Qatar has pledged $15 billion worth of investment in Turkey in a bid to curb the impact of new U.S. sanctions.
Qatar's Emir Sheikh Tamim bin Hamad Al Thani made the announcement Wednesday, saying the move was his way of standing by "brothers in Turkey," Qatari-owned news network Al Jazeera reported.
The emir's comments followed direct talks with Turkish President Recep Tayyip Erdogan in Ankara. Al Thani was also the first foreign head of state to visit Turkey since new tensions arose last week with Washington. Both the Turkish and Qatari finance ministers also attended the meeting.
Quickly responding to the announcement and other steps Ankara has taken, the lira stabilized on Wednesday, gaining 5 percent to trade around 6 lire to the U.S. dollar, compared with a record low of 7 earlier in the week.
"This is part of the Turkish government's strategy to avoid the IMF by finding alternative external support. To be a sustainable stabilizer, funding needs to be larger and reach the central bank," Mohamed A El-Erian, the chief economic adviser at the German insurer Allianz, said, according to Bloomberg.
Experts also pointed to the Turkish Central Bank's move to tighten rules on foreign exchange transactions and currency swaps, which limited the ability of banks to supply lira to international financial organizations.
"The limits on shorting the lira taken by Ankara have halted the slide in the currency, which has firmed over 4 percent after its 20 percent decline, easing contagion fears and cooling the threat on financials," Fiona Cincotta of City Index told The Guardian.
The diplomatic row between Washington and Ankara came about as a result of the detention of American pastor Andrew Brunson. Turkey arrested Brunson following a failed 2016 military coup against Erdogan, accusing the pastor of supporting the movement of U.S.-based Islamic cleric Fethullah Gulen, whom the Turkish government blamed for the coup. The pastor insists he is innocent; however, he could face up to 35 years in prison if convicted in a Turkish court.
Trump recently demanded the pastor's release, which Turkey refused. In response, Washington moved to implement punitive sanctions against the country.
Oil-rich Qatar hosts a U.S. military base and has invested heavily in the U.S. economy, recently pledging billions more. U.S. Treasury Secretary Steven Mnuchin reportedly told Qatar's Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani at a dinner in late June: "You have been a great friend to the United States."
Nevertheless, relations between Washington and Qatar have appeared more unstable than previously under the leadership of Trump. After Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic ties with Doha last year, accusing the country of funding terrorism and destabilizing the region, the president tweeted his support of the blockade.
Former Secretary of State Rex Tillerson broke ranks with Trump over the crisis, encouraging a speedy and peaceful resolution. Reports have suggested that Arab leaders then moved to lobby the Trump administration to force Tillerson out. He was then fired by the president in early March.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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Jason Lemon is a Weekend Editor at Newsweek based in Brooklyn, New York. Prior to taking on the editor role, Jason's reporting focused on ... Read more
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