Author: Mr. X
The Roman Empire didn’t fall until 1453. We in the West think of the Empire having vanished many centuries before, with the medieval kingdoms rising to take its place in the chaos afterwards. Yet in the East, in what is misleadingly called the “Byzantine” Empire, Rome’s legacy lived on.
The whole “Byzantine” name should be retired. The Greek-speaking rulers of the “Eastern Roman Empire” never called themselves anything other than Roman. Constantinople even managed to reconquer the original capital under Justinian, though plague and political infighting made holding it impossible.
In 1453, the Roman Empire truly fell. Mehmed II, the Conqueror, led the Ottoman Empire to a crushing victory over its traditional rival. However, though the Hagia Sophia was turned into a mosque and the city was sacked, it’s not true to say the Ottomans really “destroyed” it. The real damage to Constantinople had been done by fellow Christians, albeit Roman Catholics, in the disastrous Fourth Crusade. The Empire arguably never recovered.
More importantly, Mehmed II actually took the title “Caesar of the Romans.” Like Charlemagne, Mehmed wanted to associate himself with the prestige of the original empire. In his mind, he was continuing, or perhaps perfecting, the imperial tradition.
Yet the Ottomans had a rival in Russia, which was just starting to take its modern form. Sophia Palaiologina, an imperial princess of the last “Byzantine” dynasty, married Grand Prince Ivan III of Moscow. Ivan III defeated the Golden Horde and helped create the Russian Tsardom. As Russia expanded, both political and religious leaders promoted the idea that Moscow was the true “Third Rome,” one which would never fall, giving Russia its own form of Manifest Destiny.
For centuries afterward, Russia and the Ottoman Empire were traditional enemies. Russia came close to recapturing Constantinople. They would have if Great Britain and France hadn’t intervened to actually help the supposed existential enemy of “the Turk.”
Politics changed and alliances shifted, but the Turkish-Russian rivalry was almost always there. There are certain powers that are almost destined to be enemies, no matter what religion or ideology holds sway. Even when the Russian Empire had turned into the Soviet Union and the Ottoman Empire had disintegrated and been reduced to modern Turkey, the Turks were an important part of NATO. The propaganda may have changed, but the geopolitical framework would have been familiar to any sultan or tsar.
JPMorgan declares this new oil boom is a SUPER bull for oil and says “an energy revolution is underway.”
Which is why Chief Investment Strategist, Adam O’Dell, has just released the details on his No. 1 oil stock of 2023.
Until very recently, it looked like Turkey was going to become part of the West. Turkey applied to join the European Union in 1987. It seemed like this would eventually happen – Turkey is a predominantly Muslim country, but modern Turkey, exemplified by its founder Mustafa Kemal Atatürk, was built on the explicit repudiation of Turkey being a universal caliphate. Modern Turkey was going to be a secular, progressive, and powerful nation-state. Europe itself is no longer the “Christendom” that defined itself against “the Turk” or Islam. Figures like former Prime Minister Boris Johnson (himself of partial Turkish origin) used to argue quite passionately that Turkey was a core part of Europe.
Yet all this has changed.
First, the immigration issue has increased divisions between Turkey and the West. Turkey often serves as the “refugee warehouse” of Europe, holding would-be migrants who want to go to the Continent. President Recep Tayyip Erdogan has often used migrants as political weapons, leading to bitterness within Europe. Anti-immigrant nationalist and populist movements have become influential in many European countries. They charge, with justification, that Turkey is using migration as a club to win concessions from Brussels. If Turkey became part of the EU, the hundreds of thousands of migrants stuck in Turkey could much more easily move into the Continent, increasing political tensions and pressure on infrastructure. The situation now is barely tenable. Greece is expanding its border wall with Turkey to stop illegal migration and wants more help from the EU and the UK in dealing with the crisis.
Second, the nature of Turkey’s government has changed. Whatever the rhetoric about democracy, the West has been relatively happy to put up with authoritarianism in Turkey, as long as the traditionally secular army was running the show. However, in recent years, Erdogan has moved to embrace the Ottoman legacy. The government has become not just authoritarian, but socially conservative, even as the European Union now defines itself by social liberalism. It’s no longer just right-wing nationalists who might oppose Turkey in the EU. A government that is slowly trending towards theocracy will not mix with a Europe that is deeply concerned with LGBT issues.
Finally and most importantly, Erdogan is positioning Turkey to be a “civilization-state” in the same way as China, India, and Russia are. This means Turkey, though part of NATO, has geopolitical goals of its own. It is active in northern Syria. It is constantly fighting Kurdish separatists and is hostile to Kurdish nationalism. Erdogan has also been an enthusiastic backer of Azerbaijan in its conflicts against Armenia. Most recently, he helped Azerbaijan win a decisive victory over Armenia in the second Nagorno-Karabah War last year.
In most of these conflicts, Russia and Turkey have been enemies. Russia backs the Syrian government; Turkey backs the opposition. Russia protects Armenia; Turkey backs Azerbaijan.
Yet now the calculations may be changing. The European Union’s willingness to accept Ukraine as a new member has infuriated Erdogan, who said it shows the EU is “not sincere” in its rhetoric. “Will you put Turkey on your agenda when someone attacks [us] too?” he asked. Turkey is also not happy about Sweden joining NATO, and has demanded action against Kurdish activists it considers terrorists. European nationalists have also seized on the tension, with a recent protest outside the Turkish embassy featuring a man burning the Quran. Turkey said after this incident that Sweden should not expect any Turkish support for Sweden joining NATO.
It’s very possible we could end up with Sweden and Finland in NATO and Turkey kicked out.
The volatility has been a windfall for us – 293.2%, 161.7%, and 43.6% on SPX in under a week.
Russia and Turkey are also moving closer. The Turkish economy is being gutted by inflation. Russia is desperate because its raw materials have been cut off from Western markets. The two are natural economic partners. Russia needs a way around Western economic sanctions. Turkey needs cheap energy and consumer goods to combat runaway inflation. To put the problem in context, inflation is supposed to hit over 42% in Turkey this year – and that’s an improvement. It’s no surprise Erdogan and Putin have a good working relationship.
Turkey is also essential if Russia is going to export oil, gas, or food through the Black Sea. Russia’s efforts in Ukraine mean that Moscow can no longer back its protectorates in central Asia with much force, essentially giving Erdogan a free hand. Vladimir Putin is probably not happy about this, but it’s not an existential question for his regime if Armenia loses some territory. Winning the war against Ukraine is what matters for Putin. Quelling economic problems and gaining more power and influence in once Ottoman territory in the Middle East is what matters for Erdogan. They no longer have different interests on the issues that are most important to them.
Investors have already seen how the Turkish question can cause chaos in the market. Last year, food prices soared after Russia blocked Ukraine from exporting its grain. Turkey, Ukraine, and Russia all agreed to a deal that would allow food to get to customers who need it. Yet even now, 100 ships are in Turkish waters, a ridiculous backlog that’s been condemned by the United Nations. However, the UN is too cowed to blame anyone for the situation. If anyone is to blame, it’s probably not Russia, but Turkey.
The West’s all-or-nothing diplomacy risks uniting two traditional enemies. For many in the West, Ukraine’s fight against invasion is a simple case of good versus evil. For Western leaders who might see it in more cynical terms, it’s about preserving a certain world order. Yet for Turkey, it’s both a danger and an opportunity.
Turkey can’t help but be offended as Ukraine is welcomed into the EU after it’s been stonewalled since the days Gorbachev was in charge of the USSR. An increasingly religious Turkey also doesn’t want to join hands with those who have fundamentally different values. Many in the West may feel the same way.
Erdogan is nothing if not a canny political survivor. As he challenges Greek territorial claims, cynically uses migrants to get concessions, rolls over Russian protectorates while Moscow is distracted, and plays his foes against each other, Erdogan exemplifies a cold-hearted, realist, approach to statesmanship. He’s like a Muslim Bismarck.
To the European Union, Ukraine is a moral crusade. To Russia, the “Special Military Operation” is an existential struggle. To Turkey, it’s a potential bonanza. The West needs to be cautious about pushing Turkey, even if that offends our moral sensibilities. The fact is that the closer Turkey moves towards Russia, the easier it will be for Russia to thwart economic sanctions and inflict major economic pain on the Continent with higher food and oil costs. Right now, Turkey has no reason to side with the West, other than because the USA is threatening it. It’s all stick, with no carrot. Emotional appeals also won’t work when powerful forces among both conservatives and progressives in Europe are telling Turkey that they don’t consider them part of Europe.
There’s no easy solution. It requires thinking of the war in Ukraine as a problem to be solved, not a holy war that must be fought to the end. The longer the war goes on, the more tensions will increase between Turkey and the West, the more Russia will be willing to sacrifice to Ankara’s interests in the Middle East and Central Asia, and the more likely Turkey will be emboldened to let Russia have its way in Eastern Europe.
Both Turkey and Russia are more than just nation-states. They both are, in their way, imperial successors. Both have authoritarian leaders who think their countries have a special destiny. If the West can’t do business with Turkey’s authoritarian leader, however distasteful it may be, the sultan will find it easy to side with the tsar.
That would be one of the most spectacular own-goals in diplomatic history. It would also give Russia some credibility when it says it’s creating a new world order. Right now, Putin’s boasts about this seem hollow. They won’t if the country with the second largest force in NATO, behind only America itself, thinks it has more in common with the Third Rome than Washington.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing.