The Turkish parliament’s decision over the weekend to deny 62,000 U.S. troops basing rights near the Iraqi border caused economic havoc in the nation on Monday, as the NATO ally’s fragile stock market tipped into a downward tailspin.
The decision came both as a surprise and as a setback. Turkey’s governing faction, the Justice and Development Party, or AKP, had said it was confident approval would be granted.
Meanwhile, U.S. warships were waiting to unload soldiers and artillery off Turkey’s Mediterranean shores. The Pentagon is hoping to open a northern front from Turkey into Iraq, should war arise.
For the Turkish markets, the biggest blow was that a U.S. financial assistance package in exchange for Turkey’s participation in the war effort was suddenly thrown into jeopardy. Traders were predicting that the motion would pass, and aid was forthcoming. The reversal caused the Turkish markets to slide by more than 10 percent.
In recent weeks, Washington promised Turkey a hefty infusion in aid—perhaps as much as $30 billion, including $6 billion in grants—to compensate for whatever damages the country might incur during a war in Iraq. The 1991 Persian Gulf War had a debilitating effect upon the Turkish economy.
But parliamentary deputies told journalists the grassroots pressure from constituents with memories of the previous war and its impact on the country was simply too overwhelming to vote against. For the past month, Turkey has been the scene of numerous anti-war rallies. Polls say opposition is as high as 95 percent.
Meanwhile, U.S. troops waited in the Mediterranean, near the Gulf of Iskenderun, the endpoint of a 1000-mile-long oil pipeline soon to be constructed from Baku, Azerbaijan, to a Turkish port near Ceyhan. In recent months, the pipeline has run into minor delays attracting international financing.
Turkey has pledged to cover any costs that exceed the $1.4 billion construction fees for its leg of the project. There is no known link between the current financial aid negotiations and the pipeline project, but some analysts have speculated that the country is not in a position to make such guarantees without U.S. financial support.
Construction on the pipeline, which is owned by a consortium of 11 private oil companies and state agencies, is set to begin in April. The consortium, known as the BTC Co., has said it will proceed with the initial phases of construction using its own financing.
It is unclear whether there will be a second vote to allow U.S. soldiers on Turkish soil. Turkey’s foreign minister, Yasar Yakis, has suggested that the government will push for another motion in parliament, but other officials say unless approval is guaranteed it is unlikely the government will risk a second blow to its credibility.