Editor's note: Dr Harun Ozturkler is a professor of econometrics at Kırıkkale University in Ankara, Turkey. The article reflects the author's opinion and not necessarily the views of CGTN.

Turkish Treasury and Finance Minister Berat Albayrak and his German counterpart Olaf Scholz have agreed to meet in Berlin on September 21. The interest now hovers around a couple of critical questions.

One of these questions is if and how the Turkish lira crisis will affect the European Union (EU). One can answer this question with regard to the possible effect of a Turkish economic crisis on the EU's economic growth and EU banking system.

According to figures from the EU Directorate General for Trade, Turkey's share in EU total trade was 4.1 percent in 2017 (3.8 percent in imports and 4.5 percent in exports). The Turkish lira has lost nearly 40 percent of its value since the start of the year, making the Turkish goods and services more competitive in EU markets. As a result, we can expect net EU exports to Turkey to decline and put negative pressure on the EU economic growth rate.

On the other hand, the Turkish lira crisis is expected to have a slight effect on the EU banking system because Europe's exposure to Turkish banks is estimated to be small. The second and third questions are if the United States sanctions on Turkey offer a chance for it to mend ties with the EU (especially with Germany). And if Germany will consider providing Turkey with a financial lifeline to help it overcome its current economic crisis.

Turkey's relations with the EU and Germany have deteriorated in recent years mostly because of the disagreements regarding Turkish foreign policy preferences and political developments in the country. However, the political clashes between Turkey and the US and the US economic sanctions have led Turkey to seek to repair its relations with EU and Germany.

An overhaul of the customs union between EU and Turkey will be a considerable step in improving the relationship and constructing a stronger partnership against the US-led trade war. Turkey and Germany have good relations with Qatar and common interests in the Middle East in terms of the Syrian crisis and energy issues. Qatar has already declared that it will invest 15 billion US dollars in Turkey in the form of direct investment.

In contrast to the opposing opinions, I think that Germany may follow suit. On the other hand, Turkey needs urgent financial support to pay for its current account deficit and short-term debt. Therefore, it is crucial that Germany provides large enough cash for Turkey to alleviate its currency crisis.

Turkey has tried hard to move away from using the dollar in its international economic transactions. According to Turkish Statistical Institute (TSI) data, about 40 percent of Turkish exports are in dollars and 48 percent in euros, while 58 percent of its imports are in dollars and 32 percent in euros.

The fact that Turkey has a large trade deficit implies that Turkey has also a large dollar deficit. As Turkey seeks trade deals with its other trading partners (such as China, Russia, and Iran), a new financial payment and investment framework with the EU may help Turkey to reduce its dollar needs.

The final question is if the US will change its attitude to Turkey and whether there is optimism for US-Turkey relations.

Turkey and the US are NATO allies and used to call each other strategic partners. However, America's rejection of Turkey's demand to extradite US-based terrorist leader Fethullah Gulen, whom Turkey blames for the failed July 2016 coup attempt, was the first blow to the two countries' relations.

US support for Syrian Kurdish forces and Turkey's plan to buy a Russian missile system and Russian nuclear power plant investment in Turkey have led to a further deterioration in relations. The continued imprisonment of US pastor Andrew Brunson escalated the tensions.

Also, US sanctions on Iran, a major trading partner and oil and gas supplier to Turkey, aggravated the economic and political disagreements between the US and Turkey. On the basis of this background, it is not easy to be optimistic about the relations between the US and Turkey.

Although the disagreements over the Syrian crisis and related issues and US sanctions over Iran may not be expected to thaw easily, on other fronts there may be developments to ease tensions in the coming days.

According to TSI figures, the US is the 5th largest export and 4th largest import partner to Turkey. Therefore, dampening political tensions between the two countries will help Turkey to relieve its currency crises in the short run. In the long run, on the other hand, Turkey needs comprehensive economic reforms to restructure its economy to have sustainable economic development and a growth path.

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