Turkey Defiant as German Relations Slump to a Postwar Low (1)

(Bloomberg) -- Turkey’s Foreign Minister Mevlut Cavusoglu said his country wouldn’t give in to threats, as relations with its NATO ally Germany slumped to their lowest since World War II.

Cavusoglu was responding to an announcement by German Foreign Minister Sigmar Gabriel earlier Thursday of a “re-orientation” of German policy toward Turkey, in which he warned companies against doing business in the country and issued revised guidelines for travelers.

“Germany knows very well that the Turkish people have never bent in the face of any threats or blackmail,” Cavusoglu said. “We will evaluate these threats made to us with the same state seriousness and we will of course respond.”

The tit-for-tat escalation underscores what Turkey called a “serious crisis of confidence” with Germany that threatens to harm trading ties worth more than $36 billion last year. After months of discord over NATO troop visits, imprisoned journalists and Turkish barbs peppered with Nazi references, tensions came to a head this week over the detention of a German human-rights activist.

“This is the worst crisis between Turkey and Germany since World War II, when Turkey and Germany took their places on the opposite camps even though Turkey did not enter the war,” Huseyin Pazarci, a professor of international relations who lectures at Near East University in northern Cyprus, said by phone from Ankara. “Political and trade relations with Germany have been steadily improving since it began receiving Turkish workers in 1960s.”

Dependency

The rapidly escalating situation affects two NATO allies that are mutually dependent. Germany is Turkey’s largest trading partner, while ethnic Turks make up Germany’s largest minority. More than 6,800 German firms are currently operating in Turkey, according to the German-Turkish chamber of commerce.

At stake is also the future of a refugee deal between the European Union and Turkey. Chancellor Angela Merkel was key in pressing for the accord with President Recep Tayyip Erdogan under which Turkey keeps mainly Syrian refugees in the country in return for billions of euros in aid and progress toward EU membership.

But as Erdogan has cracked down on dissent since a failed coup last year -- sacking or jailing more than 100,000 supposed followers of the cleric Turkey says organized the putsch attempt -- Germany has been a prime target of his wrath.

The Turkish leader resorted to Nazi references when attacking Germany for stopping his officials from campaigning among Germany-based Turks ahead of a critical referendum, contributing to a 25 percent decline in German visitors to Turkey so far this year.

‘Disappointed’

Turkey is blaming Germany for harboring terrorists, including members of the Gulenist movement it accuses of leading the coup as well as the autonomy-seeking Kurdish PKK, Pazarci said. “Turkey is very much disappointed over the lack of cooperation from its main allies, including the U.S. and Germany, on that front, and the more its demands are ignored, the more the Turkish government is adopting a tougher tone.”

This week’s flare-up was prompted by Turkey’s arrest of German rights activist Peter Steudtner and five others on the grounds that they were part of a terrorist organization -- an act denounced by Merkel as “absolutely unjustified.”

Turkey’s actions show that it’s “departing from the basis of European values,” Gabriel told reporters in Berlin on Thursday, raising the prospect of diminishing investment and a further drop in the number of Germans traveling to Turkey. Merkel backed his position, calling it “necessary and unavoidable” through her spokesman. German business groups, including the BGA exporter lobby, warned of a “significant drop” in sales to Turkey.

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The Steudtner case “shows that German citizens are no longer safe from arbitrary arrests in Turkey,” Gabriel said. “We can’t go on as we have before,” he added. “We have to be clearer than before so that those in charge in Ankara understand that such a policy won’t be without consequences.”

German Meddling

Turkey’s Foreign Ministry earlier accused Germany of meddling with the independence of its judiciary system by criticizing the arrests, saying statements by German government officials “directly interfere with Turkish judiciary.” Germany is “harboring various groups of terrorists who have been targeting our country and preventing their trial before justice,” the ministry said, in a reference to supporters of the Gulen movement.

Caught in the crossfires, Germany’s BGA exporters signaled the threat over business is real, saying that companies had already halted investment. At 22 billion euros ($25 billion) in deliveries of mostly auto parts and chemical products, Turkey ranked in 15th place last year, BGA said. By contrast, Turkish exports to Germany of some $14 billion made it the No. 1 destination for foreign sales, ahead of the U.K., Italy and Iraq.

“You certainly can’t advise any companies to take on investments in this climate,” said the BGA.

(Updates with Turkish Foreign Ministry response from first paragraph.)

To contact the reporters on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net, Patrick Donahue in Berlin at pdonahue1@bloomberg.net, Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Alaa Shahine at asalha@bloomberg.net, Stuart Biggs, Mark Williams

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