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By Daren Butler and Jonathan Spicer

ISTANBUL (Reuters) -President Tayyip Erdogan's political opponents said on Sunday that his call to expel the ambassadors of 10 Western allies was a bid to divert attention from Turkey's economic difficulties, while diplomats hoped the expulsions might yet be averted.

On Saturday, Erdogan said he had ordered the envoys be declared 'persona non grata' for seeking philanthropist Osman Kavala's release from prison.

By Sunday evening, there was no sign that the foreign ministry had yet carried out the instruction, which would open the deepest rift with the West in Erdogan's 19 years in power.

The diplomatic crisis coincides with investor worries about the Turkish lira's fall to a record low after the central bank, under pressure from Erdogan to stimulate the economy, unexpectedly slashed interest rates by 200 points last week.

The lira hit a fresh all-time low in early Asian trade, weakening 1.6% to 9.75 per dollar in a move that bankers attributed to Erdogan's comments. It has lost almost a quarter of its value so far this year.

Kemal Kilicdaroglu, leader of the main opposition CHP, said Erdogan was "rapidly dragging the country to a precipice".

"The reason for these moves is not to protect national interests but to create artificial reasons for the ruining of the economy," he said on Twitter.

'SEEN THIS FILM BEFORE'

Kavala, a contributor to numerous civil society groups, has been in prison for four years, charged with financing nationwide protests in 2013 and with involvement in a failed coup in 2016. He denies the charges and has remained in detention while his trial continues.

"We've seen this film before," said opposition IYI Party deputy leader Yavuz Agiralioglu. "Return at once to our real agenda and the fundamental problem of this country - the economic crisis."

Erdogan said the envoys had failed to respect Turkey's judiciary and had no right to demand Kavala's release.

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Sinan Ulgen, chairman of the Istanbul-based think tank Edam and a former Turkish diplomat, said Erdogan's timing was incongruous as Turkey was seeking to recalibrate its foreign policy away from episodes of tension in recent years.

"I still hope that Ankara will not go through with this," he tweeted, describing the move as unprecedented among NATO allies. "The foreign policy establishment is working hard to find a more acceptable formula. But time running out."

Erdogan has not always acted on threats.

In 2018, he said Turkey would boycott U.S. electronic goods in a dispute with Washington. Sales were unaffected. Last year, he called on Turks to boycott French goods over what he said was President Emmanuel Macron's "anti-Islam" agenda, but did not follow through.

CABINET MEETING

One diplomatic source said a decision could be taken at Monday's cabinet meeting and that de-escalation was still possible. Erdogan has said he will meet U.S. President Joe Biden at next weekend's G20 summit in Rome.

Erdogan has dominated Turkish politics for two decades but support for his ruling alliance has eroded ahead of elections scheduled for 2023, partly because of high inflation.

While the International Monetary Fund projects economic growth of 9% this year, inflation is more than double that, and the lira has fallen 50% against the dollar since Erdogan's last election victory in 2018.

Emre Peker, from the London-based consultancy Eurasia Group, said the threat of expulsions at a time of economic difficulties was "at best ill-considered, and at worst a foolish gambit to bolster Erdogan's plummeting popularity".

"Erdogan has to project power for domestic political reasons," he said.

In a joint statement on Oct. 18, the ambassadors of Canada, Denmark, France, Germany, the Netherlands, Norway, Sweden, Finland, New Zealand and the United States called for a just and speedy resolution to Kavala's case, and for his "urgent release".

The European Court of Human Rights called for Kavala's immediate release two years ago, saying there was no reasonable suspicion that he had committed an offence.

Soner Cagaptay from the Washington Institute for Near East Policy tweeted: "Erdogan believes he can win the next Turkish elections by blaming the West for attacking Turkey -- notwithstanding the sorry state of the country's economy."

(Writing by Daren ButlerEditing by Dominic Evans and Giles Elgood)

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Erdogan's critics say demand for expulsions is distraction from economy woes - Yahoo News

Turkish President Recep Erdogans pride in his countrys recent interest rate cut calls to mind the apocryphal story of the mothers pride in her son at a military parade. The source of her pride was that her son was the only one in the parade who, in her mind at least, was marching in step.

Erdogan similarly takes pride in his countrys central bank cutting interest rates at a time of rising domestic inflation. He does so evenwhen most of the worlds central banks, including those in the emerging markets, are in the process of tightening their monetary policies in response to signs of rising inflation.

Over the past year, Erdogan has fired three central bank governors for not complying with his eccentric view that high interest rates are the cause of inflation, rather than a cure. Last week, Sahap Kavcioglu, Turkeys most recent central bank governor, seemed to yield to Erdogans demands by cutting interest rates by 100 basis points from 18 percent to 17 percent. He did so even at a time that inflation had accelerated to 19 percent. He also did so at a time that the Turkish lira was the worlds worst performing currency, as underlined by a 16 percent drop in the currency since the start of the year.

Even more surprising about Turkeys sharp reduction in interest rates was that it flew in the face of the International Monetary Funds (IMF) explicit warning about the dangers of such a move.

In a recent report, the IMF observed that even before COVID-19 the Turkish economy suffered from external vulnerabilities in the form of uncomfortably low international reserves, a large amount of banking system dollar deposits and a high amount of dollar-denominated corporate debt. Those vulnerabilities have increased as a result of the verystrong monetary policy response to the COVID-19 crisis. This was underlined by a re-emergence of a significant external current account deficit and a rise in dollar denominated deposits to as much as 60 percent of the banking systems overall deposits.

Despite the countrys shaky banking system, its low level of international reserves and its uncomfortably high amount of dollar-denominated corporate debt, it has managed to avoid a full-fledged currency crisis. It has done so as its banks have continued to have easy access to a global capital market that was awash with liquidity and that had international investors desperate for yield in a low world interest rate environment.

Making Erdogans gamble all the more reckless is the strong likelihood that we are moving towards a less benign international liquidity environment. In response to incipient signs of inflation across many countries, many central banks have already started tightening policy. Meanwhile, Federal Reserve Chairman Jerome Powell is giving increased signs that the Federal Reserve is about to start tapering its aggressive bond buying program, which he has suggested is likely to end by mid-2022. This runs the risk of putting Turkey once again in the front line of thoseemerging market economies that will be severely impacted by a shift to tightening world monetary policy conditions, as occurred during the 2013 Bernanke Taper Tantrum.

None of this bodes well for the Turkish economy in the run-up to its presidential elections in 2023. Domestic and foreign investors will likely head for the door as they see interest rates lagging behind inflation and as interest rates abroad become more attractive. That in turn is likely to send the currency to yet lower levels, which will feed the upward march in domestic inflation for which Erdogan could pay a heavy price in the 2023 election.

A silver lining is that Turkeys economic troubles may serve as a cautionary tale for other emerging market economies about the dangers of pursuing unorthodox monetary policies at a time of tightening global liquidity conditions. It might also serve as an early warning to policymakers in the advanced industrial countries of potential trouble ahead in the emerging market economies.

DesmondLachmanis a senior fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Funds Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.

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The economic folly of Turkey's Recep Erdogan | TheHill - The Hill

ANKARA

President Recep Tayyip Erdoan on Sept. 13 said Turkey has shown that the power of national will can withstand any kind of attack against the country.

We have shown the whole world that neither tutelage nor social engineering calculations nor terrorist organizations nor coups can stand before the power of the national will, he said, speaking at the centennial anniversary celebration program of the Sakarya Victory.

Turkey didnt get to this point that easily as the country was harassed from all sides to divert its attention from its goals, Erdoan said while stressing that his government has overcome these with the support of the nation.

In the restructuring process of the global, political and economic system, we, as Turkey, always turn to the future and determine the direction and move towards it. Undoubtedly, the culmination of these steps is the 100th anniversary of the establishment of our Republic, which we will be qualified for on Oct. 29, 2023, without any worries, he stated.

Some countries cannot bear even one of the attacks that Turkey has faced, and every extraordinary situation that has been experienced in the last period, from pandemic to natural disasters in Turkey, makes this picture even more evident, Erdoan emphasized.

We stand tall thanks to the power of thousands of years of state tradition behind us, he added.

Now, we are more confident in ourselves; we look to our future with more hope, Erdoan said, noting that the Peoples Alliance, formed by the ruling Justice and Development Party (AKP) and Nationalist Movement Party (MHP), are walking towards the future with more confidence.

The main thing for us is the will of our nation: One nation, one homeland, one state and one flag. We know that like any victory we have won since the [battle of] Malazgirt [Manzikert], this will not be easy, Erdoan said, referring to a battle between the armies of the Seljuk Turks and the Byzantine Empire that took place on the plain of Manzikert (Malazgirt) in what is now Mu in eastern Turkey, which paved the way for both the Ottoman Empire and the modern Republic of Turkey.

Erdogan, Politics, Diplomacy,

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No one can stand before power of national will: Erdoan - Hurriyet Daily News

ISTANBUL, Aug 31 (Reuters) - Turkish President Tayyip Erdogan held a rare phone call with the UAE's de facto ruler, Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan, Erdogan's office said on Tuesday, in a new sign of efforts to improve ties between the regional rivals.

Turkey and the UAE have competed for regional influence since the Arab uprisings erupted a decade ago, a rivalry which saw them backing different sides in Libya's civil war and extended to disputes from the eastern Mediterranean to the Gulf.

Erdogan said last year Turkey was considering breaking off diplomatic relations after the Gulf state's accord to normalise ties with Israel.

"Relations between the countries and regional issues were discussed in the talks," Erdogan's office said of his call with Sheikh Mohammed.

The call came two weeks after Erdogan met a senior UAE official and said the two countries had made progress in improving relations which could lead to significant UAE investment in Turkey. read more

"It is in everyone's interest to pursue an agreement-based policy instead of a conflict-based policy. Because the latter has costs. This is an important development," a senior Turkish official said of the latest talks.

Ankara and Abu Dhabi have backed rival groups in the Middle East for years, with Turkey supporting Islamist movements, especially the Muslim Brotherhood which took part in the Arab Spring uprisings in a bid to overthrow autocrats in the region. Wealthy Gulf leaders worry such unrest would reach home.

The UAE's state news agency WAM said both leaders discussed "the prospects of reinforcing relations between the two nations in a way that serves their common interests and their two peoples."

Turkey last year accused the UAE of bringing chaos to the Middle East through interventions in Libya and Yemen, while the UAE and several other countries criticised Turkey's military actions.

Ankara has also made overtures this year towards the UAE's main regional allies, Egypt and Saudi Arabia, aimed at overcoming tensions that have impacted Turkey's economy.

Turkey's tense ties with Saudi Arabia collapsed after the 2018 killing by Saudi agents of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.

Relations with Egypt have been strained since the military overthrew Egypt's first democratically elected president, Mohamed Mursi of the Muslim Brotherhood. Erdogan, whose ruling AK Party is rooted in political Islam, had been a strong supporter of Mursi.

The two countries said on Tuesday they would hold a second round of talk next week. The Turkish official said it was unrealistic to expect to solve long-term problems in a short period of time.

"But there is a will to solve them. The issues will not worsen, in the short and medium term relations will get better."

Reporting by Orhan Coskun and Aziz El YaakoubiWriting by Daren ButlerEditing by Kim Coghill and Angus MacSwan

Our Standards: The Thomson Reuters Trust Principles.

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Turkey's Erdogan speaks with UAE crown prince over strained ties - Reuters

Images of Afghan refugees scrambling to escape Kabul following the Talibans seizure of power will haunt the international community for decades. According to the United Nations, 550,000 people have been displaced in Afghanistan this year alone. In the middle of the Talibans lightning nationwide offensive, between twenty and thirty thousand Afghans are thought to be leaving the country every week.

These numbers are expected to escalate rapidly after the collapse of President Ashraf Ghanis government and a new Islamic Emirate of Afghanistan is established. Meanwhile, Turkeys president, Recep Tayyip Erdogan, has heightened his anti-refugee rhetoric with an eye toward leveraging the situation, assuring his NATO allies that his country will neither house refugees nor act as an intermediary in the resettlement process.

This is an unprecedented but localized humanitarian crisis. If NATO refuses to take a hard line with Turkeys manoeuvring, it will become a global one as well.

Several NATO members have already responded by pledging support for Afghans fleeing the Taliban. Among them, Canada has promised to resettle 20,000 refugees, and the UK is expecting 5,000, prioritising women, children, and religious minorities.

Although these measures have been rightly criticised for not going far enough, they do at least indicate a basic level of commitment to NATOs fundamental values, including humanitarianism and a sense of shared responsibility.

In stark contrast, Erdogan, Turkeys authoritarian leader, has responded to the unfolding crisis with callous disregard. A NATO member since 1952, Turkeys primary response to the unfolding crisis is to build a physical wall along its borders while erecting legal barriers to keep Afghan refugees out at all costs.

Already, a 243-kilometer barbed wire-topped concrete wall is under construction along Turkeys border with Iran to deter Afghan refugees. Just this week, Ankara deployed 750 elite troops to fortify the border.

Erdogans disregard for the safety and wellbeing of Afghan refugees is hardly surprising, given his administrations systematic abuses of domestic minorities, including the Kurdish and LGBT communities, amongst others. Erdogans steady drift towards authoritarianism has been signposted along the way by a consistent assault on human rights.

Just as predictable will be Erdogans willingness to use Afghan refugees as a diplomatic bargaining chip.

For the past ten years, Ankara has treated its Syrian refugee population as a pawn in its diplomatic maneuvers, especially in relation to its European neighbors prompting accusations of blackmail from EU ambassadors.

Ever since Chancellor Angela Merkels stoic response to the 2015 refugee crisis summed up memorably in the phrase Wir schaffen das (well manage this) provoked a blistering domestic backlash, Erdogan has assiduously manipulated his countrys role as a buffer zone to exact endless concessions from Europe.

Although the EU provides billions of dollars in assistance to Turkey to aid Syrian refugees, Erdogan frequently complains that the money goes through aid groups rather than directly to his endemically corrupt government. Make no mistake, Erdogan fully intends to draw on the same playbook and play politics with the Afghan refugee crisis.

Erdogan has perfected the art of operating at the very edge of what other NATO members will tolerate, mixing flagrant breaches of common values with small symbolic gestures of solidarity. Erdogans last minute offer to send Turkish troops to secure Kabul airport just ahead of his meeting with President Joe Biden is a perfect example of the latter.

Having banked that diplomatic credit with Washington, the Turkish administration will now feel it has a freer hand to deal brutally with incoming Afghan refugees while simultaneously threatening to destabilise the EU by channelling unsustainable numbers of asylum seekers towards European shores.

Erdogan intends to blockade his countrys border with Iran in order to prevent a domestic backlash similar to what Chancellor Merkel endured in 2015, while using the growing population of refugees on Turkeys eastern flank to forestall EU action against his regimes many abuses.

Unless NATO and the EU take decisive steps to resolve the current refugee crisis, Turkeys dictator in waiting will purposefully exasperate the suffering of Afghan asylum seekers to finalise his demolition of Turkeys civic infrastructure and, in turn, become an even bigger thorn in the side for his erstwhile allies.

If Europe and its close allies dont manage this, Erdogan will.

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How Erdogan will manage the Afghan refugee crisis - New Europe