Under the Trump administration diplomatic fall outs between the US and other nations continue to escalate. Relations between Russia and the US have never been easy but the growing differences with, traditional ally and fellow NATO member, Turkey is something new.
The latest issue to divide the US and Turkey is the Zarrab case. Turkish-Iranian businessman, Reza Zarrab, is accused of laundering money and helping the Iranian government circumvent US sanctions. A spokesman for the Erdoğan government said "The Zarrab case aims to damage Turkey's ties with Iran, Russia and other countries,” the spokesman went on, “[This] is a clear plot against Turkey, a political case lacking any legal basis.”
Both Russia and Turkey are being threatened by US sanctions. Both are also building their gold reserves at a vast rate. Since June 2015, the Central Bank of Russia has added over 520 tons of gold to reserves. Gold Reserves in Turkey increased to 456.13 Tonnes in the second quarter of 2017 from 427.84 Tonnes in the first quarter of 2017.
Turkey’s central bank says this is part of its diversification policy, but some see this as preparations for escalating tensions with the US. This speculation has been fuelled by Erdogan’s comments last year when he urged both Turks and the central bank to invest in gold instead of the US dollar.
Regarding Russian gold acquisition, Lawrie Williams at Sharps Pixley said '...the Russian gold reserve building programme is in place in part to reduce the nation’s reserve dependence on the US dollar.’ This opinion was re-enforced when Russian Central Bank First Deputy Governor Sergei Shvetsov said Russia is increasing a share of gold in its state reserves to ‘beef up national security.’
Xi Jinping’s China, a power set to rival the US, is also building its gold reserves. China aims to increase its annual gold output to 500 tonnes by 2020 from around 450 tonnes currently.
Both Turkey and Russia have much to gain from Xi Jinping vision for a new Silk Road. Also known as ‘Belt and Road’ (B&R), this is a vital part of China’s ‘Going Global’ strategy. The planned Silk route railway through Turkey, the BTK, Baku-Tblisi-Kars, was described by President Erdoğan as “an important chain in the New Silk Road, which aims to connect Asia, Africa, and Europe.” The new transportation corridor is configured as an important Eurasian hub linking not only the Caucasus with Central Asia but also the EU with Western China.
The New Silk Road would establish a huge new global market, dominated by China and independent of the US. Should this happen it would inevitably strengthen the Yuan as a trading currency which would be supported by China’s growing gold reserves.