BY: CEMIL ERTEM*
One reason for the inconsistent up and down trend in the dollar is the U.S.’s lack of efficient politics, especially in the Middle East and Pacific region. The dollar, which has been gaining value against the currencies of developing countries over the past few weeks, started declining after the release of China’s third-quarter growth data on Wednesday. China grew by 6.7 percent in the third quarter. Based on this development, Asian markets revived, with first the New Taiwan dollar, then South Korean and Philippine currencies and stock markets beginning to rise. Then the markets were convinced that the U.S. Federal Reserve (Fed) would continue expansionary monetary policies in the first quarter of 2017. Meanwhile, some got into panic thinking that the dollar’s rise would continue and it would lead to a new financial crisis for developing countries. They bought the U.S. dollar, one kilogram of which will not be worth more than scrap paper in the long term. Thus, they both financed the U.S. and put money in the pockets of speculators. We must be aware that the U.S. will continue operations like these through such speculators.
This muddy state of the U.S. has increasingly turned into a chaos strategy in both economy and politics and is not different from its political and military attitude in the anti-DAESH struggle and Mosul operation. What do you think the U.S. is doing in Iraq differently from Iran? Does its support for the PKK’s derivatives on the Turkish-Syrian border correspond to a blind support for Shiites, which might escalate into a sectarian war in Mosul?
Just like Turkey, which is rightfully asking these questions, the whole world must ask them to the U.S. The Fed and the U.S.’s perspective of the global economy is an unsustainable situation which constantly produces crises. Likewise, the U.S.’s foreign policy strategy which is based on chaos in the Middle East is unsustainable to the same extent and produces crises. This state is spreading across the Pacific region – which is more critical for the U.S.
The U.S. began giving political weight to the Pacific region under Barack Obama’s presidency. For the U.S., the control of the region was important for two reasons. First, the Bretton-Woods monetary system, which highlights the dollar’s sovereignty that came to a de facto end in the 2008 financial crisis, could have survived merely through the Pacific countries’ demand for the dollar and U.S. treasury bills as they ran a great amount of foreign trade deficit. Second, Pacific countries, especially China, which were likely to move away from the U.S.-based monetary system, could have created a secondary political system in addition to the economic one. On the days that followed the 2008 crisis, the U.S. strove to keep the dollar high at the expense of intensifying the crisis. It aimed to prevent significant cuts in Chinese and other central banks’ demand for the dollar and minimize the possibility of China’s liquidation of its dollar reserves in a rapid way. This was the reason why the U.S. withdrew from the Caucasus and Middle East and prioritized the Pacific region.
However, there were problems stemming from some countries in all economic and political control areas with the exception of the Pacific region. For instance, Turkey came to be a greater problem than Russia for the U.S.’s control of Eastern Europe, the Middle East and Caucasus. This was because Russia had limits which dated back to the Cold War period, so, the U.S. could make out where Russia would stop in the Middle East, Caucasus and Islamic world. However, where Turkey would stop was a controversial issue. In fact, Turkey has protected open and democratic politics all along the line. For instance, it has never missed its objective of European Union accession in the much-discussed Turkey-EU relations. So, it is even possible to suggest that Turkey is closer to the EU than the U.K. is.
Turkey has a clear perspective of the Middle East and refugee crisis. Depending on its improving relations with Israel and Russia, it has observed peace and stability in the Middle East.
In fact, the current strife on Mosul, which started 98 years ago, is not a trivial issue. The resolution of the Mosul question will also eliminate the quagmire of terrorism and poverty in the entirety of the region on condition that Turkey is involved in this resolution. Turkey is a power which can prevent this strife from growing into an endless sectarian war.
No one should comment on the future of economy and politics by looking to the dollar and the U.S.’s current policies. From now on, the dollars that the U.S. has so far issued in a reckless manner, thinking that they would somehow return to itself, might not return. The U.S. might not be the owner of these dollars, either. This is because money is like water which fills gaps and tries to find its true owners, just like Mosul.
*Cemil Ertem is a Turkish columnist at Daily Sabah Turkish newspaper
(Published in Daily Sabah on Friday Oct. 21, 2016)