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ISTANBUL (Reuters) - Turkish President Tayyip Erdogan said Turkey will stand its ground after U.S. President Donald Trump threatened to slap sanctions on Ankara if it does not free an American pastor, broadcaster Haberturk reported on Sunday.

FILE PHOTO: U.S. President Donald Trump and Turkish President Tayyip Erdogan gesture as they talk at the start of the NATO summit in Brussels, Belgium July 11, 2018. REUTERS/Kevin Lamarque/File Photo

The friendship between the United States and Turkey is on the line in this dispute, Erdogan was quoted by TRT Haber and other media.

We will not take a step back when faced with sanctions, Erdogan is quoted as saying. They should not forget that they will lose a sincere partner.

American pastor Andrew Brunson, who was transferred to house arrest this week after 21 months of detention in a Turkish prison, has worked in Turkey for more than two decades.

Brunson has been accused of supporting the group Ankara says was behind a failed military coup in 2016 and Kurdistan Workers Party (PKK). The pastor, who has denied the charges, faces up to 35 years in jail if found guilty.

Diplomats have been working to settle the tense dispute and on Saturday U.S. Secretary of State Michael Pompeo discussed the status of the pastor with Turkeys Foreign Minister Mevlut Cavusoglu, the State Department said.

Writing by Ezgi Erkoyun in Istanbul and Patrick Rucker in Washington; Editing by Sandra Maler

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Erdogan: Turkey will stand its ground faced with U.S ...

At least the "potato crisis" seems to be over since prices are falling again. But recently a kilo cost up to seven lira (1.25, $1.50), four times more than it cost a year ago. The prices for onions, tomatoes and other staples have also risen sharply.

Inflation is now an everyday part of life and can be felt everywhere. Its effects can be seen while shopping, at the gas station and in increasing rents.

"Everything is getting more and more expensive. There are many things I can't afford anymore let alone a holiday," complains a customer at the fruit and vegetable market in Istanbul's Sisli district.

Read more:Recep Tayyip Erdogan: The sultan of 21st-century Turkey

Artichokes, fresh mint, melons, grapes, the commonfigs all of themfrom farmers in the region. The selection is great, but prices fluctuate. "We now pay double for many foods," says a man at the neighboring stand. "The government is to blame and it must finally do something."

The price of food at this Istanbul fruit and vegetable market is on the rise

A downward spiral

The Turkish economy has recently grown by 7.4 percent, a rate which is even higherthan that of the Chinese economy. But at the same time the current account deficit is rising, the lira has lost more than a fifth of its value against the dollar and the euro since the beginning of the year and inflation is at a record level of 15 percent.

The economic situation has not been this bad in years. Recently, the rating agency Fitch downgraded Turkey's creditworthiness further into junk territory: the credit rating of the country is now BB with a negative outlook. This puts Turkey on par with countries like Guatemala or Costa Rica.

But President Recep Tayyip Erdogan seems to worry little aboutrating agencies.And after his reelection in June, he is now more powerful than ever. Now he is head of state, head of his party and head of the government all in one person.

He is promising his country a glorious future. "Our economy is on the right track and everyone can see how we invest," the Hurriyet newspaper quoted him as saying recently. Turkey will soon become "one of the ten largest economic powers in the world," Erdogan promised after his swearing-in for his current term.

Central bank under pressure

Even during the election campaign, Erdogan announced that he would strengthen his control over monetary policy in the future. Investors are worried about the independence of the Turkish central bank. Only last week, the president issued a decree allowing him to single-handedly appoint the bank's two highest officials. In addition, the decree reduces their terms inoffice from five years to only four years.

"Not only the central bank but all the institutions and individuals are under the sway of Erdogan. In the sense that we don't have any freedoms or we can't even take the simplest decisions without hispermission," says economist Atilla Yesilada. "If the central bank would not be controlled by Erdogan it would have reacted at least two years ago, when inflation started rising, by raising interest rates."

Economist Attila Yeilada

Most economists viewinterest rate increases asan important tool to stabilize a currency. But according to Erdogan's very own economic theory, higher interest rates are "the cause of all evil" and jeopardize economic growth.

For this reason, the president regularly insists on not raising base interest rates. The next official interest rate decision is scheduled for July 24, and it is still unclear how the central bank will react this time.

Son-in-law to the rescue

Erdogan's tendency to seize all decision-making power has deeply unsettled markets. Now it is up to 40-year-old Berat Albayrak to regain the business world's confidence.

As well as beingminister of finance and treasury, Albayrak is also married to Erdogan's daughter. He studied business administration in Istanbul and the US, and was energy minister in the last cabinet. Nevertheless, he is considered a relatively inexperienced politician who has simply been given a key position by his father-in-law.

Up to this point the chief economic advisor had been former Deputy Prime Minister Mehmet Simsek, an ex-Merrill Lynch economist who was considered investor-friendly and someone who even dared to contradict Erdogan. Now since the office of prime minister has been abolished, he will no longer be in the cabinet.

Read more:Turkey lifts state of emergency, but fear of repression lingers

But son-in-law Albayrak has promised fiscal discipline, structural reforms, an independent central bank and measures against inflation. "In normal times, I would give him the benefit of doubt. He should be given time to prove himself," says analyst Atilla Yesilada. "Unfortunately, these are extraordinary times At a time like this you need experienced pilots flying the plane."

Albayrak must now deliver, says Yesilada, otherwise Turkey will face a financial crash. "By the fourth quarter of this year, the economy will start shrinking, unemployment will rise from 10 to 12 percent, the Turkish lira in best case scenarios would loose another 10 percent against the dollar and we will have a spate of bankruptcies in the corporate sector not large corporations, but among small and medium enterprises," predicts the analyst, adding that the country will more than likely soon have to ask the IMF for financial help.

This scenario would not only impact Turkey itself but also have consequences for Europe, because many Turkish companies are highly indebted to European financial institutions.

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Is Erdogans Turkey on the edge of a crash? | Business ...

(Rami Khoury/Al Bawaba via AFP/FILE)

By Ty Joplin

Before Recep Erdogan was Turkeys president, he was the mayor of Istanbul. We are proud of him, his former Istanbul barber said of Erdogan. Hes not only a leader, but a world leader.

His barber is right: Erdogan has shaped the political system of Turkey around him, and has been trying to market himself as a world leader for Sunni Muslims around the world. With his recent re-election, a project to grant himself sweeping powers and recent international moves, Erdogan is closer than any previous leader at reconstructing a neo-Ottoman power out of Turkey, even if it implodes the countrys economy and any semblance of democracy it once maintained.

Even though Turkish voters think many politicians within Erdogans own party, the Justice and Development Party (AKP), are corrupt and ineffective, Erdogans own reputation appears immune to such skepticism.

Both Turkeys domestic political sphere and foreign policy objectives abide by one idea: Erdoganism.

Erdoganism Inside Turkey

Erdogan has all but ensured that Turkeys political system revolves around him personally.

In April, 2017, the AKP launched a referendum that would transform Turkey towards a fully presidential system, getting rid of the Prime Ministers position and placing more power than ever in the hands of the President.

By a narrow margin (51.4 percent to 48.6 percent), the referendum passed and Erdogan was given a wide-range of newfound powers.

With the new changes, the president is becoming head of government as well as head of state, absorbing all authorities and responsibilities of the prime minister, reads an article on the changes from the state-owned TRT World.

The referendum all but eliminated the ability of opposition parties to block the political agenda of Erdogan. It even gives the president the abilities to pass his own laws, which the referendum calls decrees.

On July 9, the referendums changes went into effect.

Erdogan speaks with supporters after a failed military coup in 2016 (AFP/FILE)

Dont be misled by the term decree those decrees amount to laws. Parliament has lost its legislative prerogative, warned Abdullatif Sener, a former deputy prime minister of Turkey.

While on paper, the law states that parliament has the ability to override any presidential decree, that clashes with their own, it remains to be seen whether this power will be exercised as parliament, currently in the hands of the AKP, would likely never pass bills that clash with their leader, Erdogan.

The referendum was passed with the implicit understanding that Erdogan would win the June, 2018 national election and formally hold onto the reins of power. He did exactly that, winning about 53 percent of the votean outright majority.

One of Erdogans biographies is called the New Sultan, using an historic term to refer to a ruler. In Turkey, the Sultan was once used to refer to the ruler of the Ottoman Empire. Now that Erdogan has formally situated himself in the central seat of power, brushing off coup attempts and purging anyone who dissents, he is setting his sights on building a 21st century empire.

The latest estimate is that Erdogan has jailed over 160,000 dissidents and purged nearly 20,000 civil servants from the government on his quest to centralizing his power.

Sultan Erdogan, the Neo-Ottoman

As Turkeys economy began to expand, surging an astounding 7.4 percent in 2017 alone, Erdogan began to flirt with regional ambitions that encompassed much of the Sunni Muslim world.

Today, Turkey is a player in the Levant, GCC, North Africa and as far as Sudan and Somalia, said Mohanad Hage Ali of the Carnegie Middle East Center in an interview with Al Bawaba.

In other words, Turkey is the regions Sunni Iran.

While Turkey was riding the wave of its economic surge, it announced that it would deploy 60,000 troops to four separate military bases around the world.

Apart from his protracted intervention in Syria, where he now occupies a solid chunk of the countrys northwest, his ambitions have expanded beyond the neighboring countries.

Turkish troops parade (AFP/FILE)

In 2015, Turkey established a military presence at the Tariq bin Ziyad military base in Qatar before sending elements from its air force to the Al Udeid Air Base in southern Doha in 2017.

According to Turkish state-backed media, At least 1,000 pilots will be trained annually at the center that was built by Turkish defense contractor HAVELSAN at Al-Udaid.

Both bases in Qatar serve to entrench Turkeys strategic and economic ties to the Gulf, but it has sent thousands more troops into Africa.

A little-known port city in Sudan has become a focal point of Erdogans project to expand his influence into northern Africa.

Sudan and Turkey agreed to let Turkey completely rebuild the port city, which was once a trade hub in the Ottoman Empire. The deal includes a plan to build a dock to maintain civilian and military vessels, Turkeys Foreign Minister Ibrahim Ghandour said.

Saudi Arabia and Egypt both warned that the Turkey-Sudan deal would give Turkey the ability to establish a military foothold in Sudan. Those concerns turned out to be true.

Sudan leased the city to Turkey for 99 years, and many of the development plans involve ensuring the ability for Turkey to soldiers and a naval base on the port. In fact, the 99-year lease is so long that it's safe to say Turkey has essentially bought control of the port city from Sudan.

Though the rumors of Turkish soldiers stationed in Suakin have been denied or rebutted, experts and officials are careful to say that if there are Turkish soldiers there, they are meant to serve as anti-terrorist security forces.

Erdogan has also sought to capture Somalia in his sphere of influence, funding a wide array of development and security projects in the capital, Mogadishu.

"Ankara aims to help Somalia rebuild its public institutions that have been ruined since 1991. Turkey will train Somali soldiers here so that the Somali army can recuperate, Olgan Bekar, Turkeys ambassador to Somalia told TRT World.

Turkey's Erdogan opens a new Turkish Embassy in Somalia, (AFP/File)

Turkeys entrance into Somalia includes training and equipping Somali security forces in addition to establishing its own facilities capable of housing thousands of soldiers. It is Turkeys biggest overseas military base, and comes at a time when Somalia is running out of partners for its war against militant groups in the country.

Erdogan is positioning himself to be an indispensable ally of Sudan and Somalia; both of which give him access to critical trading ports and access to the Red Sea.

Erdogan has also gave overtures rhetorically linking his political empire to the welfare of Sunni Muslims around the world including places like Malaysia and the Philippines. And now as the West grow increasingly wary of him and his authoritarian ways, Erdogan will increasingly concentrate on his growing ties in Eurasia and Asia, explains Kamal Alam for the Nikkei Asian Review.

All this is to say that Erdogan dreams of shaping modern day Turkey into a neo-Ottoman force is slowly coming true, even if that means sacrificing any semblance of democratic legitimacy.

Notwithstanding his current political dominance, the deteriorating state of the economy is his Achilles heel and the biggest threat to his currently unrivalled leadership. says Fadi Hakura of Chatham House.

Turkeys economic surge has begun to stall, and the economy is imploding. In the face of contraction and double-digit inflation, Turkey is drifting into a stagflation crisis that threatens to upend any effort from Erdogan to establish himself as a world leader.

But even as his country remains on the brink thanks to unorthodox monetary policies Erdogan engineered, many are convinced that Erdogan is precisely the leader they need to pull him out.

Turkish people who voted against Erdogan did so to deny him one-man rule; for them, it was a vote for democracy. But for those who voted for Erdogan to receive broad powers and be re-elected President, they seem to care less about democracy and more about strength: Erdogan, to many, projects strength.

Weve entered a very peculiar period, which I cannot define as a democracy, Sener, the former deputy prime minister, posits.

We might speak of a dictatorship in Turkey in the future.

This article is part of an ongoing series investigating Turkey's geopolitical aims. Read more about this:

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Erdogan: Turkey Has a New Sultan | Al Bawaba

ISTANBUL Even before President Recep Tayyip Erdogan of Turkey was inaugurated last week, he began elbowing his way into the front ranks of the globes strongmen.

Hours before taking the oath of office after 15 years already in power Mr. Erdogan published a 143-page decree changing the way almost every government department and public body in the country operates.

In the days since, he has issued several equally lengthy decrees and presidential decisions, centralizing power and giving him the ability to exert control in nearly all areas of life with almost unchecked authority.

At a moment when democratic systems around the world are under increasing pressure, Mr. Erdogan, who was re-elected in June, is among those leaders, like Vladimir V. Putin of Russia and Viktor Orban of Hungary, who are using the levers of democracy to vastly expand their authority.

Among the changes Mr. Erdogan has put in place under the new presidential system are these:

The prime ministers office has been abolished;

The military has been brought under firmer civilian control;

The president will draft the budget and choose judges and many top officials;

The president can dismiss Parliament and call new elections at will;

The president appoints the head of the National Intelligence Agency, the Religious Affairs Directorate and the Central Bank, as well as ambassadors, governors and university rectors, among other top bureaucrats;

Virtually none of the presidents appointments require a confirmation process.

None of the amendments Mr. Erdogan decreed were subject to public debate before becoming law. The vast accumulation of power fulfills Turkeys shift from a parliamentary system to the presidential one that was narrowly approved by voters in a referendum last year.

The voluminous decrees, analysts say, promise months of administrative upheaval as agencies are abolished and government employees reassigned.

Critics have voiced concern at the lack of checks on the presidents increased powers.

The state is being reorganized around Tayyip Erdogan, the columnist Asli Aydintasbas wrote in the secular opposition newspaper Cumhuriyet last week.

Many of the changes, analysts point out, merely formalize what was already the case: It is Mr. Erdogan who makes the decisions. But the consolidation of his power is far-reaching.

Mr. Erdogan has also amended the counterterrorism law in expectation of lifting the state of emergency, which expires on Thursday and was put in place two years ago after a failed military coup against him.

The new measures bring the powerful Turkish military firmly under civilian control a step that the president says is in line with changes required under the European Unions accession process. The bloc has dangled admission before Turkey for years.

But Mr. Erdogan and his fellow Islamists have long called for a presidential system and for greater civilian control over the military. Turkeys recent history has been filled with military coups, and the Islamists chafed more than others under military rule.

Mr. Erdogan has placed the chief of staff of the armed forces under control of the Defense Ministry, and the Supreme Military Council, which decides senior appointments in the armed forces, has been reconfigured to include more civilian ministers than military commanders.

Mr. Erdogan appointed a loyalist, the former chief of staff, Gen. Hulusi Akar, as his first defense minister under the new system. General Akar opposed the 2016 coup he was taken prisoner on the night of the failed coup by rogue officers and has overseen a comprehensive purge of the armed forces in the two years since.

It seems Erdogan has planned the transition to be as smooth as possible by naming Akar, Turkeys top soldier, as the defense minister, the columnist Murat Yetkin wrote in The Hurriyet Daily News.

Mr. Erdogan outlined his own powers in one new decree after his inauguration. He will appoint the chief of staff of the armed forces along with the commanders of the land, air and naval forces and the deputy chief of staff by presidential decision, which needs no confirmation process. The president will also make promotions in the upper ranks of the security forces from colonel upward.

Decree 703, issued just before Mr. Erdogan was sworn in to his new term, also removed many of the regulations in the selection process for appointments.

For instance, the president will appoint the rectors of Turkeys public and private universities, without the usual shortlisting procedure by the university and Higher Education Board.

Yes, U.S. President Trump can appoint a replacement to a vacant seat in the Supreme Court, but he does not appoint a police chief in Massachusetts or a public theater director in Boston, Ms. Aydintasbas commented in Cumhuriyet. He cannot appoint a state governor or even a university rector, she added.

The decree also lowers the qualifications for judges appointed to the governments administrative courts, which regulate government departments. Previously, judges had to hold law or political science degrees, but they can now be drawn from any degree program, as the Justice Ministry sees fit.

One of Mr. Erdogans most controversial moves has been the appointment of his son-in-law Berat Albayrak as minister of the newly combined Treasury and Finance Ministry.

A presidential circular published in the Official Gazette over the weekend also placed the Central Bank under the responsibility of the ministry.

Mr. Erdogan has emphasized that changes are needed to make state institutions more responsive and efficient. But the latest regulations diminish the legal and practical independence of the Central Bank, Umit Akcay, an associate professor of Economics at the Berlin School of Economics and Law, said in emailed comments.

Turkish equities and the countrys currency fell in value in the days after Mr. Erdogans appointment of a new cabinet that removed two highly regarded officials Deputy Prime Minister Mehmet Simsek and Finance Minister Naci Agbal and that promoted Mr. Albayrak.

Mr. Albayrak addressed the changes at the Central Bank last week in an effort to calm the markets.

The policy in the new period aims to render the Central Bank more effective than ever, he said at a news briefing last week. The Central Banks decisions will be driven by market conditions, he said, promising a more predictable, simple and determined monetary policy in line with the objectives.

Yet Mr. Albayraks appointment is part of the concern unsettling investors, the credit ratings service Moodys said in a statement the same day. Such appointments will inevitably raise questions regarding the independence and experience of Mr. Erdogans government, Moodys said.

Ms. Aydintasbas warned that centralizing power had never worked in Turkey.

I believe that such concentration of power will tire Turkey out, lock out the state and overload the economy, she said. I hope Im mistaken.

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Erdogan, Flush With Victory, Seizes New Powers in Turkey ...

ISTANBUL (Reuters) - Turkish President Tayyip Erdogan and U.S. President Donald Trump held a phone call on Monday and discussed the importance of implementing the joint roadmap in Syrias Manbij, Turkish presidency said in a statement.

FILE PHOTO: President Donald Trump and Turkish President Tayyip Erdogan gesture as they talk at the start of the NATO summit, July 11, 2018. REUTERS/Kevin Lamarque

Under a deal reached between the United States and Turkey last month, the Syrian Kurdish YPG militia would withdraw from Manbij and Turkish and U.S. forces would maintain security and stability around the town.

During Mondays phone call, the two leaders said the implementation of the Manbij deal would significantly contribute to the solution of Syria problem, the statement said.

It added that Erdogan and Trump also repeated their determination to further improve bilateral ties in all areas.

Reporting by Orhan Coskun; Writing by Ali Kucukgocmen; Editing by Humeyra Pamuk

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Erdogan, Trump emphasize importance of Manbij roadmap ...