Many global stock markets have suffered substantial falls from recent market peaks lately and in view of socio-political tensions in Turkey. Investors there have been hit hard with the largest falls for years in early June. However the situation to its southern borders adds to its problems.
In addition to my mixed metaphor title is surely the oxymoronic Hizbollah peace keepers come to the aid of the Assad regime in Syria. This Alawite off-shoot sect of Shi’ite Islam, fighting a civil war against the fractious Syrian National Coalition ranging from the Free Syrian Army to off-shoots of Al Qaeda adds confusion with complexity. The rebel coalition is receiving arms from both Sunni-dominate Saudi Arabia and soon from the US, UK and France (or part Christian/part secular west). Maybe the UK and France are trying to revive their post-colonial influence in the region? Russia and Iran are arming the Syrian regime leaving any hope of achieving a cease fire and a return to stability almost impossible to conceive at this time. What’s most needed is to move forward to more peaceful times not back to a previous era of misrule and long fought-out conflicts.
Turkey’s demonstrations mainly in Istanbul and Ankara seem akin to the Arab Spring. Peaceful and violent crowds who mostly are secular or non-Moslem wish to oust the Islamic AKP party’s authoritarian Prime Minister Erdogan. This unrest adds to recent bombings near the Syrian border linked to factions in Syria. Turkey also has a large Kurdish population in the SE of the country which after a long period of internal unrest requires careful diplomacy. However, in light of political successes since the US led invasion of Iraq the autonomous Kurdish Regional Government of Northern Iraq does suggest that further ethnic disputes in the region seem easily plausible if not probable.
This all makes for a testing period of geo-political instability in a supposedly faster growing economic region to that of the EU. This can only impinge against trade and stability at a time when investors need to deal with the skittish of markets in view of the effects of the EU, US and UK central bank policies and continuing financial repression in developed western markets. Turkey’s bond and stock markets have received an influx of investment of late but recent events will test confidence along with competence.
All part of the twisted web we weave- revenge of the metaphor perhaps- it’s darkest before the dawn. Although Syria is a worry for everyone not just global investors surely Turkey, the Kurds and Iraq can at least see light at the end of the tunnel despite all the problems.
LDC