Turkey's gradually recovering economy risks falling again because of a military campaign in northeastern Syria.

A year ago, the Turkish lira experienced a crisis when it lost nearly 30% of its value, partly due to US sanctions and tariffs. President Donald Trump then launched these sanctions to pressure Ankara to release Andrew Brunson, an American pastor arrested on charges of terrorism. He was later released.

The lira has recently stabilized and inflation has fallen, showing that Turkey's US $ 766 billion economy has shown signs of overcoming the worst recession in nearly two decades.

However, this week the lira fell 3% to 5.9 lira per dollar, the lowest level in almost 4 months, after Ankara launched a military campaign against the Kurdish militia (YPG) in northeastern Syria. . The country's stock market also went down.

Turkey's central bank has cut interest rates since July to boost lending, but investors are concerned that Turkey will not be able to continue to relax its policies and that the war in Syria may hold. postponement of economic recovery. Tourism could also be affected if the Turkish army is bogged down in the war.

The biggest risk for Ankara is that the Republican Party in the US is increasingly determined to punish them for its campaign against the Kurds in Syria, Washington's key ally in the fight against the Islamic State (IS) itself. confess.

Republican Senator Lindsey Graham, Trump's close ally, on Oct. 9 with a Democratic congressman announced the framework for a proposed sanctions on Turkey and criticized the decision to withdraw troops. of America. Graham wants to impose sanctions on the property of President Erdogan and other top officials, impose visa restrictions and penalize anyone who deals in military transactions with Turkey or supports the water power industry. this.

Turkey could also face more sanctions due to Russia's purchase of S-400 missile defense systems this year despite Washington's strong opposition.

"Broader sanctions will completely change the Turkish economic picture. We will have to take into account the risk of a new recession in the context that the economy remains vulnerable after the 2018 crisis," Lizrich Leuchtmann, head of research at Commerzbank in Frankfurt, said.

It is not clear whether Congress will support Graham's proposal or Trump's position on the proposal. Trump has a good relationship with Turkish President Tayyip Erdogan and talked to him before withdrawing US forces from Syria. However, earlier this week, the US president warned that the Turkish economy would be wiped out if it did anything "beyond the limits" in Syria, but did not say specifically how it exceeded the limit.

"The political pressure is increasing, the more Trump is able to declare Turkey's actions to the limit," Leuchtmann added.

"The relationship with the United States is an important concern that we cannot predict yet," said an unnamed senior official in Turkey's banking industry. He said that concern will continue until Erdogan is scheduled to meet with Trump in the United States on November 13.

Turkey's Ministry of Finance issued a statement to ease worries about economic risks: "We do not think it will have a long-term negative impact on the Turkish economy. losses may arise in the future in many different areas ".

"Turkey has built a stronger structural economy over the past year to face all sorts of scenarios," the statement said.

Additional U.S. sanctions could trigger a backlash in Turkey. In a speech on October 9, Erdogan aroused nationalism against European countries that criticized Ankara.

"Right now, the nationalist spirit in Turkey has skyrocketed," said Galip Dalay, a scholar at Oxford University.

"If passed, US sanctions would only make officials in Ankara believe they have made the right decision to get closer to Russia (by buying missile defense systems), and even if Trump has sympathetic to Turkey, the rest of Washington is hostile, "Dalay said.