As the date for delivery of Turkey’s order of a Russian S-400 air defence system drew closer, president Recep Tayyip Erdogan faced louder and louder warnings. If the shipment went ahead, US officials and analysts cautioned, then Donald Trump would have no choice but to impose sanctions that could wreak havoc on the fragile Turkish economy.
But in recent weeks, 30 planeloads of radars, missile launchers and support vehicles have arrived at an air base near Ankara, Turkey’s capital, and the threatened sanctions have not materialised. It has taken everyone by surprise.
“No one expected this outcome” says Asli Aydintasbas, a senior policy fellow at the European Council on Foreign Relations. “Erdogan took a huge gamble and it paid off — for now.”
Observers are now asking whether Turkey, a Nato member, has got away with its bold decision to strike a $2.5bn defence deal with the alliance’s historical foe — or whether the fallout has merely been postponed.
The picture is muddied by the chaotic policymaking that has become a defining feature of the Trump administration. Last summer, the US president was engaged in a Twitter dispute with Ankara over Andrew Brunson, a detained US pastor, that pushed the country to the brink of a financial crisis. A year later, he was stepping in to defend Mr Erdogan’s decision to buy the S-400 because the US would not sell its Patriot system to Ankara.
Yet even if Mr Erdogan has the US president on his side, it might not be enough to shield Turkey from the consequences of what some in Washington fear is the start of a strategic shift towards Moscow.
The Pentagon has already kicked Ankara out of the US-led F-35 fighter jet programme, risking long-term repercussions for the Turkish armed forces and their future co-operation with Nato. And there is still the danger that the US Congress — which is unusually united in its antipathy towards the Turkish president — could flex its muscles to make sure that his dealings with Russia do not go unpunished.
“Erdogan has managed to postpone a crisis,” Ms Aydintasbas says. “But I don’t think it’s entirely gone away.”
Turkey’s plan to buy the S-400 Triumf — the formidable, Russian, surface-to-air missile system — first became public in the autumn of 2016, in the febrile months that followed an attempted military coup. Mr Erdogan, who suspected the US of having had a hand in the bid to overthrow him, was drawn closer to his Russian counterpart Vladimir Putin despite deep differences over the conflict in Syria. Within months, they had secretly signed a deal for Turkey’s military — the second largest in Nato — to acquire two regiments of the S-400 system that was built to shoot down American fighter jets.
“People thought it was a joke,” says one US official who worked on the issue. “That initial surprise and confusion then started to turn to anger the more Erdogan dug his heels in.”
The Pentagon was anxious that Turkey’s acquisition of the S-400 would pose risks to the F-35, a fifth-generation aircraft that was due to become the backbone of Nato air operations. US defence officials acted to ensure that, if Turkey went ahead with the purchase, it would be blocked from receiving Lockheed Martin’s stealth aircraft.
There was another major concern. In 2017 Congress passed the Countering America’s Adversaries through Sanctions Act, known by its acronym of Caatsa. Enacted as Mr Trump faced accusations of collusion with Moscow, the measure was aimed at binding the hands of the US president on Russia.
But the implications for countries doing defence deals with Moscow soon began to dawn. “I thought: holy shit, they [Turkey] are going to get smashed by sanctions,” says Aaron Stein, director of the Middle East programme at the Philadelphia-based Foreign Policy Research Institute. “The senate armed services committee, John McCain [the late Republican senator] — they were all talking about how serious this was.”
A procession of US senators and unofficial intermediaries warned Mr Erdogan of the possible consequences should he go ahead with the deal.
But the Turkish leader would not change course. Russia, seeing an opportunity to curry favour with a useful ally and stir up trouble between Nato members, sped up the delivery timetable, prioritising Turkey’s order over a delivery to China. “Why wouldn’t we?” says a senior Russian official, who characterised the deal as part of Moscow’s drive to expand its clout in the region. “We have a role to play in that arena and we have to decide what our priorities are.”
With the first deliveries imminent, foreign investors — whose money is essential for sustaining the Turkish economy — grew more nervous. Turkey was badly hit by the 2018 currency crisis that knocked close to 30 per cent off the value of the lira. They feared that a fresh round of sanctions could trigger a new, even more painful, sell-off.
Hedge fund managers and credit analysts pored over the Caatsa legislation trying to second-guess Mr Trump — who by law must chose at least five of 12 possible measures if a person “engages in a significant transaction” with the Russian defence or intelligence sectors. They tried to predict whether he would opt for the light end of the spectrum, such as denying US visas, or pick measures that could cripple the Turkish financial system.
Mr Erdogan always insisted that Mr Trump would not sanction Turkey due to its geostrategic importance, straddling Europe and the Middle East. Shortly before the planned delivery, he said he would simply ask the US president not to impose punitive measures. “It’s that simple, since we are friends, since we are strategic partners,” he said.
That suggestion was met by derision. But then, at a meeting between the two men at the G20 summit in Osaka at the end of June, the US president appeared to prove him right. Mr Trump repeated Mr Erdogan’s complaint — long disputed by US officials — that he had been treated “very unfairly” by the Obama administration when Ankara had tried to buy a US-made Patriot missile system several years earlier.
“He needed [a missile system] for defence,” Mr Trump said. “So he went to Russia, he bought the S-400 because he couldn’t get it, couldn’t buy it.”
The following day, the headline of the pro-government Sabah newspaper in Turkey declared: “No sanctions.”
US officials were dismayed. Mr Stein says the Pentagon was “blindsided” by the president’s decision to veer so dramatically off-message. “Trump went bonkers at his press conference with Erdogan,” he says.
A fortnight later — just days before the third anniversary of the attempted coup — the first deliveries of the S-400 were transported to the air base near Ankara. Mr Erdogan described the purchase as “the most significant agreement in our history”.
More than a month on, there is still no sign of any sanctions. The lira gained as much as 6 per cent against the dollar in the weeks after the first shipment on July 12.
Some analysts believe that Mr Trump was reluctant to impose sanctions on Turkey while the two sides were still trying to thrash out a deal to avert a Turkish assault on Washington’s Kurdish allies in northern Syria.
“The American threats turned out to be basically empty words,” says Soli Ozel, a professor of international relations at Istanbul’s Kadir Has University. “Turkey has once more bet on its strategic importance, and it seems to have paid off.”
Yet, despite the swell of nationalist pride at Turkey’s defiance in the face of the threat of sanctions, the country has faced other consequences.
Within a week of the first S-400 deliveries, the Pentagon announced that Ankara would not receive its order of 100 F-35 fighter jets. US officials said that Turkish manufacturers would be removed from their role in producing parts such as blade rotors, landing gear components and cockpit displays, striking a blow to Turkey’s growing defence sector. “In the long term, the local defence industry was expecting $12bn-$15bn worth of business from these contracts,” says Arda Mevlutoglu, a Turkish defence industry consultant. “That number will now be zero.”
More significant are the implications for the Turkish air force of being left without an aircraft that was supposed to be at the core of its future operations. The aircraft had offered the potential of “not only beefing up an air force branch”, said a study by the Istanbul-based think-tank Edam, but “also [the] entire armed forces”.
Losing the F-35 and gaining the S-400 also raises questions about Turkey’s ability to take part in Nato operations.
The alliance will “try and find a way to be constructive and have a relationship where we can”, says Rachel Ellehuus, a former senior Pentagon official. “When you think about the practical implications, like interoperability or our ability to meet collective defence commitments, share intelligence or operate out of Incirlik air base [in southern Turkey], a good working relationship may become impossible.”
Even if he wants to, it remains unclear whether Mr Trump will be able to shield Turkey in the longer term. Under Caatsa legislation, to delay sanctions the White House would have to submit a report to Congress every 180 days certifying that Turkey is “substantially reducing” its business with Russia.
The problem for the Trump administration is that there is broad, bipartisan frustration with Turkey in Congress. Anger towards Mr Erdogan has been building for years, fuelled by a series of disputes from the detention of US consular staff to the Turkish president’s harsh language towards Israel. At the same time, many US lawmakers want to send a warning to other nations — including Saudi Arabia and India — that are planning to buy the S-400.
Jeanne Shaheen, a Democratic senator who has spearheaded efforts to punish Turkey not only for the S-400 purchase but also over the detention of Pastor Brunson and other areas of US concern, describes the country’s acquisition of a Russian missile system as “a critical moment for US foreign policy.”
She wants Mr Trump to impose “tiered sanctions” that intensify as further shipments arrive in Turkey and says “the president should develop specific benchmarks and brief Congress on how he expects to deter Turkey, as well as other nations, from further acquiring Russian weapons systems that undermine US national security interests”.
Several prominent Republican senators have also voiced concern, including Jim Risch, chairman of the senate foreign relations committee, and Jim Inhofe, chairman of the senate armed services committee.
The Trump administration appears to be searching for a new compromise. “There could be more sanctions to follow, but frankly what we’d really like is the S-400 not to become operational,” US secretary of state Mike Pompeo said at the end of July. Mr Erdogan has said that the technology will not be activated until April 2020, leaving some space for further negotiation.
There is, however, a bipartisan drive to table standalone legislation that would mandate the president to punish Turkey when Congress returns from recess in early September. If such a bill were to pass with a two-thirds majority, it would be impossible for Mr Trump to veto.
There are other potential pitfalls. Intensive talks last week appear to have averted, at least temporarily, a showdown between the US and Turkey over Syria, but the two sides profoundly disagree on the future of the Kurdish-controlled part of the country.
Given the deep antipathy towards Turkey in Washington, some analysts wonder whether it was wise for Ankara to have put all its eggs in one basket — namely, what Eric Edelman, a former US ambassador to Turkey, calls “an authoritarian bromance” between Mr Erdogan and Mr Trump.
Ms Aydintasbas says that next year’s US presidential contest, when Mr Trump will campaign for four more years in office, is a major risk for Turkey. “Ankara’s entire investment is in Trump,” she says. “Who is to say what will happen in America? He could be gone.”
The Turkish lira has enjoyed a dramatic turnround over the past three months. The currency — trading at TL5.5 to the dollar — received a significant boost from Jay Powell, chairman of the Federal Reserve, whose dovish tilt has fuelled recent investor appetite for riskier emerging market assets. And the decreased risk of US sanctions also helped it defy warnings of a fresh crisis.
Investors feared that, once shipments of the Russian S-400 surface-to-air missile system began to be delivered, Donald Trump would have no choice but to respond with sanctions, even if those measures were on the lighter end of the spectrum. The memory of last summer’s Turkish currency crisis — triggered when the US president imposed largely symbolic sanctions in a bid to free a detained American pastor — was still etched in their minds.
“It is a risk I don’t want to see in the headlines if I’m an investor in Turkey,” said one portfolio manager, speaking in April. Economists warned that a fresh slide in the lira would pile pressure on Turkish corporates that are heavily indebted in foreign currency, as well as on the country’s banking sector.
But with Mr Trump reluctant to punish Turkey, and the Fed triggering a global hunt for yield, the Turkish currency has reaped the benefits. Having plunged when the S-400 began arriving in Ankara on July 12 the lira has subsequently gained 6 per cent against the dollar. It even shrugged off the sacking of Turkey’s central bank governor last month, and a dramatic 4.25 per cent rate rise a few weeks later.
Phoenix Kalen, emerging markets strategy director at Société Generale, said in a recent client note that the risk of sanctions appeared to have been “pushed out”. Adding: “We are unlikely to witness a repeat of the Turkish lira crisis of summer 2018.”