Turkish ports have stopped receiving tankers holding Iranian oil as Ankara reluctantly complied with US sanctions targeting Iranian oil exports.
The development came as Washington ended a 6-month reprieve for eight countries, including Turkey, by not renewing sanctions waivers that allowed them to buy Iranian oil without risk of sanctions.
Turkey has been the most vocal of Iran’s oil customers in scrutinising US moves that aim to restrict Iran’s oil income. At the same time, Ankara was unwilling to take on the economic risks that continued oil trade with Iran could bring.
Turkey has been experiencing deep strains in relations with the United States over its role in the conflict in Syria. As Ankara reset ties with Moscow and engaged Tehran to reshape its Syria policy, Turkey’s disagreements with the United States became more apparent.
US-backed Kurdish militias in Syria lie at the heart of the disconnect between Turkish and US approaches. Mistrust between the NATO allies hit low levels over Ankara’s purchase of the Russian S-400 missile defence system, which the United States is opposed to. Washington threatened to block deliveries of F-35 joint strike fighter aircraft to Turkey in response.
Turkey has also been battling a growing economic crisis at home as its credit-fuelled growth falters. The past year has seen the Turkish lira lose nearly half its value against the US dollar and Turkey’s current account deficit spiral to $27 billion.
With inflation at around 20%, Turkey’s central bank is unable to bring down interest rates even as unemployment grows.
It is in that political and economic backdrop that Turkish President Recep Tayyip Erdogan’s ruling Justice and Development Party (AKP), Turkey’s dominant political force for almost the last two decades, suffered upsets in recent mayoral and municipal elections.
The AKP’s record of delivering strong, sustained economic growth suffered in recent years, changing the domestic political landscape and results at the ballot box. Turkey’s markets are edgy as Istanbul heads for a controversial election rerun in which an opposition candidate had originally been named the victor.