- The dire state of Turkey's economy may be a consequence of a diplomatic misunderstanding between the country's president and Donald Trump.
- Trump met Turkish President Tayyip Erdogan at a July NATO summit, and reportedly cut a deal on prisoner releases.
- Turkey asked the US to get a prisoner out of Israeli jail, which the US did the next day, according to The Guardian.
- Trump asked for Erdogan to release a US pastor, and Erdogan said he'd look into it, the report says.
- When Erdogan didn't release the prisoner, merely shifting him to house arrest from jail, Trump struck with sanctions that tanked the lira.
- Sources tell the Guardian this simple misunderstanding, that took place at a one-on-one conversation with only translators, caused the lira crisis.
President Donald Trump and Turkish President Tayyip Erdogan reportedly met on the sidelines of July's NATO summit to cut a deal on prisoner releases — which would later become an economic disaster for the lira, and potentially the world.
Trump and Erdogan hammered out a deal for the US to get Israel to release a Turkish woman imprisoned for alleged links to Hamas, and for Turkey to release detained US pastor Andrew Brunson — or so Trump thought, sources tell The Guardian.
"It took place on the margins of the NATO summit," the source said. "Erdogan asked Trump for help with the lady in prison in Israel. There was only the two of them and a translator. Trump said: 'I need some traction on the pastor first.' When Erdogan said OK he meant that we are working on it."
The day after the summit, Israel let the Turkish woman walk free, but Turkey merely moved Brunson from jail to house arrest, where he remains today.
"Trump confused a process for an agreement," the source said.
Brunson, important to Trump and his Vice President Mike Pence as a Christian known in the evangelical community, then went on to become the stated reason for US sanctions on Turkey that tanked its economy.
"Pence, due to midterm election considerations, messed things up," the source said.
Turkey detained Brunson after a failed 2016 coup that it blamed on Fethullah Gülen, a former ally of Erdogan who now lives in Pennsylvania. Erdogan has previously offered to trade Brunson for Gülen, but the US has refused.
Shortly after, US sanctions citing Brunson's detention created a perfect storm of economic conditions in Turkey that's seen the lira down more than 45% against the dollar so far this year, despite a slight rally on Monday.
Erdogan's ideological resistance to raising interest rates in a time of high inflation, and general mismanagement of the economy, have exacerbated the crisis, leading to fears that the lira could collapse and take much of Europe with it.
Erdogan has blamed the crisis on "economic terrorists" in the US, a NATO ally, which he said is waging economic "war" against the country. On Tuesday Turkey announced a boycott on US electronics in response.
More on the Turkish meltdown and its impact:
- Turkey is blaming social media and 'fabricated news' for the collapse of its currency
- Turkey could solve its banking crisis with a massive hike in interest rates — but Erdogan is ideologically against it
- The Turkish lira is sinking so fast it risks 'smashing into the ground' — and people are worried about European contagion
- 'Clear risks of contagion': European markets drop as Turkey's lira crisis spreads around the world
- Look: The moment the rand, and 5 other emerging-market currencies, followed the Turkish lira into meltdown
- This is why Turkey is in meltdown – and why it is dragging the rand down with it
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