As options narrow on Syria, Trump prepares to drop sanctions hammer on Turkey

By Idrees Ali and Humeyra Pamuk

WASHINGTON (Reuters) – President Donald Trump’s administration is set to impose economic sanctions on Ankara, potentially as early as this week, for its incursion into northern Syria, one of the few levers the United States still has over NATO-ally Turkey.

Using the U.S. military to stop the Turkish offensive on U.S.-allied Kurdish fighters was never an option, defense officials have said, and Trump asked the Pentagon on Sunday to begin a “deliberate” withdrawal of all U.S. troops from northern Syria.

After Treasury Secretary Steven Mnuchin said on Friday that Trump had authorized “very powerful” new sanctions targeting Turkey, the administration appeared ready to start making good on Trump’s threat to obliterate Turkey’s economy.

On Sunday, Trump said he was listening to Congress, where Republicans and Democrats are pushing aggressively for sanctions action.

“Dealing with @LindseyGrahamSC and many members of Congress, including Democrats, about imposing powerful Sanctions on Turkey,” Trump said on Twitter, referring to the loyal Trump ally and U.S. senator who lambasted the president last week.

“Treasury is ready to go, additional legislation may be sought. There is great consensus on this. Turkey has asked that it not be done. Stay tuned!” he added.

A U.S. official, speaking on condition of anonymity, told Reuters that sanctions were “being worked out at all levels of the government for rollout.”

Trump is struggling to quell harsh criticism, including from some of his staunchest Republican backers, that he gave Turkish President Tayyip Erdogan a green light to attack the Kurds last Sunday when he decided to pull a small number of U.S. troops out of the border area.

Turkey’s offensive aims to neutralize the Kurdish YPG militia, the main component of the Syrian Democratic Forces (SDF) and seen by Ankara as a terrorist group aligned with Kurdish insurgents in Turkey. But the SDF has also been Washington’s key ally in fighting that has dismantled Islamic State’s jihadist “caliphate” in Syria.

Trump’s decision, rooted in his long-stated aim to get the United States out of “endless wars,” has prompted bipartisan concerns that it opens the door to the revival of Islamic State.

While sanctions appear to be the strongest tool of deterrence, the United States and its European allies could also ponder arms sales bans and the threat of war crimes prosecutions.

“Good decision by President @realDonaldTrump to work with Congress to impose crippling sanctions against Turkeys outrageous aggression/war crimes in Syria,” Graham tweeted.

‘MONUMENTAL FAILURE’

It is unclear what sanctions are in the order drafted last week, which Mnuchin said was ready for activation at any moment, and whether they would be as severe as what lawmakers are proposing.

Representatives Eliot Engel, the Democratic chairman of the U.S. House of Representatives Foreign Affairs Committee, and Mike McCaul, the committee’s senior Republican, introduced a bill last Friday that would sanction Turkish officials involved in the Syria operation and banks involved with Turkey’s defense sector until Turkey ends military operations in Syria.

It also would stop arms from going to Turkish forces in Syria, and require the administration to impose existing sanctions on Turkey for its purchase of a Russian S-400 missile-defense system.

Turkey’s Foreign Ministry said late on Friday that Turkey would retaliate against any steps aimed at countering its efforts to fight terrorism, in response to the announcement of possible U.S. sanctions against Turkey.

The United States has successfully gone after Turkey with sanctions and tariffs before, hitting Ankara last year to pressure authorities to return an American pastor on trial for terrorism charges.

The United States could look at targeting arm sales to Turkey, something a number of European countries have already done. France said on Saturday that it had suspended all weapon sales to Turkey and warned Ankara that its offensive in northern Syria threatened European security.

The White House could also look at increasing pressure on Turkey over reports of human rights abuses during the offensive, with a threat of war crimes prosecutions.

The United States is looking into reports that a Kurdish politician and captured Kurdish fighters were killed in northeastern Syria amid Turkey’s offensive, a State Department spokesman told Reuters, adding that Washington found the reports disturbing.

In response to the reports, the U.S. official said: “This is awful. All these are among the issues that is addressed

by our executive order,” referring to the sanctions.

Experts doubted that any of the U.S. punishments would make Erdogan change his mind, given his long-held belief that the Kurdish fighters in Syria threaten national security and whom Ankara sees as a branch of the Kurdistan Workers Party (PKK).

“This is a monumental failure on behalf of the United States,” said Aaron Stein, director of the Middle East program at the Foreign Policy Research Institute think tank.

Stein said it would be the Syrian government or Russia, not American sanctions, that could stop the Turkish operation.

“The only thing that will stop them is if the regime or the Russians move in significant numbers to where they stop,” Stein said.

The Syrian army will deploy along the length of the border with Turkey in an agreement with the Kurdish-led administration in northern Syria to help repel a Turkish offensive, the Kurdish-led administration said on Sunday.

The United States does have one person that Erdogan has long wanted extradited: the U.S.-based Muslim cleric Fethullah Gulen, accused by Turkey of orchestrating a failed 2016 military coup against Erdogan.

U.S. officials have said the courts would require sufficient evidence to extradite the elderly Gulen, who has denied any involvement in the coup and has lived in self-imposed exile in the United States since 1999.

(Reporting by Idrees Ali and Humeyra Pamuk; Editing by Mary Milliken and Peter Cooney)

Turkey says it strikes Syria-Iraq border ahead of offensive

By Orhan Coskun and Daren Butler

ANKARA/ISTANBUL (Reuters) – Turkey’s military struck the Syrian-Iraqi border to prevent Kurdish forces using the route to reinforce northeast Syria, as Ankara prepares to launch an offensive there after a surprise U.S. troop pullback, Turkish officials told Reuters on Tuesday.

Turkey says it is ready to advance into northeast Syria, after the United States began pulling back troops from the Turkey-Syria frontier in an abrupt policy shift widely criticized in Washington as a betrayal of America’s allies.

The U.S. move will leave Kurdish-led forces long allied to Washington vulnerable to attack by the Turkish Armed Forces (TSK), which brands them terrorists because of their links to Kurdish militants who have waged a long insurgency in Turkey.

Giving details of the overnight strike, a security official said one of the main goals was to cut off transit route between Iraq and Syria often used by Kurdish armed groups “before the operation in Syria”.

“In this way, the group’s transit to Syria and support lines, including ammunition, are shut off,” the official said.

It was not clear what damage was done or whether there were casualties. Details of the strike, a joint operation by Turkey’s intelligence service and the military, were hazy. One official described them as an air strike, while the other said the site was made “unusable through various means”.

President Donald Trump meanwhile denied he had abandoned the Kurdish forces, the most effective U.S. partners in fighting Islamic State in Syria. But he praised Turkey as a trade partner, in a softening of tone hours after threatening Ankara’s economy if it acted “off limits” in Syria.

Amid deepening humanitarian concerns, U.N. Secretary-General Antonio Guterres urged all parties in northeast Syria to exercise maximum restraint and protect civilians.

Signaling a further potential shift in the region’s power balance, the Kurdish-led forces said they might start talks with Damascus and Russia to fill a security vacuum in the event of a full U.S. withdrawal from the Turkish border area.

Turkey sought to underscore its determination to act. “The TSK will never tolerate the establishment of a terror corridor on our borders. All preparations for the operation have been completed,” the Turkish Defense Ministry said.

ROCKET SYSTEMS

But a Reuters witness saw no sign of military activity near the Turkish border town of Akcakale, across from Syria’s Tel Abyad. Howitzers were placed behind earth embankments on Turkey’s side of the border, pointed toward Syria.

Some 60 km (40 miles) to the west, multiple launch rocket systems mounted on two trucks were deployed behind earth embankments near Suruc, opposite the Syrian border town of Kobani. Artillery was also stationed in the area, and soldiers wandered around a nearby military camp.

U.S. forces evacuated two observation posts at Tel Abyad and Ras al Ain on Monday, a U.S. official said.

Trump’s warning on Turkey’s economy on Monday appeared aimed at placating critics who accused him of abandoning the Syrian Kurds by pulling out U.S. forces. The decision drew criticism from Democrats and a rebuke from some of his fellow Republicans in Congress, including Senate Majority Leader Mitch McConnell.

“As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!)” Trump tweeted.

His remarks, reiterated on Tuesday in slightly modified form, met an angry response in Turkey, including from opposition party politicians such as Iyi Party leader Meral Aksener.

“Threatening Turkey’s economy is a diplomatic catastrophe,” she told her party’s lawmakers in a speech in parliament. “The best response to this insolence is to go into the east of the Euphrates and break the terror corridor.”

But on Tuesday, Trump tweeted: “So many people conveniently forget that Turkey is a big trading partner of the United States … They have been good to deal with.”

“WONDERFUL FIGHTERS”

As for the Kurds, Trump said their “wonderful fighters” continued to receive U.S. help with finance and weapons.

The Kurdish-led forces have denounced the major U.S. policy shift as “stab in the back”.

Mustafa Bali of the Kurdish-led Syrian Democratic Forces (SDF) said the continued Turkish military buildup on the border, together with information about further mobilization of Turkey-backed Syrian rebels, indicated that “an attack is imminent”.

Syrian Kurdish official Badran Jia Kurd said Kurdish-led authorities in northern Syria may open talks with Damascus and Russia U.S. forces fully withdrew from the Turkish border area.

His comments to Reuters reflect the predicament of Kurdish-led forces in northern Syria after the partial withdrawal of U.S. troops who in effect shielded the area from Turkish attack.

“At that time we may hold talks with Damascus or the Russian side to fill the void or block the Turkish attack,” he said.

Syria insisted it would defend itself against any Turkish assault. Damascus, however, was unable to prevent Turkey taking control of a swathe of northwestern Syria earlier in the war.

Russia, Syrian President Bashar al-Assad’s strongest foreign ally, said it was not told in advance by Washington or Turkey about any agreements to pull U.S. troops from the northeast, adding it was watching the situation very closely. Iran, another Assad ally, voiced opposition to any Turkish operation in Syria.

Germany and Britain expressed concern about Turkey’s plans for military action. German government spokeswoman Ulrike Demmer said a military intervention would “have fatal security, political and humanitarian consequences”.

Turkey, which hosts 3.6 million Syrian refugees, plans to resettle two million refugees in northern Syria. Turkey’s lira <TRYTOM=D3> lost 2% of its value against the dollar to hit its weakest since early September, but edged off its lows to 5.8195 on Tuesday.

Ties between Ankara and Washington have long been tense over a range of issues including Syria policy and Turkey’s purchase of a Russian missile defense system.

(Additional reporting by Tuvan Gumrukcu in Ankara, Rodi Said in Qamishli, Syria, Mert Ozkan in Akcakale, Turkey and Babak Dehghanpisheh in Geneva, Ellen Francis in Damascus; Writing by Daren Butler; Editing by Dominic Evans, William Maclean)

Turkey rejects U.S. ultimatums, says it will not back down on Russian S-400s

FILE PHOTO: A view shows a new S-400 "Triumph" surface-to-air missile system after its deployment at a military base outside the town of Gvardeysk near Kaliningrad, Russia March 11, 2019. REUTERS/Vitaly Nevar/File Photo - RC1BFE102410

By Tuvan Gumrukcu

ANKARA (Reuters) – Turkey will not back down from its decision to buy Russian S-400 missile defense systems despite U.S. warnings that it will lead to Ankara’s exclusion from the F-35 fighter jet program, Foreign Minister Mevlut Cavusoglu said on Thursday.

In what has become the main source of tension between Ankara and Washington, the NATO allies have sparred publicly for months over Turkey’s purchase of the S-400s, which Washington has said could trigger U.S. sanctions.

U.S. Acting Secretary of Defense Patrick Shanahan last week sent his Turkish counterpart a letter warning that Ankara would be pulled out of the F-35 jet program unless it changes course from its plans to install the defenses.

In what was Turkey’s first direct response to the letter, Cavusoglu said no one can give Turkey ultimatums.

“Turkey will not back down from its decisions with these kinds of letters,” he said. “Turkey bought S-400, it is going to be delivered and stationed in Turkey.”

The S-400s are not compatible with NATO’s defense systems and Washington says they would compromise its F-35s, which Turkey also plans to buy. Turkey has proposed that the allies form a working group to asses the impact of the S-400s, but has yet to receive a response from the United States.

Cavusoglu on Thursday repeated Turkey’s call for the joint working group, saying experts from both countries should come together to evaluate U.S. concerns.

A day earlier, President Tayyip Erdogan said that Turkey had completed the deal with Russia and that the systems will be delivered in July. Russia has said it will begin the delivery of the systems in July.

Erdogan also said that Ankara would challenge its potential removal from the F-35 program on every platform and hold those who exclude Turkey accountable.

The United States has threatened to impose sanctions on Ankara under its Countering America’s Adversaries Through Sanctions Act (CAATSA), the possibility of which has spooked investors and caused a selloff in the lira this year.

The lira stood at 5.8460 at 1029 GMT on Thursday, weakening from around 5.8320, where it stood prior to Cavusoglu’s speech. It was down some 0.7% from Wednesday’s close.

While Turkey has dismissed the U.S. warnings, Washington has said discussions are taking place with Ankara on selling Turkey rival Raytheon Co-Patriot defense systems. But, Erdogan has said the U.S. offer was not “as good as the S-400s”.

Defense Minister Hulusi Akar has said Turkey is working on a response to Shanahan’s letter and that it will be delivered in coming days.

The ministers later spoke by telephone on Thursday and discussed the letter, Turkey’s defense ministry said, adding that Akar had “emphasized the improper wording not in line with the spirit of the Alliance” in the letter during the call.

Israel’s deputy Defense Minister Eli Ben-Dahan said the strains between Turkey and the United States could help strengthen ties with Israel and boost the country’s participation in the F-35 program.

“It could also very much be that..the State of Israel will get another portion within the framework of the F-35 and additional things which, in part, were meant to have been transferred to factories in Turkey,” he told Army Radio.

(Reporting by Tuvan Gumrukcu and Ali Kucukgocmen; Additional reporting by Dan Williams in Jerusalem; Writing by Daren Butler; Editing by Jonathan Spicer and Angus MacSwan)

Turkey says buying Russian defense system should not trigger U.S. sanctions

FILE PHOTO: New S-400 "Triumph" surface-to-air missile system after its deployment at a military base outside the town of Gvardeysk near Kaliningrad, Russia. Picture taken March 11, 2019. REUTERS/Vitaly Nevar/File Photo/File Photo

By Humeyra Pamuk

WASHINGTON (Reuters) – Turkey’s purchase of a Russian air defense missile system should not trigger U.S. sanctions because Ankara is not an adversary of Washington and remains committed to the NATO alliance, Defense Minister Hulusi Akar said on Monday.

Speaking at a U.S.-Turkey conference in Washington amid rising tensions between the two NATO allies over Ankara’s plan to buy the Russian S-400 missile system, Akar adopted a relatively conciliatory tone and urged to resolve issues via dialogue.

“Turkey is clearly not an adversary of the United States,” Akar said and added that therefore its procurement of the S-400 system should not be considered within the scope of U.S. sanctions designed to target America’s enemies.

U.S. Secretary of State Mike Pompeo said last week that Washington had told Ankara it could face retribution for buying the S-400s under a sanctions law known as Countering America’s Adversaries Through Sanctions Act (CATSAA).

“This procurement decision does not signify a change in Turkey’s course. I’d like to reiterate strongly that there is no change in Turkey’s commitment to NATO,” Akar said.

FILE PHOTO: A Lockheed Martin F-35 aircraft at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo/File Photo

FILE PHOTO: A Lockheed Martin F-35 aircraft at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo/File Photo

The disagreement over the F-35 is the latest of a series of diplomatic disputes between the United States and Turkey including Turkish demands that the United States extradite Islamic cleric Fethullah Gulen, differences over Middle East policy and the war in Syria, and sanctions on Iran.

Turkish President Tayyip Erdogan has refused to back down from Ankara’s planned purchase of a Russian S-400 missile defense system that the United States has said would compromise the security of F-35 aircraft, made by Lockheed Martin Corp . Turkey has said it will take delivery of the S-400s in July.

In early April, the United States halted delivery of equipment related to the stealthy F-35 fighter aircraft to Turkey, marking the first concrete U.S. step to potentially blocking the delivery of the jet to the NATO ally.

Akar said Turkey was puzzled by the move and expected U.S. and other partners in the program to fulfill their obligations.

“We firmly believe that linking the S-400 to the F-35 project is unfortunate … We are one of the investors and partners and not just a buyer. We have invested over $1 billion … and fulfilled all our obligations,” he said.

Akar repeated Turkey’s offer to hold technical talks with the United States to address “technical concerns” over the S-400 purchase.

Turkey is also assessing a renewed offer from the United States to buy Patriot missile defense systems, Akar added.

“Recently we received the restated offer for the Patriots. This offer is now on the table, we are studying it carefully,” he said.

(Reporting by Humeyra Pamuk; Additional reporting by Ezgi Erkoyun in Istanbul; Editing by Dominic Evans and Phil Berlowitz)

Erdogan’s AK Party challenges Istanbul, Ankara election results

Supporters of Ekrem Imamoglu, main opposition Republican People's Party (CHP) candidate for mayor of Istanbul, wait for him to visit Anitkabir, the mausoleum of modern Turkey's founder Mustafa Kemal Ataturk, in Ankara, Turkey, April 2, 2019. REUTERS/Umit Bektas

By Daren Butler and Tuvan Gumrukcu

ISTANBUL/ANKARA (Reuters) – President Tayyip Erdogan’s AK Party has submitted objections to local election results in all districts of Istanbul and Ankara, party officials said on Tuesday, after results showed the opposition earned narrow victories in both cities.

The AK Party is on track to lose control of what are Turkey’s two biggest cities, its commercial hub of Istanbul and the capital Ankara, in a surprise election setback that may complicate Erdogan’s plans to combat recession.

In Istanbul, the mayoral candidate of the main opposition Republican People’s Party (CHP), Ekrem Imamoglu, and his AKP rival, ex-prime minister Binali Yildirim, both said on Monday Imamoglu was around 25,000 votes ahead. Istanbul has an estimated total population of 15 million.

The AKP had previously said it would use its right to object to the results where there were voting irregularities, adding that the errors at the ballots had affected the outcome.

On Tuesday, Bayram Senocak, the AKP’s Istanbul head said that objections had been submitted by the 3 p.m. (1200 GMT) deadline for appeals, and added that legal action would be taken against electoral officials who made the errors.

“We have submitted all our appeals to the district electoral councils,” Senocak said, as he waved ballot records in which he said vote count irregularities could be seen.

An AKP deputy chairman later said the difference between Imamoglu and Yildirim was down to 20,509 votes and would keep falling as a result of their appeals. He said the elections were “the biggest blemish in Turkish democratic history.”

The CHP’s Istanbul head Canan Kaftancioglu said her party submitted objections in 22 districts, adding they expected to receive 4,960 more votes after the appeals were resolved.

“They are trying to steal the will of the people as it was reflected in the ballots,” she told reporters in Istanbul.

The CHP’s Imamoglu said on Tuesday he was saddened by the AKP failure to congratulate him after the election board count put him ahead.

“I’m watching Mr Binali Yildirim with regret. You were a minister of this nation, the parliament speaker and a prime minister,” Imamoglu said in Istanbul. “What could be more noble than congratulating?”

“The world is watching us with shame right now. We are ready to manage the big city of Istanbul. Let go and congratulate us with honor, so we can do our job,” he said.

“MOMENT OF BEGINNING”

Ahead of the elections, the CHP had formed an electoral alliance with the Iyi (Good) Party to rival that of the AKP and their nationalist MHP partners. The alliances nominated joint candidates in certain cities, including Ankara and Istanbul.

Imamoglu, who laid a wreath at the mausoleum of modern Turkey’s founder, Mustafa Kemal Ataturk, in Ankara, later went to CHP headquarters to meet Mansur Yavas, the opposition’s candidate in the capital. Speaking at the CHP building, Imamoglu said the elections marked a “moment of beginning” for Turkey.

In Ankara, Yavas received 50.9 percent of votes, ahead of his AKP rival and former minister Mehmet Ozhaseki in Sunday’s local elections by nearly 4 percentage points. The AKP said it had also submitted objections to results across Ankara.

Defeats in Ankara and Istanbul would be a significant setback for Erdogan, who has dominated Turkish politics for more than 16 years. He had campaigned relentlessly ahead of the vote, describing it as a “matter of survival” for the country.

Erdogan’s political success has rested on years of stellar economic growth in Turkey, but an economic recession that has brought surging inflation and unemployment and a plunging lira currency have taken their toll on his popularity.

Uncertainty generated by the local elections has added to pressure on the lira, which weakened sharply last week as a lack of confidence in the currency among Turks led them to snap up record holdings of dollars and gold.

On Tuesday the lira weakened more than 2 percent against the dollar on concerns about tensions with the United States after it halted delivery to Turkey of equipment related to the F-35 fighter aircraft.

(Reporting by Ezgi Erkoyun and by Tuvan Gumrukcu; Additional reporting by Ece Toksabay; Writing by Tuvan Gumrukcu and Daren Butler; Editing by Dominic Evans. Gareth Jones, William Maclean)

Turkish lira down as U.S. halts fighter parts delivery, threatens sanctions

FILE PHOTO: Turkish Lira banknotes are seen in this October 10, 2017 picture illustration. REUTERS/Murad Sezer/Illustration/File Photo

By Sarah Dadouch

ISTANBUL (Reuters) – The lira dropped nearly 3 percent on Tuesday after the United States halted delivery of equipment related to a Turkish order of F-35 fighter planes, warning Ankara’s insistence on buying Russian defense systems risked triggering sanctions.

At 1634 GMT, the lira stood at 5.6590 against the dollar, having earlier fallen 3.3 percent to as low as 5.6800.

The Turkish currency lost nearly 30 percent against the dollar last year in a sell-off sparked by concerns over the independence of the central bank and exacerbated by worsening ties with Washington.

“Factors behind last year’s currency crisis have reared their heads again,” said Jason Tuvey, senior emerging markets economist at Capital Economics.

Washington and other NATO allies are concerned that radar on the Russian S-400 missile system that Turkey is also buying will learn how to track the F-35, making it less able to evade Russian weapons.

A senior U.S. official said the purchase of the S-400 risked triggering sanctions.

Acting Defense Secretary Patrick Shanahan said later on Tuesday he expected to resolve the dispute, but his comments had little impact on the lira.

The row marks the latest in a series of bilateral disputes, notably over Turkish demands that the United States extradite Islamic cleric Fethullah Gulen, differences over Middle East policy and the war in Syria, and sanctions on Iran.

STRUCTURAL PROBLEMS

The lira has also been under pressure from domestic political developments.

Currency volatility in the run-up to local elections on Sunday led the central bank to suspend one-week repo auctions, a move seen by analysts as a “back door” tightening that reignited worries that the central bank was under pressure from politicians to lower its policy rate.

The lira lost as much as 2.5 percent against the dollar on Monday after results showed President Tayyip Erdogan’s AK Party on track to lose control of both Ankara and Istanbul, his popularity hit by the recession that the lira’s losses in large part triggered.

The AKP submitted objections to the results in all districts of both cities, party officials said on Tuesday.

“The lira is under pressure as now the focus is back on structural problems for the Turkish economy,” said Nikolay Markov, a senior economist at Pictet Asset Management.

A widening current account deficit could deepen the recession through a further lira depreciation, leading to higher inflation and borrowing costs, Markov said.

“The central bank should raise policy rates but that won&rsquo;t happen because of pressure from the government,” although AKP electoral losses could reduce that pressure, he said.

(Reporting by Ezgi Erkoyun and Sarah Dadouch; Additional Reporting by Tom Arnold in London; Editing by Dominic Evans and John Stonestreet)

Erdogan suffers major setbacks in local elections in Turkey’s big cities

Supporters of AK Party wave flags in Ankara, Turkey April 1, 2019. REUTERS/Umit Bektas

By Orhan Coskun and Can Sezer

ANKARA/ISTANBUL (Reuters) – Turkey’s President Tayyip Erdogan suffered stunning setbacks in local elections as his ruling AK Party lost control of the capital Ankara for the first time since the party’s founding in 2001, possibly complicating his plans to fight back recession.

Both the AKP and the main opposition Republican People’s Party (CHP) claimed victory in Istanbul, Turkey’s largest city and economic hub. The AKP said it had “plenty of” evidence of voting irregularities in Istanbul.

Erdogan, who has dominated Turkish politics since coming to power 16 years ago and ruled his country with an ever tighter grip, campaigned relentlessly for two months ahead of Sunday’s vote, which he described as a “matter of survival” for Turkey.

But his daily rallies and overwhelmingly supportive media coverage failed to win over voters in the two main cities, as last year’s punishing currency crisis weighed heavily on Turks.

“The people have voted in favor of democracy, they have chosen democracy,” said opposition leader Kemal Kilicdaroglu, whose secularist CHP also held its Aegean coastal stronghold of Izmir, Turkey’s third largest city.

The AKP and its Islamist predecessor have controlled Istanbul and Ankara for 25 years. The results, which were still being tallied and faced appeals, would likely bring personnel changes at the highest ranks of government, according to sources inside and close to the AKP.

IRREGULARITIES

In Istanbul, the county’s largest city, the CHP mayoral candidate was more than 25,000 votes ahead of his AKP opponent as the last votes were being counted, according to the country’s electoral board and CHP data.

But AKP Istanbul provincial head, Bayram Senocak, said voting irregularities had had an impact on the outcome and insisted that Erdogan’s party had won.

In Ankara, Turkish broadcasters said the CHP candidate had won a clear victory, but the AKP said it would appeal in districts across the city and expected to shift the outcome in its favor.

Erdogan’s ruling alliance, including the nationalist MHP, captured 51.7 percent of the nationwide vote with nearly all votes counted, according to state-owned Anadolu news agency. The turnout was a very high 84.52 percent.

Despite eking out majority support across the country, defeat for Erdogan’s Islamist-rooted party in Ankara was a significant blow for the president. The possibility of losing Istanbul, where he launched his political career and served as mayor in the 1990s, was an even greater shock.

The Turkish lira, which swung wildly https://tmsnrt.rs/2CEaO11 in the week ahead of the elections echoing last year’s currency crisis, weakened on Monday as much as 2.5 percent against the dollar before recovering early losses.

An AKP official and a source close to the party predicted a cabinet shuffle or other changes among those around Erdogan, especially given the loss in Istanbul.

“There will certainly be changes in some places, such Erdogan’s close circle in the party and the cabinet,” said the official, who requested anonymity. “Markets expect that there will be a change in the cabinet. This makes a change necessary.”

(Additional reporting by Tuvan Gumrukcu, Ece Toksabay, Tulay Karadeniz and Nevzat Devranoglu in Ankara, and Daren Butler, Ali Kucukgocmen, Behiye Selin Taner, Ceyda Caglayan, Ebru Tuncay and Ezgi Erkoyun in Istanbul, and Karin Strohecker in London; Writing by Dominic Evans; Editing by Jonathan Spicer and Gareth Jones)

In first vote since Turkey’s crisis, Erdogan could lose capital city

A stallholder reads a newspaper as he waits for customers at a bazaar in Ankara, Turkey, March 26, 2019. Picture taken March 26, 2019. REUTERS/Umit Bektas

By Tuvan Gumrukcu and Ece Toksabay

ANKARA (Reuters) – Ismail Akin has voted for Turkish President Tayyip Erdogan’s party for almost 20 years, but the father of three said that will change on Sunday because the plunging economy has forced him to shut his shop and take on debt.

In a market in the Turkish capital last week, Akin clutched his jacket and said “even this is mortgaged” after the economy tipped into recession following last year’s currency crisis.

“We voted for this man (Erdogan) for 20 years. Enough. Let’s hit him with the back of our hand so he sees what this nation is made of,” Akin said.

He said he would vote for the main opposition candidate in Sunday’s local elections.

Polls suggest Erdogan could be defeated in Ankara, the city from which he has ruled Turkey with an increasingly iron grip since 2003. His AK Party (AKP) could hang on to power in a tight race in Istanbul, where he was once mayor, but a defeat in Ankara would be a blow.

“The psychological factor of losing the capital, losing one of the big cities in Turkey, could be perceived by voters as the beginning of the decline,” said political analyst Murat Yetkin.

The nationwide local elections are the first since last year’s currency meltdown, and come as authorities fight a fresh wave of selling in the lira.

The currency has bounced back this week, in part because Turkey directed its banks to withhold lira liquidity in London, a key overseas market, until after Sunday’s election – blocking foreign investors from betting against the currency.

The stop-gap measure may save Erdogan the embarrassment of a currency meltdown on the eve of voting but economists say that longer-lasting reforms are needed to return to the strong growth which was a hallmark of the AKP’s early years in power.

AKP officials say they are anxious about Sunday’s vote. In recent weeks Erdogan has held up to five rallies per day and described the elections as a “matter of survival”.

Interviews in Ankara with more than 50 voters two weeks ahead of the vote suggested several long-time AKP supporters were shifting their views on the party and looking to punish Erdogan for the turmoil caused by the ailing economy.

“There is no production, nothing. They brought in the food stands, but will he (Erdogan) fix the economy with food stands?” said Orhan Akkaya, a local business manager who said he would no longer back AKP.

“They finished the country.”

‘VERY SERIOUS PROBLEMS’

Ahead of the elections, the main opposition Republican People’s Party (CHP) formed an electoral alliance with the IYI (Good) Party to rival that of Erdogan’s AKP and the nationalist MHP.

Mansur Yavas, the opposition candidate, appears to hold a 2 percentage point lead over his AKP rival Mehmet Ozhaseki, according to polling company Gezici. However, a poll conducted by the AKP showed Ozhaseki had closed the gap and gained a 1.5 point advantage, a party source said.

Yavas was also the CHP’s candidate in 2014, but lost in a vote marred by claims of voter fraud. Ozhaseki, a former three-term mayor from central Anatolia, was a minister until he was removed from the post after last year’s presidential and general elections cemented Erdogan’s grip on power.

Speaking to Reuters on his campaign trail, Yavas said he believed he would win in Ankara because his rival had overlooked the economic struggles of the people.

“They don’t see the economic hardships in Ankara,” he said. “They don’t come here and talk with shop owners.”

While Erdogan, championed by more pious Turks, has become modern Turkey’s most popular leader, he is also the most divisive. Secular Turks say his policies quash dissent and infringe on private lives and personal rights.

But it was his unorthodox economic policies, including a buildup in foreign debt, that helped spark last year’s crisis that wiped some 30 percent off the value of the lira. The contraction in the fourth quarter was the economy’s worst in nearly a decade.

“What we expected didn’t happen in the economy, that is a reality,” an AKP official told Reuters. “While the economy was a gain before, it’s now our weak point.”

“If there is a big loss (in Ankara)…we may enter a period where there will be very serious problems for the AK Party.”

People shop in a second-hand bazaar in Ankara, Turkey, March 27, 2019. Picture taken March 27, 2019. REUTERS/Umit Bektas

People shop in a second-hand bazaar in Ankara, Turkey, March 27, 2019. Picture taken March 27, 2019. REUTERS/Umit Bektas

‘FED UP’

Murat Gezici, chairman of pollster Gezici, said three of every four undecided voters have backed the MHP or AKP in past general or local elections.

The fraying economy had left many of them unsure, Gezici said citing his company’s March 16-17 poll, and added that rather than the AKP’s past successes, voters were more focused on candidates’ future promises.

“Maybe I won’t even vote, that’s how fed up I am,” said Huseyin Kilic, another longtime but disenchanted AKP voter.

Sacked from his factory job and waving in the air coins that he said were his last, Kilic, standing in a street market in the central Ankara district of Ulus, said he had not yet settled on a favored candidate.

Yet few are writing off Erdogan before votes are counted.

In nearly two decades he and his AKP have not lost a local election in Ankara or Istanbul. The party is leading polls in other big cities like Adana and Konya.

Shopping for vegetables in central Ankara, Neriman said she remained committed to the AK Party, dismissing economic woes.

“They (the AKP) gave us everything, financially and emotionally. There are no economic troubles. Are there?” she said. “I am planning on voting for the AK Party because for years we’ve been so much better off.”

($1 = 5.5652 liras)

(Additional reporting by Orhan Coskun and Mert Ozkan; Editing by Jonathan Spicer and Anna Willard)

Turkey will resist U.S. sanctions over pastor, Erdogan says

FILE PHOTO: Turkish President Tayyip Erdogan with his wife Emine are seen in a car as they arrive in Berlin, Germany, September 27, 2018. REUTERS/Hannibal Hanschke/File Photo

By Gulsen Solaker and Ece Toksabay

ANKARA (Reuters) – Turkey will resist U.S. efforts to impose sanctions on Ankara over the trial of a Christian pastor who has been detained for two years, President Tayyip Erdogan said on Monday, accusing the preacher of having “dark links with terror”.

The case of evangelical pastor Andrew Brunson, whose next court hearing is on Oct. 12, has plunged ties between Ankara and Washington into crisis, leading to U.S. sanctions and tariffs which helped push Turkey’s lira to record lows in August.

Brunson is charged with links to Kurdish militants and supporters of Fethullah Gulen, the cleric blamed by Turkey for a failed coup attempt in 2016. He has denied the charges and Washington has demanded his immediate release.

Relations between the two NATO allies were already strained by disputes over U.S. support for Kurdish fighters in northern Syria, Turkey’s plans to buy a Russian missile defense system, and the jailing of a Turkish bank executive for violating U.S. sanctions on Iran.

“We are deeply saddened by the current U.S. government, a strategic partner, targeting our country without any logical, political and strategic consistency,” Erdogan said in a speech to a new session of parliament.

Erdogan said Turkey was determined to fight, within legal and diplomatic frameworks, “this crooked understanding, which imposes sanctions using the excuse of a pastor who is tried due to his dark links with terror organizations.”

Brunson’s case has become the most divisive issue between the two countries. U.S. President Donald Trump believed he and Erdogan had agreed a deal to release him in July, but Ankara has denied agreeing to free the pastor as part of a wider agreement.

Brunson, who has been jailed or held under house arrest since October 2016, faces up to 35 years in jail if convicted. Last month the main prosecutor in his trial was replaced, a move which his lawyer cautiously welcomed, saying it might be a sign of changing political will.

In his speech to the first session of parliament since its summer recess, Erdogan held out the possibility of better relations, while adding that there was still much work to do.

“We can say that we started to make progress towards reaching a common understanding (with the United States), although it is not at the desired level,” he said.

He also repeated Turkey’s accusation that Washington is protecting Gulen, who has been based in the United States for two decades, and said the conviction in a New York court of an executive of state-owned Halkbank for violating U.S. sanctions on Iran was “an example of unique unlawfulness”.

Tensions with Washington contributed to a meltdown in the Turkish lira in August, when the currency hit a record low of 7.20 to the dollar. It had already weakened over concerns at the extent of Erdogan’s control of the economy and opposition to raising interest rates to combat double-digit inflation.

Erdogan said Turkey’s economy was overcoming what he described as “midnight operations” designed to break it.

“Our economy started rebalancing with measures we have taken, meetings we have realized and programs we have developed,” he told parliament.

The lira &lt;TRYTOM=D3&gt; firmed more than 2 percent on Monday, reaching its strongest level in more than six weeks, on growing optimism that Brunson might be released and following a hike in interest rates and the govenrment’s new economic program.

Turkey’s exports also rose sharply in September, the trade ministry said, but Turkish manufacturing activity slid to its lowest level in nine years, a business survey showed.

(Additional reporting by Tuvan Gumrukcu; Editing by Dominic Evans)

Exclusive: Turkey’s Erdogan says court will decide fate of detained U.S. pastor

Turkey's President Recep Tayyip Erdogan addresses the 73rd session of the United Nations General Assembly at U.N. headquarters in New York, U.S., September 25, 2018. REUTERS/Carlo Allegri

By Stephen Adler and Parisa Hafezi

NEW YORK (Reuters) – Turkish President Tayyip Erdogan said a Turkish court, not politicians, will decide the fate of an American pastor whose detention on terrorism charges has hit relations between Ankara and Washington.

U.S. Secretary of State Mike Pompeo said on Monday he was hopeful Turkey would release evangelical pastor Andrew Brunson this month. The preacher was moved to house arrest in July after being detained for 21 months.

In an interview with Reuters late on Tuesday while he was in New York for the United Nations General Assembly meetings, Erdogan said any decision on Brunson would be made by the court.

“This is a judiciary matter. Brunson has been detained on terrorism charges … On Oct. 12 there will be another hearing and we don’t know what the court will decide and politicians will have no say on the verdict,” Erdogan said.

If found guilty, Brunson could be jailed for up to 35 years. He denies the charges. “As the president, I don’t have the right to order his release. Our judiciary is independent. Let’s wait and see what the court will decide,” Erdogan said.

U.S. President Donald Trump, infuriated by Brunson’s detention, authorized a doubling of duties on aluminum and steel imported from Turkey in August. Turkey retaliated by increasing tariffs on U.S. cars, alcohol and tobacco imports.

The Turkish lira has lost nearly 40 percent of its value against the dollar this year on concerns over Erdogan’s grip on monetary policy and the diplomatic dispute between Ankara and Washington.

“The Brunson case is not even closely related to Turkey’s economy. The current economic challenges have been exaggerated more than necessary and Turkey will overcome these challenges with its own resources,” Erdogan said.

Turkey’s central bank raised its benchmark rate by a hefty 625 basis points this month, boosting the lira and possibly easing investor concern over Erdogan’s influence on monetary policy. Erdogan said he was against the measure.

“It shows the central bank is independent. As the president, I am against high-interest rates and I am repeating my stance here again,” he said, adding that high rates “primarily scare away investors”.

“This was a decision made by the central bank … I hope and pray that their expectations will be met because high rates lead to high inflation. I hope the other way around will happen this time.”

The lira firmed slightly on Wednesday morning after Erdogan’s assurance on the independence of the central bank was published.

IMPROVING TIES

In an effort to boost the economy and attract investors, Erdogan will travel on Sept. 28 to Germany, a country that is home to millions of Turks.

“We want to completely leave behind all the problems and to create a warm environment between Turkey and Germany just like it used to be,” Erdogan said, adding that he will meet Chancellor Angela Merkel during his visit.

The two NATO members have differed over Turkey’s crackdown on suspected opponents of Erdogan after a failed coup in 2016 and over its detention of German citizens.

On Syria, Erdogan said it was impossible for Syrian peace efforts to continue with President Bashar al-Assad in power.

Earlier this month, Turkey and Russia reached an agreement to enforce a new demilitarized zone in Syria’s Idlib region from which “radical” rebels will be required to withdraw by the middle of next month.

But Erdogan said the withdrawal of “radical groups” had already started.

“This part of Syria will be free of weapons which is the expectation of the people of Idlib … who welcomed this step,” he said. The demilitarized zone will be patrolled by Turkish and Russian forces.

Close to 3 million people live in Idlib, around half of them displaced by the war from other parts of Syria.

Erdogan said Turkey will continue to buy natural gas from Iran in line with its long-term supply contract despite Trump’s threats to punish countries doing business with Iran.

“We need to be realistic … Am I supposed to let people freeze in winter? …Nobody should be offended. How can I heat my people’s homes if we stop purchasing Iran’s natural gas?,” he said.

Trump pulled the United States out of a 2015 multinational nuclear deal with Iran and in August Washington reimposed sanctions on Tehran, lifted in 2016 under the pact. U.S. sanctions on Iran’s energy sector are set to be re-imposed in November.

(Writing by Parisa Hafezi; Editing by Raju Gopalakrishnan and Andrew Heavens)