Each new round of US tariffs and restrictive measures not only causes financial crises in sanctioned countries, but also provides opportunities for new strategic alliances.
The US has unleashed a tariff war with China, and Japan and Germany seized the opportunity to ensure greater participation in the fastest growing passenger car market in the world.
Washington has imposed sanctions on Turkey, and Germany has already announced that it will provide economic aid to Ankara, while Chinese banks have also provided loans of billions of dollars to the Ottoman country.
US President Donald Trump has condemned German Chancellor Angela Merkel for plans on buying Russian natural gas through the Nord Stream 2 pipeline, and a few days later at a summit between Merkel and Russian President Vladimir Putin, the agreement for the pipeline was confirmed, as well as a pact to help rebuild Syria in cooperation with Russia.
The US imposed economic sanctions on Iran and Western insurance companies stopped making oil transport insurance there. In response, China has decided to use Iranian tankers with Iranian insurance for its fuel purchases from that country.
German Foreign Minister Heiko Maas stressed in July that Europe “will not be intimidated by President Trump.” The head of the German diplomacy proposed a new system of international payments independent of the dollar, a new system of interbank transfers and a European Monetary Fund to protect European companies from US sanctions. He also suggested introducing a digital tax to US companies that operate online.
However, Maas’ “manifesto” for the time being is just words, according to economist David P. Goldman in the Asia Times . According to him, this is because European companies do not want to test US determination when it comes to sanctions against Iran or Russia.
Opportunity for US Competitors
In the longer term, however, significant changes in investment patterns in response to the new US assertiveness are likely to support China’s Euro-Asian ambitions, Goldman notes. Of course, Beijing is willing to open its markets to Brussels and Tokyo, the main competitors of the United States, in exchange for their aid during the trade war.
Taking advantage of the Turkish financial crisis
The European and Chinese response to the Turkish financial crisis, lasting and exacerbated by US sanctions, shows how fast economic alliances are changing.
Instead of asking for help from the International Monetary Fund (IMF), Erdogan is looking for new friends. Qatar has committed to invest $15 billion in projects and economic investments in Turkey.
Moreover, it is more than likely that China will also participate in the recovery plans of the Turkish economy, emphasizes Goldman. According to the Chinese financial media The Asset, “the economic crisis in Turkey forces President Recep Tayyip Erdogan to seek financial aid, leaving the door open for China to seize an unmissable opportunity to accelerate its ambitions for the One Belt initiative, A Silk Road in the Region”.
According to the economist, none of this is surprising: the emirate pays Turkey for political protection and the Asian giant has always regarded Turkey as the western tip of its Eurasian logistics chain.
The surprise came from Berlin, where Merkel’s government considers the idea of financial support for Turkey in exchange for Ankara’s cooperation in managing the Syrian refugee crisis and other issues.
Germany, in theory, is a US ally, and Washington is in full confrontation with Turkey over the detention of a US pastor, among other issues. However, Berlin decided to exploit Turkey’s urgent economic needs to push its own agenda at the expense of its alliance with Washington.