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The flipside of Turkey: America’s use of soft power

Weekly investor research

20 August 2018

United States sanctions against two Turkish government ministers triggered the recent bout of volatility in the Turkish currency market. While Turkey was fundamentally vulnerable to begin with, due to a lengthy period of bad economic policies, the fact that volatility was so severe and spread far beyond Turkey indicates that this was not just about Turkey. It is also about the major shift in America’s use of soft power on the global stage. US President Donald Trump favours discretion over rules and increasingly uses American soft power in a coercive way in pursuit of narrow short-term objectives rather than using it to reassure and support the global governance infrastructure. This particular use of US soft power confers clear benefits onto Trump, who appears strong and potent, but at the same time erodes America’s stock of soft power at the fastest rate in the modern era. The erosion of US soft power will render the world more uncertain in the foreseeable future, but exactly how long the uncertainty persists and how bad it gets depends on the US itself, how America’s allies react and how quickly China overcomes its credibility deficit to emerge as the new global hegemon.

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