If the tap providing overseas capital were turned off, a chain reaction would be set in motion. The value of Turkey’s currency would fall, reflecting the fact that a reduced level of global capital would now be chasing Turkey’s lira-denominated assets. This would prompt a return to accelerating inflation, because imports would now cost more to buy with a depreciating lira. This in turn would prompt a round of interest-rate increases by the authorities in an effort to bring prices back under control. And these higher interest rates would lead to a sharp slowdown in economic activity.
This process would move the current account swiftly back towards balance. But the price paid would be economic instability of a sort that hasn’t been seen here in a decade. That would be bad news for the AKP, which has benefited greatly from the fact that its time in power has thus far been one of almost uninterrupted economic stability.