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Ankara (GPA) – German automaker Volkswagen (VW) has postponed plans to open a massive new facility in Turkey signaling Ankara’s growing isolation.

German automaker Volkswagen has spent the last few months scouting for possible locations to build a new factory. More recently it began to look like Turkey had become a top contender to be the recipient of this massive investment due to their central location with access to European and Asian markets as well as a massive workforce that can be paid lower wages than most EU nations while still producing products up to EU standards.

Now it seems the planned facility, which would build VW Passats and Skoda Superbs was slated to be announced sometime this month but now that doesn’t seem very likely as Turkey grows more isolated.

VW had already set up a subsidiary in Turkey’s western province of Manisa earlier this month which led many analysts to believe the location of the new factories had basically been decided. Now, following Turkey’s decision to launch Operation Peace Spring in northern Syria may have put a damper on this massive investment into Turkey’s economy, which is currently flopping around gasping for air.

Related: Turkey Manbij Offensive Begins as Trump Preps Sanctions on Ankara

Despite assurances from ,Stephan Weil , a member of VW’s supervisory board that the company’s location choice would “be an economic one, not political” decision, this news came as a direct result of Turkey’s Syria operation against the Kurdish People’s Protection Units (YPG) and the semi-connected Kurdistan Workers Party (PKK). This is just the latest major blow to the Turkish economy and could be a sign of more to come.

More economic war for Turkey

The news that VW was pausing their investment in Turkey came just hours after US President Donald Trump made new public threats against the Turkish economy. Just last night, Trump announced he would be raising tariffs on steel by fifty percent and put a halt on $100 billion trade agreement negotiations that were already underway.

Trump’s announcement also included the threat of future sanctions, “the blocking of property” and barring the entrance of “those who may be involved in serious human rights abuses.” This all comes several days after Trump had initially seemed to signed off on Peace Spring (which he now denies) but found out his decision was unpopular with basically everyone in mainstream media and beltway politicking.

Since then, Trump has made efforts to rein in Turkey’s operation and given multiple warnings about human rights. Trump added to his string of condemnations of Peace Spring again Wednesday when the White House released a letter that he had sent to Turkish President Recep Erdogan.

Although Trump started the letter by begging for his friend Erdogan to “work out a good deal,” between Turkey and the YPG, which Turkey isn’t looking for (Erdogan has already rejected negotiations with the PKK and has continued crackdowns on Kurds in Turkey), it quickly descended into rhetoric that is sure to only further anger Erdogan and his ruling Justice and Development Party (AKP). Even though the letter did include a portion about how Trump is confident he could work out a deal, the letter also brought up the last major diplomatic row between Ankara and Washington as a threat.

In the second paragraph of the letter, Trump refers to the pastor Andrew Brunson, who had been imprisoned by the Turkish authorities for alleged connections to both the PKK and Fethullah Gulen’s FETO. Prior to May, Turkish steel was already being hit with 50% tariffs and some members of the state were sanctioned until Brunson was returned to the United States (after Turkey failed to receive their proposed debt relief in exchange for him)

Related: Pastor Andrew Brunson’s Release Shows Turkey Still Needs US

There are also currently threats of sanctions against Turkey for the purchase of Russian S-400 missile defense systems on top of these new penalties for the Syria conflict. All of this started at the same time Turkey was having issues with inflation and their rate of growth after years of a policy encouraging lax lending practices and low interest rates which had spurred public spending and driven GDP growth at a rate second only to China’s. 

Now, this all seems to be at risk, and it is only from a pressured President Trump. The US House of Representatives also voted to condemn Trump’s plan to the withdrawal of US forces from Syria due to concerns about the safety of “Kurdish allies.”  Countries including (but not limited to) Egypt, Italy, the United Kingdom, Saudi Arabia, Israel, and even countries on the other side of the geopolitical divide including Iran have all condemned the Turkish operation.

 

The European Union government has also issued multiple warnings from several highly placed ministers who threatened to further alienate Turkey, a country that not long ago was trying to become a member state. Erdogan, for his part, has promised to retaliate against any EU hostility he deems unacceptable by releasing millions of refugees into the continent which should be taken as a warning to all the other world leaders who may think threatening Erdogan, or Turkey, in general, is a good idea.  

Despite what Trump, or whoever else, might think, threatening the Turks – a nation of people already highly suspicious of their western allies – is only going to make things worse.

Hitting Turkey with new sanctions will obviously only hurt the country’s working class, but much like in places like Iran or Venezuela, they will also serve to galvanize support for the AKP. This ire will be directed at the easiest scapegoat for Turkey’s problems including the US and EU which will likely cause more diplomatic incidents in the near future. This all will likely result in this current cycle repeating until either Erdogan leaves office, Turkey leaves NATO, or some other major geopolitical shift which means US/EU-Turkish relations probably have nowhere to go but down and the flight of capital like VW’s will likely continue.

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