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“Growing anti-Turkish bipartisan sentiment on Capitol Hill could culminate in the US Congress approving a set of severe economic sanctions to penalize Turkey for purchasing the Russian S-400 air defence system,” note Rabobank analysts in a recently published report assessing emerging market currencies for 2020.

Key quotes

“Turkey has been also strongly criticized by Congress for conducting a military operation in northern Syria against Kurdish forces long allied with the US. The main reason why the lira has not collapsed yet is President Trump’s seeming admiration of President Erdogan.”

“The Trump administration has been allegedly stalling the implementation of the CAATSA on Turkey. However, Trump’s relationship with Erdogan could be put to a major test in 2020 due to growing bipartisan political pressure on Trump to adopt a
much firmer attitude towards Turkey, especially if the Russian S-400s are fully operational in 2020 and/or the ceasefire in northern Syria collapses.”

“Many Republicans want to reprimand Turkey and Trump’s high regard of Erdogan could become an issue when Trump may need their support the most during the 2020 election campaign dominated by Democrats’ attempt to impeach him.”