Germany is considering offering Turkey emergency aid funds as U.S. sanctions continue to wreak havoc on the Turkish economy.
“We would do a lot to try to stabilize Turkey,” a senior German official said, according to The Wall Street Journal. “We don’t have much choice.”
Berlin is still discussing what measures it will take, but is considering everything from a coordinated European bailout like that used in the eurozone debt crisis to project-specific loans by state-controlled development banks and bilateral aid.
{mosads}Two German senior officials told the Journal that German Finance Minister Olaf Scholz discussed some of the possible forms of the emergency assistance with his Turkish counterpart, Berat Albayrak, recently.
European and German officials said that they fear Turkey’s economic woes will destabilize the region, sending a new wave of immigrants into Europe.
Turkey’s economy has suffered since the U.S. enacted sanctions earlier this month after Turkey refused to release American pastor Andrew Brunson, causing the Turkish lira to hit record lows.
President Trump said last Monday that he would not make any concessions to Turkey amid the ongoing dispute.
“This is an absolutely insane and ill-informed policy,” one senior German official said of the sanctions.
The Journal reports that Berlin’s central fear is that economic turmoil would destroy a deal the European Union made with Turkey to limit the number of refugees moving into Europe. The EU pays Turkey, which in turn cracks down on refugees passing through its territory.
Two EU officials confirmed that there have been discussions of a possible bailout for Turkey, but only if the U.S.-based International Monetary Fund (IMF) is a party.
That may difficult to achieve, given that the U.S. is threatening to veto any request for IMF funding from Turkey.
If the IMF does not agree to bail out Turkey, the EU will have to create new financial tools, which means building a consensus, one German official and two EU officials told the Journal.
“Turkey would have to initiate this demand and only then would we discuss what support we could bring them,” a French finance ministry official said.
A spokesman for the Turkish finance ministry said Turkish officials had no intention of soliciting outside support. Any EU aid package would require austerity measures, which Turkish President Tayyip Erdoğan may well reject.
A German official said that Berlin could consider bilateral funds via untied financial credits, but another official said any German or European support was conditional on the IMF support.
However, a Deutschlandtrend poll released last week found that 72 percent of Germans oppose offering any funds to Turkey, creating a large political obstacle to any action.
Yet, the EU may act anyway.
A senior EU diplomat in Ankara said, “We cannot just sit and watch Turkey go down the drain. The migration pressure and the geostrategic importance, as well as the economic links, are too important.”