According to the orthodox neoliberal vision of financial globalization, the expansion of footloose capital shall be commended as it is bound to create economies of scale, provide flow of additional investment resources for developing countries and thus contribute to global welfare. In this framework, the main gatekeepers - credit rating agencies - are expected to hold investors to universal standards in terms of risk evaluation and facilitating rational decision making. It should come as no surprise that the major corporate players that dominate the oligopolistic market; namely, Standard and Poor's, Moody's and Fitch (with the addition of Japanese Credit Rating - JCR) have enjoyed being in the privileged position of useful adjuncts in the Wall Street-U.S. Treasury-IMF-global investment lobby compact. Despite their miserable risk evaluation and credit rating performance during the global economic and Schengen-zone crises that was fiercely criticized by objective observers, rating agencies somehow managed to maintain their central position as corporate actors impacting major investment decisions aimed at the developing world. The main motivation for the leniency towards the "rating gang" might be better understood in the context of their intimate relationships with Wall Street as well as the Anglo-Saxon financial and foreign policy-making establishment. As global volatility and frequency of financial crises began to increase in the 2000s, institutional mechanisms that could have an effect on global financial flows increasingly acquired political importance. Especially the rise of the BRICS and emerging economies, most of which require a steady inflow of international capital resources due to insufficiency of national savings, increased the strategic importance of credit rating agencies. A series of negative rating decisions against emerging markets which were perceived to be taken in the light of their political and geostrategic competition with the West, rather than purely macroeconomic considerations, started to arouse widespread reaction across the board.

Behind the rather cool, apparently objective and technocratic language of the rating agencies, it was a poorly kept secret that Western strategic interests played a certain role in the timing, composition and transformation of rating decisions. The outcome was a sophisticated political economy mix that determined the attitude of the big three towards individual countries in the world system. To illustrate, decisions to lower credit ratings of Brazil and Russia have corresponded to rather sensitive political conjunctures during which the U.S. and the Western alliance in general were experiencing frictions with the political elite of both countries. The ousting of Brazilian President Dilma Rousseff via a judicial coup was supported with the capital flight and economic mayhem created in the country with the kind support of the rating agencies. Likewise, credit reductions against Russia came in the wake strategic tussles on major issues such as Crimea and Syria; and therefore was fiercely protested by Moscow.

In this conjuncture, it was conceivable that subsequent decisions by the Standard and Poor's and Moody's to reduce Turkey's credit rating in the aftermath of the foiled coup attempt on July 15 would arouse fierce reactions. In the case of the S&P, decision making process advanced in a rush leading to a downgrade after just two days following the coup attempt while the market actors and society were still trying to recover from the shock of the incident. While Moody's took its time and waited for another two months to better gauge the recovery dynamics in the Turkish economy, it shocked both local and international investors by declaring a downgrade just two days after a senior executive declared that the Turkish economy had overcome the risks imposed by the coup attempt. There were even calls for a judicial prosecution against Moody's on the basis of financial manipulation. This baseless decision in the face of improving macroeconomic balances, as well as the unprofessional way in which it was implemented, promptly fueled the ongoing discussion on excessive politicization of credit rating agencies.

It is no secret that Turkey and the U.S. have diverging interests on several issues such as the War in Syria and the Gülenist Terror Group (FETÖ) that still freely operates from U.S. soil. But as strategic wrangling between Ankara and Washington continues on the PKK's Syrian offshoot the People's Protection Units (YPG) and their role in the future of Syria or the extradition of Gülen to Turkey, employment of economic instruments such as credit ratings to pressurize Turkey and extract additional concessions remind us of the gunboat diplomacy or Cold War tactics that should not be seen between NATO members. Credit ratings might be an essentially political act but Turkey's economic fundamentals and political capacity are robust enough to withstand such pressures.

[Daily Sabah, October 1, 2016]