Turkey's post-coup crackdown is slowly reaching every nook and cranny of the society, from soldiers, to academics and journalists to neurosurgeons.

The latest tally indicates that more than 60,000 people have been sacked or suspended, while about 11,000 have been arrested and 19,000 detained for investigation for potential links to the presumed perpetrator of the coup, Fethullah Gulen and his religious order, the Gulenists, or the Hizmet network.

Counting the Cost - Turkey's economy after the coup

Uncertain times

A danger lurks around the corner. The Justice and Development Party's (AKP) effort to cleanse the society of Gulenists is causing a deterioration in relations with the United States and the European Union, which might lead to a confidence crisis among investors and creditors.

There is little doubt among Turkish citizens that the Gulenists organised and largely executed the putsch.

Ankara demands his speedy extradition from the US. Yet, the American mind, wherein the church and the state comfortable and peacefully co-exist, refuses to countenance the possibility that a moderate Islamist preacher who has served as a paragon of education and interfaith dialogue most of his life could orchestrate a rebellion against the state, much less erect a parallel, clerical state within the secular one.

It looks like Ankara's demand for extradition will be stymied or take years to process.

While the AKP government didn't spell out what its retaliation for the US' foot-dragging would be, re-evaluating its relationship with NATO or barring coalition jets from the Incirlik airbase is widely discussed in the pro-AKP press.

Turkey can't abandon the Western alliance, because over the years it has developed an umbilical cord to Western capital and goods markets.

 

The EU is deeply concerned about the human rights violations that are occurring with increasing frequency in the process of the purge, such as the arrest of journalists and the alleged mistreatment of coup-plotting officers under custody.

The EU authorities also told Ankara in no uncertain terms that the reintroduction of capital punishment of putschists would trigger immediate suspension of accession talks.

The talk in pro-AKP press is to abandon EU membership dreams permanently, and to craft a strategic alliance with Russia, which has already normalised relations after Erdogan's apology for the downed jet; and is trying to ply Turkey away from the West with lucrative energy deals like the Turkish Stream natural gas pipeline project.

A strategic alliance with Russia?

Turkish frustration with the West's reluctance to appreciate her plight is comprehensible, but engaging in tit-for-tat competitive diplomacy with the US and EU would be prohibitively costly.

It is to be hoped that the most market savvy member of the cabinet, Deputy Prime Minister Mehmet Simsek and visits from allied capitals explain the cost of escalating conflict to Ankara.

A strategic alliance with Russia is not cost-free. The Kremlin made it clear that the price for full political normalisation would be for Turkey to revise its policy towards Syria.

OPINION: The West fails the 'coup test' in Turkey

In other words Ankara will have to cease its aid to moderate rebels, in which case Bashar al-Assad would easily capture Aleppo and the Idlib province.

Not only would such a course of action infuriate AKP's constituency at home, which has been honed to hate Assad, but it would also complicate the burgeoning alliance with the Gulf kingdoms, deepening Turkey's isolation in the Muslim world.

The biggest threat from an escalation of conflict with the West would be a blow to Turkey's extremely fragile balance of payments.

OPINION: Coups work only for autocracies, not democracies

Adding its $30bn current account deficit and $180bn foreign currency debt which comes due within a year, Turkey needs new foreign capital equal to roughly 28 percent of its GDP - one of the highest ratios among developing nations. That means it needs to borrow roughly $210bn a year to stay solvent.

That foreign capital comes almost entirely as loans, short-term bonds or "hot money", which is capital invested in Turkish lira denominated bonds and equities. And almost all of these funds originate from Western banks or funds.

An incomplete affair

Despite major terror attacks, the loss of tourism revenues and the coup attempt, foreign creditors and investors stood bravely by Turkey, partly encouraged by the global risk appetite for emerging markets assets.

But, it is hard to imagine such support being sustained, when Ankara has a public and near-permanent rift with the US and EU. It is also possible that the US and EU authorities might whisper to banks that it might not be wise to lend to Turkey.

Without a fresh supply of loans, and financial investors abandoning its bond and equity markets, Turkish lira could weaken precipitously; heavily indebted Turkish companies could not be able to service their foreign debts; and Turkish banks could not be able to extend loans at home. Recession and double-digit inflation could ensue in the upcoming months.

Turkey can't abandon the Western alliance, because over the years it has developed an umbilical cord to Western capital and goods markets.

This reality is starkly obvious to anyone outside Ankara to see. Whether Turkey's coup-shaken politicians appreciate this reality remains to be seen, but until they do, Turkey's "normalisation" will be an incomplete affair.

Atilla Yesilada is an Istanbul-based partner of independent think-tank GlobalSource Partners.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

Source: Al Jazeera