Qatar comes to Turkey's aid, pledging $15 billion lifeline

The amount is a small fraction of what Turkey needs to shore up its faltering economy or pay its dollar debts.
Friday 17/08/2018
Turkish President Tayyip Erdogan meets with Emir of Qatar Sheikh Tamim bin Hamad al-Thani in Ankara, Turkey August 15, 2018. (Reuters)
Turkish President Tayyip Erdogan meets with Emir of Qatar Sheikh Tamim bin Hamad al-Thani in Ankara, Turkey August 15, 2018. (Reuters)

LONDON - Qatar has pledged $15 billion to prop up Turkey’s ailing economy.

“Turkish-Qatari relations are based on solid foundations of true friendship and solidarity,” Turkish presidential spokesman Ibrahim Kalin posted on Twitter on August 15 in announcing the pledge. It came during a meeting between Turkish President Recep Tayyip Erdogan and Qatari Emir Sheikh Tamim bin Hamad al-Thani in Ankara.

Qatar went to Turkey's aid amid one of the biggest financial crisis facing the Erdogan government.The Turkish lira has been in free fall, losing close to 40% of its value against the US dollar this year.

Several factors contributed to Turkey’s currency woes, including market worries over Erdogan’s increasing control of Turkey’s economy, especially after he gained sweeping powers in a June vote, including final say over economic matters.

The lira’s situation worsened when US President Donald Trump on August 10 announced new tariffs on Turkish steel and aluminium. The US move is tied to an on-going dispute between the two countries over the detention of a US pastor, whom Turkish authorities accuse of ties with the outlawed Kurdistan Workers' Party and the Gulenist movement.

"We stand by our brothers in Turkey," Sheikh Tamimi wrote on his official Twitter account following meeting with Erdogan. He stressed what he called Turkey's support for "the causes of the [Arab] nation and Qatar."

Ankara has also taken a pro-Qatari stance in a dispute involving Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. The four countries severed ties with Doha in June 2017 over what they claimed was the Qatari government’s support for terrorism and Islamist groups such as the Muslim Brotherhood, as well as its ties to Iran, generally viewed as a destabilising regional force.

Ankara’s setting up a military base in Qatar was also interpreted as a threat by some Gulf Arab countries.

The Kuwaiti government denied Turkish media reports that it would inject $1.6 billion into the Turkish currency.

Kuwait’s Ministry of Finance said in a statement that Finance Minister Nayef al-Hajraf had met with Berat Albayrak, Turkish minister of treasury and finance and Erdogan's son-in-law, at Kuwait International Airport on August 12. The two were said to have discussed the economic situation in Turkey, considering the significant Kuwaiti investments in the country, which is estimated to be in the $2 billion range, $400 million of which is by private citizens.

The statement stressed that the two ministers did not touch on the possibility of Kuwait backing the Turkish national currency nor did they make financial or investment decisions.

The denial by the Kuwaiti government came despite Muslim Brotherhood supporters, including clerics and members of the Kuwait parliament, telling Kuwaitis it was their Islamic duty to support the Turkish lira.

Regardless of the Qatari pledge, the amount is a small fraction of what Turkey needs to shore up its faltering economy or pay its dollar debts, the New York Times report.

An International Monetary Fund (IMF) official told CNBC that Turkey needed to commit to sound economic policies that promote stability and that the IMF had yet to receive a request for assistance from the government in Ankara.