We at notes will sometimes put an issue on the radar screen that may not have present value for trading, but may well have significance in the near future and ultimately have an effect on global money flows that we hold dear. Turkey fits that profile.
During the weekend, Israeli commandos boarded a flotilla of boats that were trying to break a long-established blockade of Gaza. Israelis’ actions seemed to be irrational and ill-thought out, but we don’t wish to revisit that as it is an issue for the “pundits.” What bothers us at Notes is the fact the actions carried out by those attemting to run the blockade were aboard a Turkish-flagged ship. Turkey, who has long held friendly relations with Israel, provided the diplomatic cover for what was in no uncertain terms a preconceived belligerent action meant to attract media attention. Why would a “friend” license its relationship to agent provocateurs? This action toward a friend is beginning to look like a pattern. During the Iraq invasion in 2003, the Turkish government did not allow the U.S. Fourth Army to use its territory to invade from the north, thus prolonging the war and resulting in more U.S. casualties. In the last year, Turkey has also been a blocking agent in the U.S. efforts to tighten the screws on Iran.
Turkey has been a moderate and pragmatic Muslim-led country and is a full member of NATO. Further, until recently, Turkey appeared to be on the fast track for full membership in the EU until the French appeared to slow its entry down and perhaps even scuttle the idea. Turkey may well be moving away from Europe in an attempt to carve out a position as the leader of the Islamic world and end its affair with the WEST. The Turkish Prime Minister, Recep Tayyip Erdogan, has been under fire from his own military for years for involvement in combining the clerical with the secular in Turkey politics–previously a no no–and may well be looking to international affairs to establish Turkey’s role in the Islamic world. This is our hypothesis, but is deserves watching as Turkey has been a recipient for foreign investment and is a heavyweight in the emerging markets. We caution that any moves by Turkey to break with the West would certainly disrupt Nato and other alliances.
We found of more then passing interest in a piece by Chris Patten in today’s Financial Times, “Europe must focus on what works”, this quote buried deep in the article: “Above all, we should understand that the reallly EXISTENTIAL issue for Europe is how we handle Turkey’s membership application.” Again, we caution to put events in Turkey on your radar screens. Its implications for global macro events is potentially huge.