In the USA, in case you didn't know, there used to be a game called "chicken." The essence of the game is that two individuals would drive their cars at breakneck speed toward each other, and whoever veered away first was "chicken." Of course, this insane and irrational "game" seems to have informed the thinking of the USSA's "neo-consevatives" or neocons in recent years, as they seem to be playing chicken with France, Italy, Germany, Great Britain, China, Japan, Russia and....well, and just about everybody.
Well, of course, it takes two to play chicken, and Turkey's Sultan Erdogan appears to be willing to play the game, especially in the wake of his historic meeting with Mr. Putin recently. Now, why neither side came away from that meeting with everything they wanted, at least they're talking to each other. But Mr. G.B. shared this article from our friends at Zero Hedge, and if nothing else, it suggests that whatever shortcomings the meeting held for the Kremlin or the Sublime Porte, the latter, at least, comes away from the event a little more emboldened:
No doubt the reader caught the main story here:
But perhaps the most notable development was reported today by Turkey's Gunes newspaper, which said that as part of the discussion between Putin and Erdogan on Tuesday, the Turkish president suggested to abandon the US dollar in bilateral trade between Turkey and Russia, and instead to transact directly in lira and rubles. This would "benefit both Russia and Turkey", Erdogan allegedly said in his August 9 meeting in St Petersburg, adding that this would relieve the lira from the USD's upward pressure. The reason Erdogan is concerned about exchange rates is because recently Turkish inflation soared by nearly 8% Y/Y, and the recent devaluation of the TRY against the USD has only poured more oil on the fire.
Needless to say, such a bilateral agreement would further infuriate Turkey's European "friends", permanently halting Turkish accession into the customs union, in accordance with Austria's recent demands, and would in turn lead to a dissolution of the refugee agreement that is still keeping millions in refugees away from Europe in general and Germany, and Merkel's plunging popularity ratings, in particular. Which, incidentally, means that not only Erdogan, but now also Putin, holds key leverage over the career of Europe's most important politician.
Leaving aside for the moment Kanzlerin Merkel's plummeting approval rates (can't blame the Germans for that! she has only herself to blame) and growing unpopularity throughout the rest of the EU project, what's noteworthy here is that Turkey appears to be ready to abandon the trade with Russia in dollars and enter into bilateral ruble-lira arrangements, which is, of course, yet another blow against the dollar's reserve currency status.
All this comes after the abortive coup attempt against Erdogan, and in the context of increasing noise from Ankara that it is disgusted and dissatisfied with NATO in general and the USSA in particular. There were, you'll recall, actions against the US airbase at Incirlik, when the Turks shut off the power to the base for a few days, and there have been ongoing protests against the base since.
What to watch for? If Turkey and Russia do proceed with such bi-lateral trade and currency agreements, then eventually I suspect that Turkey will indeed withdraw from NATO if it is able to satisfy its defense requirements from purchases from Russia or China. If that happens, it will demand the removal of the US base at Incirlik, and if that happens, then the "fun" begins. The USSA in that case can then refuse, and risk an extraordinary amount of blowback and loss of prestige in the world, or it can press for a delay while it tries to find new basing in the region. Given the "success" of USSA foreign policy in the region under the previous two administrations (and you know who), that is not likely to be forthcoming. Either way, it's a lose-lose situation, for refusal to remove the base will lead to similar demands and increasing pressures in other countries (think Japan and Okinawa here), and removal of the base will lead to...well, the same thing.
And the sultan knows this, and is playing for keeps.
See you on the flip side...