Analysis-Turkey sets new Western tilt in foreign policy as economy weighs

By Huseyin Hayatsever, Can Sezer and Burcu Karakas

ANKARA/ISTANBUL (Reuters) - After pivoting Turkey away from Western allies, President Tayyip Erdogan has changed tack with moves that have pleased the U.S. and upset Russia, a turnaround seen aimed partly at reversing his country's economic downturn and boosting foreign investment.

The foreign policy rethink is part of a wider recalibration by Erdogan six weeks after his re-election: he has also changed course on the economy, reversing unorthodox financial policies blamed for Turkey's runaway inflation and collapsing currency.

Erdogan's ties to Russian President Vladimir Putin have weighed on Turkey's relations with its traditional Western allies for years, along with other factors including concern over his increasingly autocratic rule.

But Erdogan's nod of approval on Monday for Sweden to join NATO - a move he had resisted for months - was welcomed by Western leaders who have sought to strengthen the alliance in the wake of Russia's invasion of Ukraine.

The warmer tone stood in contrast to Moscow's response last week when Ankara allowed President Volodymyr Zelenskiy to take home five Ukrainian commanders who had been kept in Turkey under the terms of a prisoner swap agreement.

Denouncing the move as a violation of the Turkish-brokered deal, Moscow said Ankara had promised to keep the commanders in Turkey and complained that it had not been informed.

Analysts believe Erdogan's moves - including his declaring support for Ukraine joining NATO - were no coincidence.

"There was a perception in recent years that the Turkish-Russian relationship had gone too far. This indicates a clear rebalancing," said Galip Dalay at the Chatham House think-tank.

One of the main motivations is Turkey's bid to climb out of its economic slump and reinvigorate foreign investment, added Dalay, noting that strained ties with the West had dampened the economy and investment flows. While Turkey has started to attract Gulf Arab investments, more is needed, he said.

"Turkey doesn't want the Turkish-Russian relationship to be badly hurt, but this will inevitably have an impact on relations. After the election Erdogan feels he has more room for manoeuvre."

The Turkish presidency’s communications office did not immediately respond to a request for comment.

F-16s, VISA-FREE TRAVEL

A day after Ankara gave the green light for Sweden to join NATO, Washington said it would proceed with the transfer of F-16 fighter jets to Turkey in consultation with Congress. Turkey had said in October 2021 that it wanted to buy the fighters and nearly 80 modernisation kits for its existing warplanes.

Both Turkish officials and the Biden administration have rejected any suggestion that Ankara's approval of Sweden's NATO accession was being linked to the F-16 sale in the months of talks to address Turkish opposition.

A senior Turkish official told Reuters that Turkey would not harm its ties with Russia while improving relations with the West, adding that the West needed to support Turkey in its financial needs.

Erdogan's ties to Putin have loomed large in diplomacy surrounding the war in Ukraine, helping him broker a deal for safe export of grain from Ukraine's Black Sea ports.

But that deal, which Moscow has threatened to quit due to what it says is the West's broken promise to remove obstacles to Russian grain and fertilizer exports, is due to expire on July 17.

Kremlin spokesman Dmitry Peskov said on Monday there were currently no plans for Putin to meet Erdogan to discuss renewing the deal, and it was not known when Putin might visit Turkey.

Ankara has been important to Moscow as Erdogan has refused to join Western sanctions against Russia over the Ukraine invasion. Flights and trade have continued, and Turkey is a rare customer for Russian gas.

Moscow, too, has been important to Ankara as a trading partner and major source of tourism revenue, and it is building Turkey's first nuclear power plant as well.

Ahead of Turkey's tight presidential election in May, Moscow also allowed Ankara to defer up to $4 billion of its gas import bill for the first time this year, relieving pressure on dwindling currency reserves.

'ROSE-TINTED SPECTACLES'

The Kremlin said it intended to develop relations with Turkey "despite all the disagreements".

"Turkey can be orientated towards the West, we know that in the history of the Republic of Turkey there have been periods of intense orientation towards the West, there have been periods of less intense orientation," Peskov said.

"But we also know that... no one wants to see Turkey in Europe, I mean the Europeans. And here our Turkish partners should not wear rose-tinted spectacles either."

Turkey's bid to join the European Union has been frozen for years after membership talks were launched in 2005. In 2009, Cyprus blocked six out of the 35 chapters Turkey must conclude as part of its EU accession negotiations.

Analysts believe that in addition to visa-free travel for Turks, Erdogan wants closer trading arrangements with the EU, even if membership remains a distant prospect, linked to progress on democracy and other issues.

Many European governments have shown little enthusiasm for reviving the process.

"Turkey wants the European Union to play a role in economic recovery. 'Let's revitalise Turkey-EU relations' is an indirect way of saying this," said Evren Balta, a professor of international relations at Ozyegin University.

(Additional reporting Orhan Coskun and Tom Perry; writing by Tom Perry; editing by Mark Heinrich)