Turkey's Erdogan vows country will defy economic threats as United States tensions escalate

U.S. President Donald Trump on Friday said the United States was not going to take Turkey's detention of U.S. Christian pastor Andrew Brunson "sitting down", a day after his Treasury chief said Washington could hit Ankara with further sanctions.

It also forecast that inflation will peak at 22 percent over the next four months and said the weakening lira was putting pressure on the indebted corporate sector and had considerably increased the funding risk for Turkey's banks.

President Donald Trump doubled tariffs on Turkish metals exports to the United States last week prompting Turkey, which says it will not bow to threats, to raise tariffs on USA cars, alcohol and tobacco by the same amount on Wednesday.

USA authorities have rebuffed efforts by Turkey for the extradition of Gülen, who lives in Pennsylvania.

Brunson was charged with terror offenses by a Turkish court and has been held since October 2016.

Also worrying investors has been President Recep Tayyip Erdogan's refusal to allow the central bank to raise interest rates to support the currency, as experts say it should. Erdogan previously suggested a swap in which Brunson is released in exchange for Gulen, though US officials have said Turkey must present convincing evidence for any extradition proceeding to be considered.

In retaliation, Turkey on Wednesday imposed tariffs on certain US goods.

Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions on two government ministers for not releasing American pastor Andrew Brunson, who faces terrorism-related charges in Turkey.

The United States has imposed sanctions on two Turkish government ministers and doubled tariffs on Turkish steel and aluminum imports.

The rising tensions have caused the value of the lira to plunge by about a third of its value against the dollar since January. Turkey's dollar bonds fell, while the cost of insuring exposure to Turkish debt rose.

While the Brunson matter appeared far from being resolved, Turkish President Tayyip Erdogan got a shot in the arm from Qatar's Emir, who approved a package of economic projects, investments and deposits after the two met in Ankara.

The Committee of Concerned Scientists has compared the Brunson case to that of Serkan Golge, a NASA scientist who was arrested at the time of the coup attempt and was sentenced to more than seven years in prison for alleged links to Gulen's group.

Mr Trump later said in a tweet that the U.S. "will pay nothing" for Brunson's release, "but we are cutting back on Turkey!"

The fight between Turkey and the USA has escalated in recent weeks, with Brunson's detainment as a flashpoint.

The court in the western city of Izmir ruled that Brunson, who faces 35 years in jail if convicted, would remain under house arrest, his lawyer Cem Halavurt told AFP.

  • Eleanor Harrison