuz is the world’s most important oil chokepoint because of the large volumes of oil that pass through the strait. In 2018, its daily oil flow comprises 21 per cent of global petroleum liquids consumption. China’s gluttonous need for fuel makes the Gulf indispensable to Beijing.

This puts Iran in a strong position geographically; and for decades Tehran has been threatening to block the Straits. In July 2018, Tehran hinted that Iran could disrupt oil flows through the Strait in response to US sanctions and Trump’s calls to reduce Iran’s oil exports to zero. A Revolutionary Guards commander warned that Iran would block all oil through the Strait if Iranian exports were stopped.

The USA has been willing to use its firepower in the past. It escorted ships here during the 1980s ‘Tanker War’. America fought its last naval battle in these waters against Iran in 1988. In July that year, the warship USS Vincennes even shot down an Iranian airliner, killing all 290 aboard, in what Washington said was an accident. Tehran said it was a deliberate attack.

This summer has seen Iranian attacks on tankers with the result that now the US Navy is putting together a coalition of nations to counter a renewed maritime threat from Iran.

This US move to build a maritime multinational force to patrol the key sea route across the Strait of Hormuz prompted outrage in Tehran. Iran’s Foreign Minister blamed the US, insisting that ‘any extra-regional presence is by definition a source of insecurity’ and that Iran ‘won’t hesitate to safeguard its own security.’ The result is that tankers are now being convoyed down the Straits. All it needs now to spark fighting is some out of control Revolutionary Guard commander chancing his luck – and the Iranian RGC is a law unto itself.

This is demonstrated daily in Syria, where the long arm of Tehran now reaches as far as the Israeli border. For months now an undeclared low intensity war has been waged by the Israelis, systematically targeting Iranian weapon dumps, training camps and missile sites across Syria. Unfortunately Netanyahu’s professed strategic goal – ‘the removal of all Iranian forces from Syria’ – is fantasy. The result is a dangerous instability, because Israel is confronting a nasty dilemma. An enemy sworn ‘to drive Israel into the sea’ is camped on his borders; and every day that Tel Aviv does nothing to pre-empt Iran’s expansion makes the potential enemy stronger.

Netanyahu has been steadily raising the stakes, ostensibly with the aim of forcing Iran back to its own turf. But what does Israel seek to achieve? Removing Iran’s forces from the entire Middle East? Changing the Iranian regime?

What kind of American backing can Israel expect? Israel is now upping the ante. It was undoubtedly responsible for recent explosions at Iran-linked sites in Iraq. Sabotage or air strikes were involved and Israel stands at the top of the list of potential culprits. Israel is on the verge of expanding its anti-Iran campaign from Syria deep into Iraq to check the threat from the Islamic republic. But any Israeli action in Iraq comes with high risk that it could ignite a major regional war.

So the danger of crossing the line between limited and full-scale warfare between Israel and Iran grows daily more likely, especially now that Hezbollah – Tehran’s Shi’a proxy, currently running Lebanon – appears to be gearing up for a missile strike on Israel’s cities.

To make this devil’s brew more dangerous still, Iran – smarting from increased US sanctions – is now openly accelerating its drive to get a nuclear weapon. The Mad Mullahs, hell bent on war, can just about be contained; but the Ayatollahs with a bomb? For Israelis that is a chilling step too far. It threatens the country’s existence. Israel has made it very clear: it will not allow an Iranian bomb – by force if necessary.

Others in the region are equally nervous of any Atomic Ayatollahs. Sunni Saudi Arabia has the money and technology to build a bomb quickly to deter the Shi’a of Iran; and only last week President Erdogan openly hinted that of Turkey has an interest in obtaining a bomb, adding to worries about the proliferation of nuclear weapons in the Middle East.

If this were not bad enough, everywhere you look in the Middle East there are many other dangerous flashpoints, many of them already the scene of fierce fighting. In Yemen, Sunni fights Shi’a (Saudi versus Iran), as the Houthis become part of Iran’s regional proxy warriors. On the Syrian border, Turkey is already busy fighting the Kurds. Gaza and the West Bank still simmer with anti-Israeli anger. Israel has already mobilised some reservists as a cornered Netanyahu looks for a grand gesture – probably a demonstration of Israel’s military might – to help him form a government after the recent elections.

Even sleepy little Cyprus, sitting secure in the eye of the hurricane, is now feeling the heat. Drawn by the lure of black liquid gold, powerful allies are now jockeying for position. Ankara suddenly finds itself having to confront a Greek-Cypriot defensive alliance of Israelis, Egyptians, Greeks and Italians – plus France and the USA – all hungry to get their hands on the spoils of the huge natural gas reserves off the coast. Gunboats now protect the Turkish prospecting ships as a symbol, a warning and a deterrent.

The truth is we are sitting in the middle of a region set to explode at any moment, thanks to an aggressive Iran-sponsored build-up. The plan appears to be to force Israel to concentrate on dealing with threats to its civilian population – from rocket barrages and commando raids – from Lebanon, Syria, and Gaza. Consequently, Israel would not be able to focus on blocking the principal surge when it comes.

Now even China is involved. Beijing considers Iran to be its strategic partner in the greater Middle East and vital to China’s ‘Belt and Road Initiative’ across Asia. The PRC knows that the Iranian network of roads, railroads and pipelines all the way to the Mediterranean is a major contribution to the ‘New Silk Road.’ But now, Beijing is becoming increasingly concerned by the sudden possible slide to war caused by Iran’s regional ambitions.

It may not come next week, it may not come next year, but be in no doubt, the Middle East is gearing up for a major war. And it’s important to remember that for Jews, Christians and Muslims alike, according to their scriptures, a final battle between good and evil will usher in God’s brave new world, free from sin.

The place for this battle? The ancient city of Megiddo, better known by its Greek name – Armageddon – a real, geological location in Israel….

August 1974 – Hubris, Nemesis and Lies

Everyone in Cyprus knows that the Turks intervened in Cyprus in July 1974. However, thanks to clever, well-funded and unremitting Greek propaganda, the world has been led to believe that this was nothing less than a brutal and uncalled-for invasion against the peace-loving Greeks – an Ottoman jackboot to seize Greek land and occupy Cyprus.

Nothing could be further from the truth – but for once the victors have not written the true story of events. Thanks to Turkish Cypriot laziness, incompetence and a refusal to see the PR importance of explaining what really happened, the Greek Cypriots’ mendacious version of events is finding its way into the history books.

The true story is simple. On 15 July 1974, the Greek army, in conjunction with fascist Greek-Cypriot gangs, mounted a coup to overthrow and murder the island’s president. A panic-stricken Archbishop Makarios III fled in his socks to be rescued by the British and flown to safety. An EOKA thug and admitted murderer called Nikos Sampson became the new ruler of Cyprus.

On 19 July 1974, President Makarios addressed the UN Security Council in New York and denounced a Greek invasion. The next day, the Turkish army intervened – quite legally – as a guarantor of the1960 Cyprus Constitution. The British forces on the island were ordered to sit tight and become mere spectators. In 1976, the UK House of Commons Select Committee found that Turkey had proposed joint Anglo-Turkish action under the Treaty of Guarantee. However the then Labour Government in Britain refused to help (see written evidence submitted on 30 September 2004 by former MP Michael Stephen to the House of Commons Select Committee on Foreign Affairs).

They argued that Britain was under no duty to act, even though Article II of the Treaty provided that Britain would guarantee the state of affairs established by the 1960 Constitution. The Parliamentary Committee concluded that ‘Britain had a legal right to intervene; she had a moral obligation to intervene. She did not intervene for reasons which the Government refuses to give.’ In other words, this was not Whitehall’s finest hour.

One of the other inexplicable mysteries of the affair is the extraordinary stupidity of the Greek military junta in Athens not to think through the inevitable consequences of their actions on Cyprus in 1974. A bloody civil war among the Greeks, together with attacks on Turkish Cypriots, gave Ankara the political excuse to move into Cyprus that Turkey had been seeking for years.

The Greek word hubris springs to mind, in its sense of human pride, arrogance and defiance of the Gods. However, hubris is inevitably followed by nemesis – retributive justice from vengeful Olympus  to squash over-ambitious mortals. Nemesis now struck the new Greek-Cypriot regime a fatal blow.

The Greek-Cypriot National Guard and their Greek allies made things worse by making a monumental strategic blunder. One of the principles of war is ‘concentration of force.’ The Greeks should have sealed off the Turkish beach head in the north and counter attacked. Instead, blinded by a determination to wipe out the hated Turkish minority once and for all, they spread their forces all over the island in a muddled attempt to crush the widespread Turkish-Cypriot armed enclaves. The notorious Akritas Plan, to get rid of all the Turks in Cyprus, became the Greeks’ ruinous priority.

This dispersal of effort failed. Turkish forces broke out of the beachhead, and parachute and helicopter infantry were flown in. Outgunned, outnumbered, out-manoeuvred and – critically  lacking air superiority, the Greeks fell back and (on 22 July 1974) the UN Security Council was able to broker a ceasefire that brought an uneasy end to the fighting by 24 July. Turkey had intervened, got her foothold on the island and protected her minority. By then the Turkish forces were in command of a wide land corridor between Kyrenia and Nicosia

Thus far, this part of Turkey’s ‘illegal invasion’ is common knowledge. What happened next is not so well known and is blurred in the history books, because there were two phases to the ‘Cyprus war’. After the July lull there were numerous breaches of the cease fire as both sides jockeyed for position and played for time. The UN ceasefire was more honoured in the breach than in the observance.

On 2 August 1974 Greek forces captured a Turkish armoured resupply column, including an M47 tank and an armoured personnel carrier. (The captured M47 later engaged a confused Turkish tank squadron near Skylloura on 15 August, hitting seven M47 tanks.) Also, on 6 August, Turkey’s 28 Division launched a surprise attack supported by 30 tanks and overran the Greek forward positions around Lapithos (Lapta) and Karavas (Alsanjak), west of the bridgehead to straighten out their line.

By 14 August the Geneva talks, aimed at a political solution, had broken down. Turkey’s demands for a bi-zonal federal state plus complete population transfer shocked Cyprus’ new acting President Glafcos Clerides, who begged for an adjournment in order to consult Athens and Greek-Cypriot politicians. The long shadow of the Machiavellian archbishop fell over the negotiating table, however. No one trusted Makarios, who was dissembling, lying and stalling to the last.

Turkey flatly refused any more delays and the Prime Minister ordered Phase 2 of Operation Attilla. Now with two divisions, an armoured brigade, 200 tanks (many of them the newer M48) and over 150 guns on the island, plus total air supremacy, the result was inevitable. The outnumbered Greeks could do little in the face of such overwhelming Turkish superiority.

The breakout to the West was spearheaded by 28 division and the Commando Brigade, heading for Morphou (Guzelyurt) and Kormakiti. The Greek defenders were pushed back to their final ‘Troodos Line’ to the south. To the east, 39 division’s tanks and armoured personnel carriers attacked along two axes: one raced east towards Famagusta and another to the south east towards Mia Milia (Haspolat), and on towards Larnaca. The 10 Greek battalions and 20 tanks defending the Eastern sector were overwhelmed.

In the centre of the island, a vicious battle developed on 16 August around the Greek national contingent (ELDYK) near the grammar school close to Nicosia International Airport. After the area had been softened up by bomb and napalm attacks, 2000 men of the reinforced ‘Turkish Cyprus Regiment’, supported by 17 M48 tanks, assaulted the regular Greek Army positions. Both sides fought hard. From somewhere near the Star Chinchilla Farm, an unknown Greek Forward Observation Officer (FOO) managed to call in artillery fire from widely dispersed batteries of different guns. This artillery tour de force separated the Turkish armour from the infantry, causing serious casualties until a napalm airstrike silenced the FOO for ever. The fighting went on all day. Four Turkish M48 tanks were knocked out and 100 Greeks died in the fighting before the survivors slipped away.

The final battle was at Pyroi (Gaziler), south east of Nicosia on 16/17 August. As the Turks advanced south, a single Greek infantry platoon with tank support attempted to repel a Turkish infantry battalion. In the fighting four T-34s were abandoned on the road as the defenders fled. The Turks followed, creating the ‘Lourajina Appendix’ in the ceasefire line, bringing Larnaca within range of their guns.

After three days of continuous advance and confused fighting it was all over. Cyprus was sliced in half. The two communities were ethnically separated. Thousands of refugees were displaced from their homes. The Greek Junta and their puppet Sampson went to jail. The UN’s temporary ceasefire still remains the legal position.

Who was responsible? Even the Greek Court of Appeal in Athens ruled in 1979 that the Turkish intervention was legal: ‘The real culprits… are the Greek officers who engineered and staged a coup and prepared the conditions for the invasion.’

Council of Europe agreed: in Resolution 573 it supported the legality of the first wave of the Turkish intervention of 20 July 1974, under the Guarantee Treaty of 1960.

The bitter truth is that Athens and the Greek Cypriots brought it on themselves. Arrogance, pride and stupidity had brought defeat and disaster.

The ancient Greeks were right: hubris invites nemesis…

Turkey at a Crossroads?

‘Peace at home; peace in the world.’ Atatürk’s homely ambition has never been more important for Turkey. However, a number of crises are coming together inexorably to force Ankara to think long and hard about its future intentions. Turkey is at a major crossroads.

There are three main reasons: first Ankara’s relationship with the USA; second, Turkey’s position in the Middle East; and lastly, its delicate economic position.

The biggest snowball rolling down the hill is defence, surprisingly. Ankara has insisted that it will take delivery of a Russian-made S-400 advanced anti-aircraft missile system this month, but the US Congress says it will impose penalties on Turkey if it does so. The sophisticated Russian SAM system poses a direct threat to the latest hi-tech US F-35 fighter, also being supplied to Turkey.

Turkey faces a position in which it must either back away from Moscow’s S-400 deal, or accept the possible economic damage of sanctions and its eventual ejection from the US F-35 programme. The result would have been that, whether by levying economic sanctions, or by cancelling Turkey’s participation in the highly advanced (and very expensive) F-35 stealth fighter programme, the US could retaliate and hurt Turkey’s economy badly.

However, risks to its economy and the threat of US sanctions have not stopped Turkey from acquiring Moscow’s air defence system. Ankara stood firm. A government spokesman was defiant: ‘We are a serious country. Our deal with Russia continues.’ Ankara clearly believes that it can withstand US pressure over the issue – because America needs Turkey.

Then, in late June 2019 (in the margins of the G20 Osaka meeting), the Turkish president claimed that a deal had been struck. President Trump had told him there would be no sanctions over the Russian deal and that Turkey had been had been ‘treated unfairly’ over the move.

President Recep Tayyip Erdoğan told reporters that the first delivery of the S-400s would take place within 10 days and that he believed the dispute would be overcome ‘without a problem’ and without sanctions over Ankara’s purchase of Moscow’s missiles. The results were immediate; the Turkish lira soared nearly 3 per cent on 1 July 2019 to its strongest level since April 2019.

However, Ankara’s optimism is a risky calculation. A USAF spokesman later said: ‘Nothing has changed …  Turkey will not be permitted to have both systems.’ Moreover, if the US Congress follows through on its threat to impose sanctions on Turkey by 31 July 2019 and ignores President Trump, that pressure will have a much wider impact on Turkey’s political and economic future than just defence.

Should the USA remove Turkey from the F-35 programme and impose sanctions on its NATO ally, it would be one of the most significant ruptures in recent history in the relationship between the two nations. It would be one more policy dispute that over the years have tested the complicated relationship between Turkey and the USA.

From Turkey’s military intervention to stop the Greek coup and civil war in Cyprus in 1974, to the US invasion of Iraq in 2003 and, more recently, US support for the Kurdish-dominated People’s Protection Units in Syria’s civil war, ties have frequently been strained between the supposed allies. The danger is that Turkey is, for many reasons, drifting away from the West.

This brings us to foreign policy. Turkey is being forced to recalibrate its foreign and regional policy at a time when the Middle East is undergoing a major transformation. Both Russia and Turkey are seeking more influence in an unstable region. Their relationship is a curious mix of cooperative and competitive. Whilst Ankara is well aware of the dangers of creating new risks to its already weakened economy, it also needs to demonstrate its power as a major regional player.

The problem is that Turkey and Russia have serious form going back to the days of the Tsars. For example, the Crimean War in the 1850s was really all about Russian and Turkish rivalry. Since the days of the Ottoman Empire, Turkey has always sought to deny Russia a significant presence to the south or in the eastern Mediterranean. But that is now where Russia is becoming increasingly active – especially in Syria. As Russian influence grows, Turkey’s room for regional influence shrinks. Turkey’s recent accommodation of Russia is therefore historically and geopolitically unusual.

However, given Russia’s military involvement in the Syrian civil war in 2015 – and its determination to support President Assad in power – some form of engagement between Russia and Turkey, Syria’s neighbour, was inevitable. The two sides seem, for the moment, to have settled on a wary cooperation. Russia controls northern Syria on Turkey’s border. When Turkey is frustrated with the West – as it is now over US support for Syrian Kurdish forces and the EU’s doublespeak on enlargement –- it finds in Russia a sympathetic ear.

The third factor is economics. Turkey is a major energy-importing country. It needs low energy prices, particularly given its alarming level of borrowing and an unsustainable current account deficit, much of it caused by its increasing energy needs. Ankara is however in serious economic trouble. This spills over on to the streets of Turkey itself, as recent elections have shown.

The ruling Justice and Development Party (AKP) has won support on the streets by using nationalism to highlight frequent challenges from alleged EU and Western hostility, fear of Islam and foreign pressure against the country. The fragile state of Turkey’s economy now however threatens social and political stability. The country’s economy dipped into a recession since the last quarter of 2018. The lira has lost 30 per cent on the global money market.

Over the next year, the Turkish private sector must pay back at least $150 billion in debts, and in foreign currency too. Unfortunately, it doesn’t have the money. Financially, Ankara is drifting towards national bankruptcy without serious economic reforms – or getting a lot of new money.

However, there are four more years until the next scheduled elections in 2023. The AKP leadership is banking on having time to stabilise the economy, as Ankara believes it can find alternative sources of money.

Two obvious pots of gold are the hydrocarbons beneath the sea off Cyprus and the lure of a sell-out to the East. To deal with the latter first, China’s ‘Belt and Road’ initiative (to buy up ports and infrastructure across the Middle East and eastern Europe) could be a tempting offer for Ankara. Turning to the East offers easy cash – but at a heavy price.

The second cash cow could be hydrocarbons off Cyprus, and Ankara has shown itself determined to get as much as it can and, in the process, warn off any competition. South Nicosia’s optimistic alliance of Italian, French, Israeli, US and Egyptian backers to support their national oil companies’ ambitions is being met with hard words and the threat of maritime force. The balance of power in the eastern Mediterranean is being challenged.

Inside Turkey the first tremors of a domestic political earthquake are being felt, too. With the country in economic turmoil, AKP’s legitimacy is suddenly facing serious challenges. It suffered stinging defeats in municipal elections in March and was humiliated in the recent mayoral election in İstanbul, the key to national political power. Already there is talk of a rival party based on AKP’s original blend of Islamism with democracy and liberal market policies. Both former deputy prime minister Ali Babacan and former president Abdullah Gül are now looking to create a rival party and bid for power themselves.

The result is that politically, economically and abroad, Turkey is at a crossroads; ‘peace at home and with the neighbours’ is a fine slogan, but is looking to be an increasingly distant dream …

Cyprus in World War I

In 1914 Cyprus was a protectorate of the British Empire, leased by the Ottomans in 1878 to provide London with a base in the Eastern Mediterranean. This all changed in 1914 when, following a secret treaty between the Ottomans and Germany, the Ottoman Empire declared war against the Triple Entente powers of Great Britain, France and Russia. The British garrison promptly annexed the island on 5 November 1914.

Despite its proximity to Turkey, Cyprus was never a battlefield during World War I. Constantinople had too many other problems: first, it was flat broke. Second, many of its citizens – such as the Armenians – did not support the war, and the Sultan found himself fighting off enemies on no less than five fronts, as well as at home: the British in Egypt and Mesopotamia; the Russians invading the Caucasus; the Anglo-French landings in Gallipoli; and the desert Arabs rising up in what is today Saudi Arabia.

The British authorities were always concerned that the Turkish Cypriots might turn against the British, since the Ottoman Empire was officially one of Britain’s enemies. Listening stations were set up to spy on Turkish radio messages and spies and saboteurs were smuggled into Turkey. Cyprus was also used as a convalescent home for thousands of sick and wounded British soldiers from the Middle East campaigns. It also became a secure place to hold the thousands of Turkish prisoners of war. The island was on a martial footing throughout the war and various Governors had to fight off repeated attempts by the Army to take over the administration.

Nevertheless many Cypriots played an active part in the war. Thousands volunteered for the British army and they played an important part in the Salonika campaign. By 1916, the Military Commander of the British divisions on the Salonika front requested a Corps of Muleteers to help carry stores and supplies in the mountainous region of Macedonia.

This contribution of thousands of Cypriots supporting British troops on the Macedonian Front is a largely untold story, but Cypriots provided crucial logistical support to the Allied war effort on the Salonika Front. The Macedonian Muleteer Corps had enlisted 9200 men by early 1918.  Another 401 remained at the training centre in Famagusta. They were well paid at 3 drachmas per day and, by March 1919, the Muleteers Corps was 15,910 strong.  It was estimated that 89% of those recruited were Greek Cypriots and 11% Turkish Cypriots. They served in the Macedonian front, in Serbia and in Bulgaria, while at the end of the war some even entered Constantinople with the victors.

Inevitably they suffered losses. In five military cemeteries in Macedonia there are the graves of 30 Cypriot muleteers killed in action between the years 1916-19.

Perhaps the most curious twist of Cyprus’ involvement in the Great War was the attempt to hand the island over to Greece, lock, stock and barrel. By 1916 London was desperate to woo Greece into joining the war. Athen’s nationalist Prime Minister, Venizelos was actually offered complete ownership of the island as a bribe towards Greek dreams of ‘MegaHellas’, a greater Greece, at Turkey’s expense. To the amazement of the Greek Cypriots, King Constantine turned it down, to the fury of his Prime Minister Venizelos, who was sacked. Tempting though the offer was, at the time the King didn’t want to be dragged into someone else’s war.

This call for ‘Enosis’ – union with Greece – would have to wait another half century and for EOKA’s gunmen. But that is another story …

This article first appeared in Cyprus Today in November 2018 to commemorate the centenary of the signing of the armistice to end World War I. The piece is reproduced here with the kind permission of Cyprus Today.

ISIS: The Final Countdown?

Winston Churchill once famously said, ‘battles are the punctuation marks of history.’ Well, we have just avoided a potentially disastrous ‘exclamation mark’ in the bloody history of the Middle East. Whilst the post-colonial Versailles settlement of 1919 is being brutally readjusted to take account of the harsh realities of today’s Muslim world, a major crisis has just been avoided. At Russia’s Black Sea resort of Sochi, Turkey and Russia have agreed to form a joint, demilitarised buffer zone around Syria’s embattled north-western province bordering Turkey: Idlib.

This agreement defuses a growing crisis between Ankara and Moscow by preventing any major Russian-backed government offensive from exploding into ISIS’s final rebellious Syrian redoubt. However, significant obstacles remain; Idlib could still become a flash point.

The problem is that the Middle East is as much of an unexploded bomb today as Europe was in 1914. Sunni Saudi Arabia hates Iran, and Shi’a Iran loathes the Saudis. Shi’ite Assad’s remaining chunk of Syria is the close ally of Iran. Behind the Saudis stand the USA, Britain and France. Behind the Iranians stand the Russians, sometimes the Turks, ever keen to obliterate the Kurds, and perhaps China – and watching nervously from its ringside seat is Israel.

For the past ten years we have all been living with this savage struggle to the death. Muslim has been slaughtering Muslim, all in the name of the Prophet of the religion of Peace and Love – ‘May his name be blessed.’ Now this round is nearly over; or is it?

The Turkish-Russian Sochi deal has been welcomed by all sides as an opportunity to avert the suffering that any major offensive would inflict on the province’s 3 million civilians. UN Secretary-General António Guterres welcomed the agreement, saying that the ‘creation of a buffer zone in Syria’s rebel-held Idlib province should avert an all-out military assault and provide reprieve for millions of civilians.’

It would also avoid the heavy losses that would be incurred by government forces in launching the biggest battle yet of the Syrian war against the cornered rebels. Turkey, the UN and aid groups have warned that any major assault by Russian and government forces backing President Bashar al-Assad against the trapped rebel fighters would lead to a massacre. It could also send 800,000 new refugees fleeing across the border into an already overwhelmed Turkey.

Many of the civilians in Idlib are already refugees from other parts of Syria following the collapse of the opposition resistance in cities such as Aleppo. The consequences of an all-out offensive against Idlib with its hapless civilians and the risk of Turkish troops fighting Russians could have led to a bloodbath.

The agreement is specifically designed to halt this major Russian-Syrian-Iranian attack on Idlib, with its trapped civilians.  The agreement calls for a 9- to 12-mile demilitarised  zone around the borders of the region, safe from Syrian and Russian air-force attack and which must be in place by 15 October. Heavy weapons including tanks, mortars and artillery will be withdrawn and Russian and Turkish troops will police the neutral zone. The Syrian government said that it ‘welcomed any initiative that stops bloodshed and contributes to security and stability.’ President Recep Tayyip Erdogan added, ‘With this memorandum of understanding, I believe we have prevented a major humanitarian crisis in Idlib.’

However, the devil is in the detail. The deal’s success hinges on the withdrawal of an estimated 10,000 fanatical jihadi rebel fighters from the buffer zone, fighting under the banner of Hayat Tahrir al-Sham (HTS), the Syrian franchise of al-Qaida and listed as dangerous terrorists by Russia, the USA and the UN.

These are some of Syria’s fiercest rebels, battle-hardened over years of gruelling warfare. HTS will fight to the death rather than surrender and they have good reason to do so: talks with the government have gone nowhere. In recently recaptured parts of the country, Assad’s goons have promptly arrested former rebels and opposition officials despite assurances of amnesty. Many have disappeared into Assad’s torture dungeons. ‘It’s either die, or surrender – and then die,’ says one rebel leader.

Despite these problems, Iranian Foreign Minister Mohammad Javad Zarif (a staunch supporter of Assad) tweeted: ‘Diplomacy works.’ However, he added that his visits to Turkey and Russia in recent weeks had achieved ‘a firm commitment to fight extremist terror.’ Putin himself added, ‘Russia and Turkey reiterated their commitment to continue anti-terrorism efforts in Syria in any of its forms or manifestations.’

Quite how this agreement to quarantine Idlib helps to stamp Islamic terrorism remains unclear because the deal is very fragile. With jets from at least six countries – Israel, Russia, Syria, Turkey, Britain and America – roaming the skies over Syria, the risk of mistakes leading to further escalation of the fighting are just a pilot’s blink away. Also, where will the rebels go?

Nevertheless, the international consequences of Sochi are important. Russia has scored a major diplomatic victory by striking a deal with Turkey. Moscow has avoided damaging its growing strategic relationship with Ankara, whilst achieving its own aims in Syria without more bloodshed. The Syrian war may be ending.

However, some things have not changed. ‘Russia doesn’t like the rebels and they want to help Assad lock down his victory; but they also have strong incentives to continue courting the Turks,’ said Aron Lund, an expert on the region. ‘Syria is just a small part of what Putin cares about. If he can just make the Syrian conflict quiet and unthreatening with Assad still in power, then Russia has won the war ….’

Idlib’s locals have mixed emotions about the Sochi deal. Abdulkafi Alhamdo, a 32-year-old teacher living in Idlib remains wary. ‘After seven years, if we trusted anyone we would be fools. Whenever we trust anyone they trick us,’ said Mr Alhamdo, who lived through the siege of Aleppo before fleeing to Idlib.  He added that he was ‘so happy, and so sad’ about the deal, because it still leaves them in limbo.  ‘People might be able to live again. Children might know there is tomorrow without planes. But we are still in nowhere. Refugees forever.’

Others have spotted the loopholes in the agreement. Thanassis Cambanis of The Century Foundation warns: ‘The gaping hole is that “terrorists” are still fair game. Putin has endorsed a lot of truces, but then Russia proceeded to bomb groups it defines as terrorists, because it says they weren’t part of the wider deal.’

This truce might be different. Putin’s own credibility is at stake, having made such a high-profile deal with President Erdogan. Turkey and Russia are increasingly becoming trade and diplomatic partners. Russia is building Turkey’s first nuclear reactor. The Kremlin also sees the strains between Turkey and western countries as a wonderful opportunity to divide and weaken the NATO alliance, to which Turkey provides the second largest number of troops. Putin has a personal stake in the Idlib agreement.

However, whilst for the Jihadis the battle may be lost, their long war is not over, because crushing ISIS in Syria will not eradicate the real problem. If the jihadis escape, the deadly spores of terrorism will merely disperse to spread their Islamist terrorism, which is already ‘global and growing.’ Islamist extremists caused 84,000 deaths in 2017 and intelligence agencies have identified 121 groups sharing a common ideology, now operating worldwide. They killed 84,000 people – nearly 22,000 of them civilians – in 66 countries in 2017, according to latest reports.

Even Whitehall admits that a convicted jihadi terrorist is being released onto the streets of Britain nearly every week. Home Office figures show that 46 prisoners held for terrorism offences were released in 2017 (The Telegraph, 13 September 2018)

ISIS and al Qa’ida are still very dangerous. Whatever happens in Idlib, we have not heard the last of them. The fallout from Syria will be with us for years.

What’s Going On with the Lira?

When Turkey sneezes, then the Turkish Republic of Northern Cyprus (TRNC) catches a cold. Nowhere is this more true than in the TRNC’s currency, the Turkish lira.

The Turkish Army bled to liberate the Turkish Cypriots in 1974. Turkish soldiers’ graves lie on TRNC soil. Since that legal intervention to protect Turkish Cypriots over four decades ago, Ankara has maintained a garrison in the North to deter any foolish Greek adventures. From this benevolent occupation many other things have flowed: Turkish taxpayers pay for the TRNC; Turkish money provides jobs and infrastructure; and, above all, the TRNC uses the Turkish lira as currency.

But of late something has gone badly wrong. In the past few months the Turkish lira has plummeted in value on the international money markets. The impact on the TRNC is cataclysmic.

So what has gone wrong? The simple answer is that Turkey, having emerged from the global financial crisis of 2008-09, borrowed heavily in foreign currencies to fund its government’s programmes. With interest rates at an all-time low this made sense. Cheap foreign money could boost growth.

This plan worked well initially. The Turkish economy has grown by 300 per cent since the early 2000s, riding an unprecedented wave of construction and consumption. Foreign investment poured in. Huge projects – such as the USD $11bn (GBP £8.6bn) Istanbul–Izmir motorway, a high-speed Ankara-Istanbul rail link and plans to build the world’s largest airport – have soaked up foreign loans. The economy grew by a whopping 11 per cent in 2011.

However massive borrowing at low interest rates cannot last for ever; it has to be repaid. Now the chickens have come home to roost. To make matters worse, many of Turkey’s big construction companies have borrowed too much the past decade and are finding it difficult to repay them. This makes the economy very vulnerable.

Also, the geopolitical game has changed. US interest rates have got tighter and the dollar is strengthening. Any country that has borrowed heavily from abroad to fill its budget deficit is suddenly under pressure. Now Turkey has to repay its debts in foreign currency and there’s the rub: it can’t afford to.

Turkey has a deficit in its international trade: it imports more than it exports, which means that it spends more than it earns. This deficit has to be financed, either by foreign investment or by more borrowing from the world’s money markets. There’s nothing unusual about that: Britain’s Treasury does just that, year in year out.

Turkey’s position is not like the UK, however. With a growing deficit of national income, or GDP, in 2017, investors are becoming increasingly wary of lending more money to Turkey, for three reasons.

  • Ankara has a lot of debt due for repayment in the near future – loans that have to be repaid or more money borrowed from someone else to pay them off. To the financial markets, the debt has to be ‘refinanced’. However, borrowing from Peter to pay Paul has never been good economics, either personally or nationally. Credit rating agencies like Fitch estimate that Turkey’s total debt is a whopping USD $223 billion – about a quarter of Turkey’s GDP – USD $50 billion of which falls due in 2019, USD $20 billion by December 2018. Where will Turkey find that money?
  • Since many big Turkish companies have borrowed in foreign currency, nervous investors suspect that the companies may have over-reached themselves. These loans become more expensive to repay if the value of the national currency declines – which it has. The result is that a number of major Turkish corporations, among them Doğuş Holding and Yıldız Holding, are already in trouble and need to restructure their loans. Türk Telekom has actually been taken over by its creditors after Oger Telekom defaulted on a USD $4.75 billion debt.
  • Investors are increasingly reluctant to put their money into Turkey. They are actually selling off their holdings of Turkish lira, forcing the value down. The nervous markets are causing a self-perpetuating fire sale of lira. Like lemmings going over a cliff, bankers everywhere are trying to dump their lira holdings as fast as possible at knockdown rates.

In other words, Turkey’s reliance on the foreign investment to keep itself afloat is drying up. For many years, this did not matter as interest rates in developed economies were at record lows, so borrowing from abroad remained cheap. Now those days are gone.

Exchange rate (TL-GBP): 2008-present

This growing currency weakness also aggravates Turkey’s persistent inflation problem, because as the lira grows weaker imports become more expensive. Just like the TRNC, Turkey relies on imports for much of its goods.

At the same time, markets are alarmed by the refusal to raise interest rates, which is the normal economic weapon to tempt timid investors back into lending their dosh. The recent US sanctions on Turkey have compounded this whole problem. ‘With a backdrop of rising rates and a stronger dollar, the imposition of US sanctions were the final ingredient for a perfect storm for the economy and Turkish assets,’ explains Nafek Zouk at Oxford Economics.

The impact of all this high finance has hit ordinary Turks and Turkish Cypriots hard. Tourist Janet Cowley, a foster carer and former police officer, said: ‘I’ve been paying for things in pounds sterling, just so the people here have some money. It’s terrible for them. Good for the tourists, though.’

Business owners are similarly concerned. In the TRNC many of the goods in the shops and supermarkets are imports bought in foreign currencies. The businesses that have taken out loans in dollars or in euros are suffering the most. One shopkeeper explains: ‘We have to pay for our stock in dollars, euros or pounds and then sell them for lira. We now need more lira – a lot more lira – just to pay our bills.’

The effect on inflation is obvious to anyone living in the TRNC. All energy has to be imported and oil is priced in dollars. Retail prices have shot up by at least 20 per cent on imported goods. Profiteering has become rampant and blatant, with some stores relabelling prices overnight on goods that have been on their shelves for weeks and were paid for months ago. Sadly we should never underestimate the Levantine temptation to grab a quick buck and let the customer rot.

The other great worry for the TRNC is that many high-value goods, such as houses or cars, are priced in pounds sterling. This means the buyer or a shopkeeper renting a shop and taking in lira as income has to find a lot more lira suddenly – as much as 40 per cent more in some cases. In turn, that means that a lot of shopkeepers will be unable to find enough lira to pay their increased bills. This leads to bankruptcies or worse: evictions. Pakistani Gastarbeiter (migrant workers) paying GBP £250 for a one room shared flat, suddenly find that TL Turkish lira symbol 8x10px.png1,800 a month won’t keep a roof over their heads, let alone a chicken on the plate. The social consequences, and dangers, of the collapse of the lira on ordinary working people throughout the TRNC will be profound – and worrying.

So what is the answer this financial crisis? The first step would normally be to put up interest rates or capital controls. Ankara has insisted it will not do that. Instead Turkey is buying time with a US $15bn loan from embattled Qatar, desperate for an ally in the Arab world. This is a fleabite, however, and the money won’t last long. In the background are Ankara’s new best friends, Moscow and Beijing. If China’s rack record is anything to go by, look out for the PRC bankrolling Turkey by buying up everything in sight, from Istanbul Harbour to factories and even an airport or two. Ankara is now looking to the East for salvation.

Money Makes the World Go Round

For the second time in a month, to my surprise, I find myself agreeing with President Putin.  Speaking at the International Economic Forum recently he warned: ‘We don’t need trade wars today … we need a comprehensive trade peace.’

Cuddly old Vlad was really warning us that there’s a financial firestorm brewing. Looking at what is going on with the euro and the Turkish lira, it’s hard to disagree.

The euro is really our old friend the Deutsche mark, cunningly devalued and disguised to pay for German re-unification, and now Europe’s chokehold currency of no choice. For example, any independent Scotland joining the EU would nowadays be ‘forced’ to accept the euro. Difficult for the Scots: not for nothing did Thomas Carlyle call economics the dismal science.’

Dismal science or not, money makes the world go round – and always has done. Even St Paul admitted: ‘The love of money is the root of all evil.’ This titanic battle for economic power rages around us every day, as China and America tussle behind the scenes over who owes how many dollars to whom and what they are worth, whilst a worried Commission in Brussels watches nervously as its great dream of a superstate called ‘Europe’ begins to disintegrate.

Because the UK’s ‘Brexit’ is the least of the EU’s problems. With Poland refusing to toe the Merkel party line, the Balkan states disobeying Juncker’s ‘diktats’ on immigration, and now a major trade war looming with the USA, Brussels has its hands full. Money is at the heart of it all. The unfolding Italian political train crash that is the new populist, anti-establishment Eurosceptic government is Brussels’ worst nightmare. It threatens their euro. Austrian chancellor Kurz gives the game away, bleating: ‘We saw in Greece how dangerous it is if a country has a bigger and bigger debt and I hope that we will not have a second Greece in our neighbouring country, Italy.’

The reason? Money and debt. Frightened hard currency has been haemorrhaging out of cash-strapped Italy for months, driving it even further into the red, amid fears of a Greek-style euro debt crisis which would bring the country to its knees. The new Italian government is even threatening to quit the euro and set up a parallel currency.

This is serious, because Italy is the eurozone’s third largest economy, nearly ten times the size of Greece’s.

The former chief economist of the IMF – Olivier Blanchard – believes the eurozone is heading for an ‘horrific crisis,’ denouncing Italy’s popular new government’s plans as ‘likely to violate all EU and domestic fiscal rules and put debt on an unsustainable trajectory’. What he means is that Rome is inviting an economic and political war, because the big French and German banks risk losing billions if Italy says, ‘no more pay offs.’

Brussels now has the beginnings of a serious rebellion on its hands. However, once again Italian voters have been over–ruled by EU technocrats, pressuring President Mattarella to ignore the voters, just as the Berlusconi government was toppled in 2011 by Brussels and the European Central Bank, in what was effectively a ‘soft coup.’

This is dangerous territory.

The Italian president’s refusal to accept the Lega-Gillini finance minister because he ‘could provoke Italy’s exit from the euro’ is dynamite. The political message to Italian voters is clear: whoever you vote for, the eurozone rules. A Lega spokesman explained: ‘You have to swear allegiance to the god of the euro in order to be allowed to have a political life in Italy. It’s worse than a religion.’

In Brussels,  Juncker openly threatens: ‘There can be no democratic choice against the European treaties. One cannot exit the euro without leaving the EU,’ and Günther Oettinger, European Budget Commissioner for Budget, actually said: ‘This will teach the Italians to vote for the right thing.’

Because the ECB and Brussels will fight to the last drop of Italian money to stop anyone escaping from their eurozone straitjacket.  The French Finance Minister warns: ‘If the new government takes the risk of not respecting its commitments [in other words, “If Italy doesn’t pay its huge debts to our big French and German banks”], the financial stability of the eurozone will be threatened. Everyone must understand that Italy’s future is in Europe and nowhere else. … there are rules that must be respected.’

This push to smother Italy’s eurosceptic rebellion, as they muzzled Syriza in Greece, comes from a worried Berlin, Brussels, and the EU power structure. But this time they may have blundered into a trap, because the EU’s economic problems grow worse every day. Now debt-ridden Spain admits it is in serious trouble. And Spain owes euro banks ‘zillions’, too. The bottom line for the EU is that if the Italians and Spanish welch on their euro debts, then the euro is finished – with huge international bankruptcies on the cards.

‘So what?’ says the man in the Kyrenia café, ‘How do big economic problems affect me, my family and my bank account? Who cares?’

The answer to the puzzled denizens of Turkish North Cyprus is ‘look at your money.’ Something very odd has happened to their Turkish lira. One year ago, 1 GBP pound sterling bought you 4.30 TRY; ten years ago, on 31 May 2008, a quid bought just 2.12 lira. And today? Going to press, a pound buys you around 6 lira. That’s what international currency fluctuations do to the expat, watching his pension. That’s how small Turkish Cypriot businesses, being paid in lira whilst paying for their rents in sterling, go bust. The reason? Money: because the Turkish lira is now in deep international doo-doo.

For years, Ankara’s AKP government has funded its massive vote-buying economic programme with money borrowed from overseas investors, attracted by Turkey’s generous interest rates. No less than 70% of Turkey’s deficit is covered by short-term foreign loans.

The problem is paying off those loans. Interest payments were biting deeper and deeper into Ankara’s Central Bank’s precious reserves of hard currency US dollars or euros. Loans began to dry up, so the Central Bank increased interest rates to tempt the punters and keep the all-important foreign dosh flowing. The problem is that at 13.5% the interest payments were expensive – but, at 16.5%, they could become ruinous.

At which point Turkey’s would-be President stepped in, boasting that he personally intends to run the economy when he wins the election on 24 June to become all-powerful leader. On his orders, interest rates will be slashed to 10% to save Turkey’s money. Result? Instant panic and predictable flight by spooked, nervous lira investors. Consequence? A market panic with foreigners desperate to unload their lira while they can. ‘Cheap? Your real, genuine Turkish lira. A real bargain, guv … Gotta sell.’

Because that’s what markets do. That’s how economics works: supply and demand. No demand for lira, they go dirt cheap. The result is that Turkey will either have to devalue, introduce capital controls or accept that, whatever their ‘Dear Leader’ thinks, foreigners will decide just what the Turkish lira is truly worth: and foreign investors are not impressed.

As an anonymous fund manager at a major asset management firm, complained: ‘Erdogan is fighting the extremists, he is fighting after the failed coup – now he is fighting the financial markets, and that is dangerous …. You can fight your domestic foes all you want; but when you are trying to take on the global financial market, that is a battle you can’t really win.’

And the EU? Watch this space. Of one thing we can be sure: the Commission, Berlin, Paris and Frankfurt will gang up in a darkened alley, ready to bludgeon, beat, bribe, browbeat and bully Italy to keep their precious euro together at all costs. Once again, the financial gloves are off. It’s going to get ugly. Just ask the Greeks.

Money really does make the world go round.

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