Turkey has declared independence from Washington D.C. The post-World War II international order is reaching the end of its shelf life. With every day that passes where President Erdogan is not removed from power or Turkish banks don't fail, is another day for Turkey to shake its fist at the U.S. for its fomenting a crisis of confidence in Turkey's currency, the lira.
It is not that this loss of confidence isn't well earned. It is. But, currencies don't blow up like this unless the country has placed itself (or found itself) on the wrong side of U.S. foreign policy imperatives.
But, the longer this situation goes on, the more convinced I am that Turkey, along with its partners -- Russia, China and Iran -- invited this crisis of confidence. They did so in the same way one always provokes a bully.
You stand up to them.
And once alpha-male behavior begins, it only ends with humiliation for one party. Don't think for a second that the U.S. didn't start this fight. It did.
But, this fight is bigger than Turkey. Turkey is just the playground at which this neighborhood after-school tete-a-tete is occurring. The big fight is over the future of the global monetary system and global trade.
And the current system is vulnerable to the same collapse as confidence in it as uncertainty spreads out from Turkey.
That is Turkey's leverage.
A Three-Hour Alliance Tour
That is what President Erdogan is saying as he and his cabinet fan out across the globe engaging world leaders who would be most receptive to this message.
Erdogan met with German Chancellor Angela Merkel, presumably to discuss assistance in keeping Turkish/German trade flowing, most likely by bypassing the U.S. dollar. Germany affirmed that Turkey should seek an IMF bailout.
That's code for give in to the U.S. from Merkel. She's in no position to stand up to the U.S.
I'm sure permitting for the stages of Turkish Stream into the EU were also discussed as well as the Trans-Adriatic Pipline (TAP) that would complete the first stage of the Southern Gas Corridor from Azerbaijan and the Shah-Deniz field in the Caspian Sea.
Qatar announced a $15 billion investment project into Turkey. We don't know what it will look like, but, a massive liquidity injection into the most strategically-important Turkish banks to stabilize them would be welcomed.
The announcement alone has already gone a long way to calming markets. And it's not like Qatar doesn't have a track record of making strategic, short-term investments as a favor to their larger benefactors, c.f. Qatar's strange relationship with the 20% sale of Rosneft over the past year.
Let's also not forget that Qatar defied Saudi Arabia's blockade of it last year, the opposition to which likely cost Secretary of State Rex Tillerson his job, since Trump needs the Saudis in the near term to support the petrodollar.
This is repayment for Erdogan's support last year, where he pledged to send in troops to stop any Saudi invasion as well as diverted food and other supplies to Qatar during the worst of the blockade.
No More Russian VISA
It should also come as no shock to anyone that Erdogan and Putin already discussed a bilateral trade agreement between Turkey and Russia to, again, bypass the U.S. dollar. Also, Crimea's banks just kicked Visa and MasterCard off the peninsula, in favor of Russia's own MIR card payment system.
And that may be more significant than people initially think. MIR will replace all other payment card systems in Russia by 2020 and will likely grow beyond its border.
“On August 14, the process of replacing Visa and MasterCard plastic cards in favour of the Mir payment system has ended. Visa and MasterCard plastic cards issued by Genbank, which have not been replaced, are not serviced since August 14,” the Crimean bank said.
However, Genbank would still accept Visa and MasterCard cards issued by other banks outside Crimea at its ATMs. The bank had been the only financial institution in Crimea to issue cards of foreign operators.
Mir is a Russian payment system established by the Central Bank of Russia in 2015. It is currently accepted mostly by Russia-based companies, such as Aeroflot or Russian Railways, but is gradually gaining acceptance among foreign companies with Russian operations.
And remember, also, that Russia has developed and is in internal testing of its replacement electronic international transfer system as a competitor to the U.S.-dominated SWIFT.
And with Iran staring at SWIFT expulsion in November with the U.S. pulling out of the JCPOA, it is very possible that the sanctions/tariff war that Trump and the U.S. is waging escalates to the point of also kicking out countries like Turkey and Russia as well.
Because once someone starts standing up to the bully, it's either go big or go home.
And that's where the big picture strategist in me says this had to be invited. Putin has a history of allowing his opponents to over-extend themselves and then, like the Judo master he is, use that as leverage to reverse them and turn the situation to his advantage.
If the goal is to cleave Turkey from NATO, and, by doing so, terminally weaken NATO, then this row with Turkey is the perfect means to achieve that goal. And if Russia, along with China and others, have in place the infrastructure to assist in Turkey survive the onslaught, then why wouldn't you convince Erdogan this is his and Turkey's best course of action?
Erdogan, for his part, has all but accused the U.S. of having staged the 2016 coup attempt against him. His lawyers are pressing for a questioning U.S. military personnel stationed at Incerlik.
If the next step in the financial war is to threaten Turkey with SWIFT expulsion over doing business with Iran, then Turkey's next move could be to raid Incerlik and extract those Erdogan believes to be guilty of organizing the coup.
Both of these are nuclear options, and if one is on the table, then the other is as well.
And that's when the chest thumping ends and someone gets his nose bloodied.
But, if you look at the events of the past few days you can see an alliance forming around the central core of emerging markets and established powers aligning themselves against what is increasingly abusive behavior from the U.S.
The Russians are right in saying that by using these financial weapons of mass destruction this way, the U.S. is undermining the world's faith in the U.S. dollar as a trade settlement currency.
That's where the limit of financial repression exists. That's when the cost of the dollar's convenience becomes larger than the benefits its use affords. Trump would do well to remember that as he pursues the politics of humiliation on his allies as well as his rivals.