Turkey’s diplomatic crisis is hastening an economic one
WHEN members of America’s Congress passed the Magnitsky Act in 2012 to pursue Kremlin officials responsible for the death of a Russian whistleblower, and even when they extended it to include foreigners involved in corruption and human-rights violations, few of them imagined the law would ever be used against the government of a NATO ally.
Yet that is precisely what happened on August 1st, when the US Treasury Department imposed an asset freeze on two senior Turkish officials, the ministers of justice and the interior, over their role in the prolonged detention of an American pastor. True to form, Turkey responded by announcing sanctions against two members of President Donald Trump’s cabinet. Both sides, including Turkey’s president, Recep Tayyip Erdogan, suggested that they would find a way out of the crisis, but the markets seem to think otherwise. The Turkish currency set record lows against the dollar for six consecutive days, while the yield on government bonds reached a new high,...