Will Turkey Drop the US Dollar?

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Will Turkey free its Lira currency from the weight of the US Dollar? This is a key question related to the emergence of new centers of alternative power countering the US, such as BRICS, towards which Turkey has been taking active steps to participate.

Already having been undertaken by a number of countries since the beginning of the 2010s and steadily strengthening in recent years, the process of phasing out the US dollar as a trade and reserve financing currency is one of the most important trends in the emergence of a multipolar world. 

The director general of the Research Center for Economic and Foreign Policy (EDAM), Can Selcuki, has commented on the prospects of Turkey joining the de-dollarization initiative.

According to Selcuki, “Turkey’s intention to negotiate with countries using domestic currency can be seen as an attempt to rid the Lira of the Dollar’s pressure, which is especially important in view of the worsening crisis in the Turkish-American relationship and the introduction of sanctions against Turkey. ”

“Turkish President Recep Tayyip Erdogan made several important statements during the recent BRICS summit, and in particular if the West does not abandon the policy of pressure against Turkey, Ankara will look for alternatives, and the practice of trade with the use of currency”, Selcuki explained.

“However, it is still difficult to say with certainty how realistic this step is. Despite the fact that significant volumes of products imported by Turkey come from China, Germany and Russia, the prices of many types of products vary. The rejection of the dollar is possible if there is an implementation of the valuation of domestic products with values ​​in full local currency,” he explained”, the analyst qualified.

For Can Selcuki, this option seems unrealistic, since “the Turkish lira is being heavily pressured, and its value is falling against the US dollar and the euro. Thus, Turkey’s desire to market with a number of countries in national currency is a step toward freeing the lira against dollar pressure, especially under present circumstances, when Turkish-American relations are going through a serious crisis, and Washington imposed sanctions against Ankara,” he continued.

The notion that de-dollarization, in terms of its effectiveness, should be applied not only in international trade but also in national trade, was recently expressed by an economist and professor at the Moscow State Institute of International Relations (MGIMO), Valentin Katasonov.

According to Katasonov, the process of de=dollarization must be carried out in complex and staged ways.

“Firstly, the model for issuing banknotes must be modified so that the national currency is not supported by the US currency, but by the real projects of the national economy. Secondly, it is necessary to abandon the use of foreign currency when conducting domestic transactions. And third, the use of the dollar in cross-border monetary transactions must be stopped,” the expert explicated.

Whether Turkey will successfully move towards dropping the US Dollar therefore depends on its national economic policies, as well as on Ankara’s ability to link up with rising multipolar initiatives, such as BRICS. Both will require a policy revolution on the part of Turkey, which is currently uneasily straddling the fence between its old commitments to the US and NATO bloc and the opportunities presented by Eurasian and multipolar alliances.

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