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Germany Looks for Ways to Help Turkey Without Offering Emergency Funding

Bloomberg logoBloomberg 8/28/2018 Arne Delfs and Birgit Jennen
Crowds of people move past store fronts at the Eminonu market in Istanbul, Turkey, on Friday, Aug. 17, 2018. Turkish President Recep Tayyip Erdogan argued citizens should buy gold, then he said sell. Add dramatic swings in the lira, and the country’s traders are now enthusiastically doing both.: Erdogan Moves To Shore Up Alliances As U.S. Standoff Deepen© Bloomberg Erdogan Moves To Shore Up Alliances As U.S. Standoff Deepen

(Bloomberg) -- Germany is examining possible ways to help Turkey avoid economic meltdown without offering emergency financial aid, a government official said.

In the latest sign of German concern about Turkey’s future, Chancellor Angela Merkel has asked government ministries to come up with suggestions, which could include export financing guarantees for German companies, said the official, who asked not to be identified because the discussions are private and no conclusions have been reached.

Germany wants Turkey to turn to the International Monetary Fund for any financial rescue, two other government officials said. But because President Recep Tayyip Erdogan has ruled out approaching the IMF and U.S. support for any aid is uncertain, European governments might have to consider stepping in as a last resort, though it would be tied to conditions, they said.

The Finance Ministry in Berlin declined to comment. Merkel’s chancellery didn’t respond to a request for comment.

Turkey’s market turmoil and its diplomatic clash with the Trump administration are turning the focus on Germany, its biggest economic partner and home to several million residents with Turkish roots. While Merkel has said Germany wants to avoid Turkey’s “economic destabilization,” her economy minister, Peter Altmaier, said Sunday there’s no immediate need for a financial backstop.

Merkel’s preference is to find ways Germany can build on existing business ties to help boost Turkey’s economic growth. On its own, Germany could potentially offer a boost in export financing by its state-controlled development bank.

German-Turkish Talks

That agenda is due to be discussed at a meeting of German and Turkish finance and economy ministers next month, one of the officials said. After a war of words over democratic values sent relations to a low point a year ago, Germany now plans to host Erdogan for a state visit on Sept. 28.

For Merkel, an economic crisis in the NATO ally could put at risk Turkey’s willingness to host Syrian refugees and keep them from moving to Europe. Turkey also ranks 16th among German export markets, ahead of Japan and many smaller European Union countries.

To contact the reporters on this story: Arne Delfs in Berlin at adelfs@bloomberg.net;Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka

©2018 Bloomberg L.P.

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