Turkey’s President Recep Tayyip Erdoğan is driven by ambitions to assert himself as a strongman. This year, the Turkish leader has been already involved in military conflicts in Libya, Syria, and Iraq. In the fall, he decided to support Turkey’s ally Azerbaijan in the long-lasting conflict with Armenia. 

At the dawn of his presidential career, Erdogan delegated the full authority to control the national economy and foreign politics to the executive power, i.e. to himself. Long ago, Turkey’s central bank lost the status of an independent full-fledged financial regulator obeying directives from the President. As any strongman, Recep Tayyip Erdoğan justifies his pressure on the central bank by the benefit to his nationals. 

When it comes to the hostilities in Nagorno-Karabakh, he assured the Azerbaijanis of his overwhelming support. “I condemn Armenia once again for attacking Azerbaijani lands,” he made an official statement. “Turkey continues to stand with the friendly and brotherly Azerbaijan with all its facilities and heart.” In other words, the Turkish leader does not aim to calm down political tensions between the warring Caucasian countries. Instead, Ankara supplies weapons to Azerbaijan and reportedly deploys some troops and aircraft. 

Amid Turkey’s campaign in the South Caucasus, the Turkish lira went into a tailspin again heading for new multi-year lows. It is expected to sink as low as 8 against the US dollar. At the same time, Turkey’s foreign debt has swollen to $100 billion. Besides, the central bank’s debt under its currency swap agreement increased to $50 billion. It means that the regulator is not able to repay its huge debt even with all of its available forex reserves.