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Turkish President Recep Tayyip Erdogan, said that "fight against terrorism should not be lead with another terror organization." | Getty

President Donald Trump's first face-to-face meeting with Turkish President Recep Tayyip Erdogan since taking office will take place next Tuesday at the White House, the administration announced Wednesday.

"The two leaders will discuss how to further strengthen our bilateral relationship and deepen our cooperation to confront terrorism in all its forms," the White House office of the press secretary said in a statement, officially announcing the May 16 gathering.

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The news comes a day after Trump gave the Pentagon authorization to arm Kurdish militias in Syria as part of a renewed push to drive the Islamic State out of the pivotal city of Raqqa, despite the strong opposition of Erdogan and the Turkish government. The Turkish leader called on the White House to reverse its decision ahead of their planned meeting next week, according to the Associated Press.

The Kurdish fighters have faced opposition from Turkey in part due to their alignment with the Peoples Protection Units, which Turkey considers an extension of the Kurdish Workers Party, labeled a terrorist group by the NATO ally.

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Erdogan, speaking at a joint press conference with the president of Sierra Leone, said that "fight against terrorism should not be lead with another terror organization."

"We want to know that our allies will side with us, and not with terror organizations," Erdogan added.

In a statement Tuesday a Trump administration spokesman called the Turkish militias and the U.S. coalition forces "the only force on the ground that can successfully seize Raqqa in the near future.

President Trump in the past has praised the Turkish leader, congratulating him on his controversial April victory in a Turkish election referendum marred by claims of voting irregularities. That triumph bestowed Erdogan with sweeping new executive powers, alarming those who fear he's leading Turkey toward a dictatorship.

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The diplomatic spat between the U.S. and Turkey is a symptom of a much broader phenomenon: Authoritarian rulers everywhere not only thumb their noses at the U.S, but they see no reason not to.

Turkish President Recep Tayyip Erdogan hasn't been a reliable U.S. ally since before the failed 2016 coup attempt, which he blames on the U.S.-based Turkish preacher Fethullah Gulen. In a recentessayabout the U.S. war against Islamic State, former Defense Secretary Ash Carterwrote thatTurkey"caused the most complications for the campaign" startingwell before the coup.

The two countries' key interests diverged wider than ever, given U.S. support for Kurds in Iraq and Syria, whom Turks -- not just Erdogan -- traditionally consider a major threat. Since the U.S. has refused to hand over Gulen, the rift became both geopolitical and increasingly personal, regardless of President Trump's early overtures to Erdogan and even his reaffirmation of friendship at the recent United Nations gathering.That the U.S. has now suspended non-immigrant visas for Turks in response to the arrests of some dual citizens is just a tangible manifestation of the growingdivide.

Turkey's angry tit-for-tat response shows Erdogan doesn't attach too much value to smoothing relations with the U.S.In 2016, Americansaccountedfor 460,000 of Turkey's 25.3 million foreign visitors, so if they stop coming at all, it won't be a major blow to Turkey's important tourist industry, which is more dependent on Europeans and Russians. The U.S. is a relatively important trade partner, having absorbed$8.1 billionin Turkish exports last year, but the exports are so diversifiedthat Erdogan may feel Turkish business can absorb a dent in trade. And with the world'seighth strongestmilitary, Turkey may feel less in need of NATO's protections these days given all the constraints that imposed in return.

Turkey will have also looked around and learned a few things from Vladimir Putin and other authoritarian leaders. With its annexation of Crimea, Russian President Vladimir Putin showed there is more room for misbehaving than many thought. A prolonged spat with the U.S. might bring something of an asset sell-off, a stock-market drop and higher political risks factored into borrowing costs. Russia has weathered it; its 10-year bond yields 7.5 percent now; it never went much lower. Turkey has less of a cushion in the form of foreign reserves and a negative trade balance, but Erdogan is unlikely to be too worried about the recent jump in his country's government bond yields, driven by the tension with the U.S.

Xi Jinping's tightening control of every aspect of Chinese life and his independent geopolitical line, most recently manifested in the North Korean controversy, has gone unchallenged by Western leaders. Erdogan will also have watched Narendra Modi's illiberal shift in Indiameet with no tangible resistance in the West.

Hungarian Prime Minister Viktor Orban and Polish ruling party leader Jaroslaw Kaczynski have clearly asked themselves whether there is any advantage to be gained by cozying up to the West. The answer they have all arrived at is, not much -- or, at any rate, less than they gain in domestic political dividends by showing off pride and independence.

Neither the U.S. nor Western Europe has the raw power to bring rogue leaders into line. But that doesn't mean there is no constructive response. The easier path is to pull up the drawbridge, but writing off the global liberal project as a failure isn't necessarily a good idea. The temptation to equate countries with their leaders is particularly strange in the U.S., where most of the policy establishment is busy distancing itself from the country's leader. It's useful to remember that two can play that game. In a recent Financial Timescolumnabout Xi's dictatorial tendencies, Jamil Anderlini wrote:

The rejection of western political systems has been made easier recently by what the Chinese see as the ludicrous buffoonery of Donald Trump and, to a lesser extent, the self-inflicted damage of Brexit and EU infighting. As a top foreign policy adviser recently told one of my colleagues: "Trump never talks about democracy or American leadership or liberty we should not be so stupid to worship things that in the western world are now in doubt."

Defending Western values requires making democracy and fair economic competition attractive propositions for Turks, Russians, Chinese and Indians. Cutting off travel opportunities for them -- as the U.S. has done with Russians and Turks this year -- achieves the opposite result. It makes them feel unwelcome, destroys their interest in how the Western world works on a day-to-day level, and feeds support for anti-Western leaders. That interest was what drove the Russian, Chinese and Turkish liberalization in the 1990s. Removing the travel barriers would be a huge step toward rekindling it. Investing in education opportunities for people in these countries, such as more university scholarships, would do even more.

There should also be clearer economic benefits to political liberalization. In Russia in the 1990s, that picture included Western investment into economic modernization, but the opening that ordinary people hoped for never happened and trade barriers remained. Turkey benefited from its increased openness to the West -- but not enough for Turks to fear the reversal of these gains. Eastern European countries were effectivelycolonized when they joined the European Union, a price they're less and less willing to pay for the middling level of prosperity they enjoy. The openness of Western markets to private entrepreneurs from currently authoritarian nations -- not to their state sectors or corrupt bureaucrats masquerading as entrepreneurs -- would go a long way toward building an incentive for these nations to liberalize.

Soft power and leadership by example should get more consideration from the West these days. The knee-jerk U.S. reaction to the ripening of dictatorial regimes is a flex of military muscle and other displays of hard power. That's not what ended the Cold War: Western soft power was a big part of what destroyed the Communist experiment from within, which is why Westerners were so surprised by their victory. Now with Turkey, as then, the stick won't be any use in the absence of a carrot.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story: Therese Raphael at traphael4@bloomberg.net

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AUTHORITARIAN GOVERNMENTS around the world have increasingly embraced the disgraceful tactic of arresting U.S. citizens and holding them as de facto hostages in an attempt to gain leverage over Washington. Iran and North Korea were pioneering practitioners and both repeatedly extracted U.S. concessions. That probably encouraged other nations, including Egypt and Venezuela. Now comes Recep Tayyip Erdogans Turkey, a NATO member that appears well on its way to becoming an outlaw state.

In the past year the Erdogan government has seized a dozen Americans as well as two Turks working for U.S. consulates. With a brazenness that would make Tehrans Revolutionary Guard Corps blush, Mr. Erdogan recently made clear that the prisoners are little more than pawns whom he wishes to trade for Turks in the United States particularly the cleric Fethullah Gulen, an Erdogan rival who lives in Pennsylvania. Give us that pastor, Mr. Erdogan recently said of Mr. Gulen, and we will do what we can to release Andrew Brunson, an America minister.

Following the latest arrest, of a consular employee in Istanbul, an understandably exasperated U.S. Embassy announced a freeze Sunday on the issuance of nonimmigrant visas to Turks a drastic measure that was quickly reciprocated by the Turkish mission in Washington. Such a ban could hurt many innocent people, including Turkish journalists and civil society activists working to resist Mr. Erdogans repression. If it endures, it should be refined to target government officials, business executives and others linked to the regime.

Theres no question, however, that the Trump administration, which has persisted in describing Mr. Erdogan as a close ally, must now stand up to his bullying. The Turkish ruler appears to believe he can persecute Americans with impunity; his arrogance was encapsulated when he watched as his security detail attacked peaceful protesters outside the Turkish ambassadors residence in Washington in May. His demands about Turks in the United States are equally lawless. Ankara has offered scant evidence that Mr. Gulen is guilty of a crime, which means that U.S. courts could not approve extradition. Two other Turks whose return Mr. Erdogan seeks are being prosecuted for helping Iran evade sanctions.

Over about 15 years in power, Mr. Erdogan may have drawn the conclusion that Washington will inevitably tolerate his transgressions because of Turkeys strategic importance. Unfortunately, the Obama administration provided plenty of evidence for that, as has President Trump, who after meeting Mr. Erdogan last month inexplicably declared that we are as close as weve ever been. In fact, Turkeys value in fighting the Islamic State has diminished as U.S. forces have partnered with rival Kurds; and Ankaras decision to work with Russia and Iran in Syria, while purchasing an advanced air defense system from Moscow, has further detached it from the West.

The long-standing U.S. alliance with Turkey should be preserved, to the extent that is possible with Mr. Erdogan in power. But that cannot come at the expense of tolerating hostage-taking and assaults on the U.S. rule of law. Mr. Erdogan should be made to understand that he is risking a rupture of relations that will do far more harm to his regime than to the United States.

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Markets in Istanbul tumbled after the U.S. and Turkey stopped issuing visas for each others citizens in a spat related to last years failed coup againstPresident Recep Tayyip Erdogan, deepening divisions between NATO members already at odds over the war in Syria.

The Trump administration halted visa services for Turks on Sunday, citing the Oct. 4 arrest of a Turkish citizen employed at the U.S. consulate in Istanbul for alleged involvement in the July 2016 putsch attempt. Erdogans government responded in kind within hours, repeating verbatim much of the U.S.statement.

The implementation of a such a decision by the U.S. ambassador in Ankara is very saddening, Erdogan said at a televised press conference in Kiev, Ukraine. He said that he ordered Turkeys foreign ministry to reciprocate the move. Turkey is a state of law, not a tribal state, he said.

Relations have soured since the foiled coup, which Erdogan blames on a self-exiled cleric based in the U.S., Fethullah Gulen. The U.S. has refused Turkeys request to extradite Gulen, citing lack of evidence. Justice Minister Abdulhamit Gul on Monday rejected the U.S. ambassadors request for a meeting as prosecutors invited another consulate worker in to testify, AHaber TV reported. The pro-government channel said the employees wife and child had been detained, but it didnt specify the workers whereabouts.

Read more: How Turkey-U.S. ties frayed-- a QuickTake Q&A

The U.S. Embassys press service in the capital Ankara declined to comment.

Problems that have been accumulating between the countries for a long time are starting to snowball, Tuncay Ozilhan, head of the advisory council of Tusiad, one of of Turkeys most influential business lobbies, said by phone.

The lira dropped 3.2 percent to 3.7334 against the dollar as of 5:23 p.m. in Istanbul, after plunging as much as 6.6 percent. The benchmark Borsa Istanbul 100 Index of stocks declined 3 percent.

Both sides said recent events had forced them to reassess the commitment of the other to the security of diplomatic facilities and personnel. Only two weeks ago, President Donald Trump praised Erdogan when they met at the United Nations in New York, saying that hes becoming a friend of mine and that frankly, hes getting high marks.

The U.S. last week called the charges against the worker wholly without merit, saying it was deeply disturbed by the arrest and by leaks from Turkish government sources seemingly aimed at trying the employee in the media rather than a court of law. Turkey responded by saying the arrested citizen wasnt part of the regular diplomatic corps but a local employee.

If this fight with the U.S. continues, country risk wont decline regardless of policies in other areas, said Ozlem Derici, founder of Spinn Consulting in Istanbul.

The visa spat comes as Turkish troops are preparing to deepen their involvement next door in Syria, where Turkey is planning a joint mission with Russia and Iran to create a combat-free zone in the Idlib province. Erdogan vowed Sunday to prevent stateless Kurds, whove been battling Turkish forces for decades, from creating a terror corridor from Iraq to the Mediterranean.

Turkey has also rebuffed the U.S. over charges that a former economy minister and a state bank conspired to help Iran launder hundreds of millions of dollars through the U.S. financial system, as well as its decision to buy a Russian missile-defense system that isnt compatible with NATO.

I would expect that there will be some sort of de-escalation at the leadership level -- Trump and Erdogan will speak or meet, said Murat Yurtbilir, who specializes in Turkish affairs at the Australian National University. But the underlying problems wont go away: the Gulen issue, Turkeys slow switch toward Russias policy in Syria, and the economy.

State Department spokeswoman Heather Nauert said at a briefing on Sept. 27 that the U.S. had received several requests for Gulens extradition, but that it had been a while since officials talked about the issue.

Erdogan in July accused foreigners of attempting to break Turkey apart and vowed to crush agents acting against his country. He gained sweeping powers in April after a tight referendum that critics said was fraudulent. A Council of Europe agency has since put Turkey on its watchlist, saying crackdowns on opponents have compromised human rights and the rule of law.

In recent months, Erdogan has increased coordination with Russia and Iran amid deepening tensions with the U.S., exacerbated by Washingtons decision to deliver arms to Kurdish groups that Turkey views as terrorists.

More than 37,000 U.S. citizens traveled to Turkey in 2016, about 1.7 percent of the total and down from 88,301 in 2015, according to the Ministry of Culture and Tourism.Turkey has been attracting fewer visitors since 2014 amid concerns about terrorism, regional instability and the failed coup. The U.S. tourist office doesnt break out the number of Turkish visitors on its website.

The Trump administrations visa ban puts Turkey in the same boat as Chad, Iran, Libya, North Korea, Syria, Venezuela and Yemen, which have all had U.S. travel restrictions imposed over terrorism concerns.

"Turkey, which has been in the western camp since the 1940s, is lumped together with these countries?" said Yurtbilir. "This is the lowest level in Turkish-U.S. relations."

With assistance by Garfield Clinton Reynolds, Ros Krasny, Bernie Kohn, David Tweed, Kerim Karakaya, Taylan Bilgic, Daniel Ten Kate, and Ruth Pollard

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