NEW YORK: The Trump administration is unsettling markets and US allies as it makes increasing use of powerful sanctions, underscoring President Donald Trumps willingness to act alone on foreign policy even at the expense of heightening global instability, according to The Financial Times .
Turkish and Russian markets were hit hard last week as US sanctions exacerbated concerns about the fragility of emerging markets, the newspapers said in a dispatch.
The Turkish Lira [is sliding] rapidly downward against our very strong Dollar Trump tweeted on Friday, as he announced a tariff increase on Turkish steel and aluminium to add to sanctions against Ankaras interior and justice ministers.
Meanwhile, Turkeys currency fell to another record low on Monday, hitting stocks in Europe and Asia and raising fears that the country is on the verge of an economic crisis that could spread to other emerging markets, The New York Times said.
The crisis and tensions with the United States has raised concerns over whether emerging economies that have benefited in recent years from foreign investment may also be vulnerable, according to the Times.
Rising interest rates in the United States and in Europe have made investor less tolerant of emerging markets. Foreign investors piled money into Turkish assets for years, lured by what appeared to be a stable economy and higher returns. But as interest rates rise in countries seen as safer, the relative attractiveness of riskier investments wanes. A crisis like the one in Turkey may be all it takes to send them fleeing, the Times added.
Turkeys central bank insisted over the weekend that it would take all necessary measures to preserve the countrys financial stability.
In his Friday’s tweet, President Trump also said, Our relations with Turkey are not good at this time
The dispute between Washington and Ankara over the detention of a US pastor has contributed to the 28 per cent slump in the Turkish lira against the dollar this month.
The Russian rouble has fallen 6 per cent since the US announced sweeping sanctions on Wednesday over the near-fatal poisoning in the UK of a former Russian spy.
Iran has also come under mounting financial pressure after the US reimposed sanctions following its withdrawal from the nuclear deal with Tehran, despite objections of close allies that had also signed the pact. The Iranian currency has fallen 60 per cent this year, forcing the countrys central bank to relax foreign exchange restrictions, according to The Financial Times.
The US has to rehabilitate its addiction to sanctions & bullying or entire world will unite beyond verbal condemnations to force it to, Javad Zarif, Irans foreign minister said on Twitter on Saturday, describing Washingtons sanctions against its Nato ally Turkey as shameful.
The US has been increasingly using sanctions since the 1990s, particularly after George W Bush ramped up activity after the September 11 2001 attacks. But Trump has taken the measures to a new level, as he seeks to take muscular executive actions that avoid the cost of military entanglements and yet have an impact, The Financial Times said.
The US Treasury last year added 944 people and entities to its sanctions list the highest number since 2001, according to Gibson, Dunn & Crutcher. Adam Smith, a partner at the law firm and a former senior sanctions official at the US Treasury, said it was on track to add a further 1,000 names this year. It is almost a perfect storm, John Smith, a former head of the Treasurys Office of Foreign Assets Control now at Morrison & Foerster, another law firm, was quoted as saying.
You have global crises that the US wants to confront, you have a Congress that is skeptical of the administration, particularly with respect to Russia and you have an administration that is far more willing to confront not only foes, but also friends. -APP