Turkey’s Erdoğan, France’s Macron vow to boost economic ties

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French President Emmanuel Macron (L) shakes hands with Turkey's President Recep Tayyip Erdogan ahead of a bi-lateral meeting on the sidelines of the second day of the North Atlantic Treaty Organization (NATO) summit in Brussels on July 12, 2018. / AFP PHOTO / POOL / Ludovic MARIN

Turkish President Recep Tayyip Erdoğan and French President Emmanuel Macron spoke by phone on Thursday and stressed the importance of developing economic and trade ties and boosting bilateral investment amid a currency crisis in Turkey, Reuters reported, citing a Turkish presidential source.

The source said they agreed their finance ministers would meet soon and said Macron told Erdoğan that Turkey’s economic stability was important for France. Turkey has been hit by a lira crisis fuelled by a fierce row with the United States.

The Turkish lira has lost almost half of its value since the beginning of this year, hitting a record low of 7.20 against the dollar on Aug. 12.

The US-Turkey row started following a court ruling to put American pastor Andrew Brunson under house arrest after almost two years of incarceration on “terrorism” charges.

The US administration has demanded his release.

German Chancellor Angela Merkel also spoke by phone on Wednesday with President Erdoğan and stressed that her country does not want to see economic instability in Turkey.

According to Reuters, Turkey’s economic crisis poses a threat to European banks with business in the country.

Spain’s BBVA, Italy’s UniCredit, France’s BNP Paribas, Dutch bank ING and Britain’s HSBC are the most exposed to Turkey and vulnerable to its free-falling currency.

Analysts see as manageable even a worst case scenario — which they deem unlikely at present — under which these banks would be forced to write off completely their local operations or exit the country.

But Turkey’s trouble are feeding risk aversion among investors, who worry about financial market turmoil spreading to other emerging countries or even Italy, which faces key decisions over its budget and credit ratings after the summer.

Some European politicians have also repeatedly highlighted that Turkey has been an important actor for the continent’s stability since it hosts more than 3.5 million Syrian refugees who fled their country after a civil war broke out in 2011.

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