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Russia extends sympathy to potential energy partner Turkey
by Daniel J. Graeber
Moscow (UPI) Jul 18, 2016


Moody's reviews Turkey for downgrade after failed coup
Washington (AFP) July 18, 2016 - Sovereign debt rater Moody's said Monday it was reviewing Turkey's credit rating for a possible downgrade after the attempted military coup on the weekend.

A one-notch downgrade from the current Baa3 rating would push the government's rating down into "speculative" or junk status.

"Despite the coup's failure, Moody's considers its occurrence a reflection of broader political challenges, as associated credit risks remain elevated," Moody's said.

"We believe that the most recent increase in domestic political uncertainty, and most specifically the attempted coup, has the potential to significantly affect the country's growth trajectory negatively, a risk that we will evaluate during the review."

Moody's said the country has moved slower than expected on implementing economic reforms and that the growth outlook has weakened, with a forecast of 3.0 percent for this year, down from 3.5 percent last year.

The country is heavily dependent on external funding for the government and private sector, a reliance that "continues to expose the country to sudden shifts in investor confidence."

Fitch, another of the three top rating agencies, said Monday that the attempted coup and the harsh crackdown afterwards by the government of President Recep Tayyip Erdogan "highlight political risks to the country's sovereign credit profile."

"Whether this translates into sovereign ratings pressure will depend on the extent to which the government's reaction deepens political divisions and weakens institutional independence. This could undermine policy coherence and heighten the risks that external financing stresses materialise."

Fitch currently rates Turkish sovereign debt at "BBB-", one step above "speculative." Fitch said its next review of Turkey is scheduled for August 19.

The Russian government views an attempt to undermine the government of its key energy trading partner Turkey as unacceptable, President Vladimir Putin said.

Turkish President Recep Tayyip Erdogan vowed revenge late Sunday during mourning for the 290 people left dead after last week's failed coup attempt. At least 6,000 people, including more than a dozen of the country's top military generals, were arrested in connection with the putsch.

Putin said in a statement he was expecting to meet personally with the Turkish president to discuss bilateral affairs.

"He expressed words of sympathy to President Erdogan over the numerous deaths, both among civilians and law enforcement officers who stood against the plotters, and expressed his hope that constitutional order and stability will be restored in Turkey as soon as possible," a statement from the president's office read.

Turkey is a key energy hub given is geographic position between Europe, Central Asia and the Middle East. The Turkish government last week shut down the Bosphorus Strait briefly after the coup attempt, though the Russian Energy Ministry said it's received no word of an interruption to any transits of oil or natural gas through the region.

Political ties between Russia and Turkey have soured in recent years, though both sides had reviewed the potential for energy cooperation last year. Russian military intervention in Syria frustrated the Turkish government and its allies in the NATO alliance and last year's downing of a Russian military jet in Turkish airspace was met with measured anger by the Kremlin.

Russian energy company Gazprom proposed the so-called Turkish Stream gas pipeline as an alternative to a broader South Stream pipeline network meant to feed European markets.

A series of pipelines dubbed the Southern Corridor, meanwhile, are planned for delivery of natural gas from the Shah Deniz reserve basin in the Azeri waters of the Caspian Sea for the European market. Turkey would host some of those networks, which are meant to add diversity to a region dependent on Russian energy supplies.


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Tehran (UPI) Jul 13, 2016
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